Company: BKYI
Filing Date: 2025-06-27
Form Type: DEF 14A
Source: 0001437749-25-021438
Chunk: 39

Company: BIO KEY INTERNATIONAL INC
Filing Date: 2025-06-27
Form: DEF 14A
Chunk 39
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 business strategies. Stock-based and annual cash incentive compensation has been an important component of total compensation at the Company for many years because such compensation enables us to effectively recruit executives and other employees while encouraging them to act and think like owners of the Company. If the plan amendment is approved, we believe we will maintain our ability to offer competitive compensation packages to both retain our best performers and attract new talent.                                                                                                                                                                                                 |
| ● | Supports our pay-for-performance philosophy. We believe that stock-based compensation, by its very nature, is performance-based compensation. We use incentive compensation to help reinforce desired financial and other business results to our executives and to motivate them to make decisions to produce those results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ● | Protects stockholder interests and embraces sound stock-based compensation practices. As described in more detail below under “Summary of Sound Governance Features of the Amended Plan,” the amended plan includes a number of features that are consistent with the interests of our stockholders and sound corporate governance practices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

Summary of Sound Governance Features of the Amended Plan

The board of directors and compensation committee believe that the amended plan contains several features that are consistent with the interests of our stockholders and sound corporate governance practices, including the following:

| ✔ | No automatic share replenishment or “evergreen” provision | ✔ | Members of the committee administering the plan are non-employee and independent directors |
| ✔ | Will not be excessively dilutive to our stockholders      | ✔ | Stockholder approval is required for material revisions to the amended plan                |
| ✔ | Limit on number of “full value” awards                    | ✔ | No “tax gross-ups”                                                                         |

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| ✔ | No liberal share counting or “recycling” of shares from exercised stock options, SARs or other stock-based awards | ✔ | Options, SARs and unvested performance awards are not entitled to dividend equivalent rights and no dividends will be paid on unvested awards |
| ✔ | No reload stock options or SARs                                                                                   | ✔ | Limits on non-employee director compensation                                                                                                  |
| ✔ | No re-pricing of “underwater” stock options or SARs without stockholder approval                                  | ✔ | Stock option and SAR exercise prices will not be lower than the fair market value on the grant date                                           |
| ✔ | “Clawback” provisions                                                                                             |   |                                                                                                                                               |

Background for Shares Authorized for Issuance

If the plan amendment is approved,