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This is the first time since the Plan was adopted in 2014 that we have sought to add shares. We have long been committed to responsible, market-competitive equity-based compensation that rewards leaders in line with Company performance. We have demonstrated thoughtful, conservative management of the 3,100,000 shares allocated under the original Plan. Our three-year average burn rate of 1.01% is far below the

The Plan’s expected costs, duration, and dilution effects are materially different based on which time period is used. Although one of the leading proxy advisory firms, Glass Lewis, recommended in favor of Proposal 4, another proxy advisory firm, Institutional Shareholder Services (“ISS”) recommended against the proposal due in large part to the Plan’s cost. ISS’s calculations are based on a pre-COVID share price of $41.45. Using the Company’s average stock price of $11.46 for the 30-day period ended May 31, 2020, however, the Plan costs are substantially less than ISS’s projection. At the time the proposed Plan was developed, the Compensation Committee believed the 3 million share request represented a conservative proposal allowing for an additional two years of competitive equity-based awards based on the Company’s trending stock price at the time. The actual duration of the Plan could be longer or shorter largely dependent on the Company’s stock price at the time of future grants, but was never intended to provide for 10-plus years of grants as projected by ISS. Finally, as to dilution, Proposal 4 has a 14.28% full dilution effect if ISS’s methodology is applied pre-COVID. Post-COVID, however, the dilution effect is 11.44%, since the Company had two stock offerings in direct response to the pandemic that increased its share base from figure used by ISS. This dilution effect is well below our industry average.

Without sufficient equity compensation to grant, we may be forced to deliver compensation to our executives in other ways that harm our liquidity position to the detriment of shareholders. Despite our proven conservative use of equity in compensating our leaders, if we do not add shares to this Plan now, then as we work to retain key talent and persevere through these challenges, we will need to resort to delivering market-competitive long-term incentives settled in cash. This directly conflicts with our needs to preserve cash at this juncture.

The amendment continues to align our leaders’ interests with those of our shareholders during the coronavirus pandemic. We use equity to compensate critical talent at all levels of our Company for the express purpose of fostering an employee ownership culture. Our Plan promotes retention through multi-year vesting and performance conditions, which is particularly important in this period of business transformation and macroeconomic instability.

The Plan contains strong governance features. Neither the Plan nor the stock grant agreements made under it allow for stock option repricing, excise tax gross-ups, payment of dividends before vesting of underlying awards, or single-trigger change-in-control equity vesting. We also have a strict clawback policy and individual award limits. Proposal 4 builds on the Plan’s strong governance controls by adopting an annual per-person limit on awards to non-employee directors.