the Company's Non-GAAP net profit for the preceding fiscal year; or (ii) of the Non-GAAP net profit in the Company's annual budget as approved by the Company's Board for such fiscal year.
Equity-Based Compensation: The New Compensation Policy allows the Company to adopt during the Policy's duration equity-based compensation plans ("Company's Equity-Based Plans") and grant its EVPs equity-based awards thereunder. The Company's Equity-Based Plans and the equity-based awards granted thereunder will comply with the following main principles:
Equity-based awards to be granted pursuant to the Company's Equity-Based Plan will be in the form of share options, both regular options and/or options under a cashless mechanism.
The equity-based awards will include terms so as to comply with Israeli Income Tax Ordinance [New Version] of 1961 as may from time to time be amended as well as Section 102 thereof, under the "capital gain tax route" as well as compliance with the Israeli Income Tax Rules (Tax Relief in Issuance of Shares to Employees) 2003, as amended from time to time.
The equity-based awards shall vest gradually over a minimal period of five (5) years, where the first portion of equity-based compensation will vest at least two (2) years following the later of (the "Grant Date"): (i) the date of the board’s resolution approving such grant ("Date of the Board's Resolution"); (ii) the first trading day after a period of thirty (30) days has elapsed from the date the Company has filed with the Israeli Tax Authorities the Company’s Equity-Based Plan under which the respective equity-based award is granted; or (iii) where applicable, the date on which the required corporate approvals have been obtained.
The exercise/grant price of an equity-based award shall be the higher of: (a) the average price of the Company's Shares listed on the Tel-Aviv Stock Exchange (TASE) in the thirty (30) days prior to the Date of the Board's Resolution; or (b) the price of the Company's Shares listed on the TASE on the last trading day preceding the Date of the Board's Resolution.
The aggregate value of the benefit embedded in the granted equity-based awards, calculated in accordance with an acceptable valuation method (such as the Monte Carlo, Black-Scholes and Binominal options pricing models), at the Date of the Board's Resolution, shall not exceed, with respect to the CEO - nine hundred thousand dollars ($900,000) per year and with respect to an EVP - five hundred thousand dollars ($500,000) per year.
The Company's Equity-Based Plans may include customary terms with regards to equity-based awards to be granted, such as provisions with respect to adjustments for dividends, bonus shares, capital modifications (reverse stock split, stock split, etc.), rights offering restructuring (split, merger, etc.), as well as provisions allowing, subject to approvals by the Compensation Committee and the Board, acceleration, continued vesting and exercisability, as well as a post-termination exercise period in case of termination not for cause, or as a result of death or disability.
The maximum dilution as a result of equity-based awards granted under Company’s Equity-Based Plans during the duration of the New Compensation Policy will not exceed three percent (3%) of the Company's issued and outstanding share capital, on a fully-diluted basis.
Reduction of Variable Compensation - Pursuant to the New Compensation Policy, the Compensation Committee and the Board may reduce any variable compensation (which includes the cash bonuses and the equity-based compensation) to be granted to an Executive Officer due to circumstances determined by the Compensation Committee and the Board, subject to applicable laws and the terms of the employment agreements and arrangements with the Company's Executive Officers and the rights arising therefrom.
Retirement and Termination of Service Arrangements: pursuant to the New Compensation Policy, the payments that may be provided by the Company to its Executive Officers upon retirement or termination of service may be comprised of the following:
Severance Pay: The New Compensation Policy reduces the maximum amount of severance pay that the Company may pay to its Executive Officers upon termination of employment in addition to the amounts that are mandatory under applicable law from the amounts as set forth in the Former Compensation Policy. To that effect and in line with the Approved Employment Terms of the CEO, the Company's CEO will be paid additional severance pay in an amount equivalent to the last paid monthly base salary multiplied by the years of employment with the Company, while an EVP may be paid additional severance pay of up to fifty percent (50%) of the amount resulting from multiplying the respective EVP's last paid monthly base salary by the years of employment with the Company. Payment of the above mentioned additional amounts are subject to such Executive Officer serving in the Company for at least ten (10) years and further provided that the termination is not for cause.
Advanced Notice Period: The Company's Executive Officers may be provided advance notice of termination of up to six (6) months, during which period the Executive Officers will be entitled to receive his or her monthly base salary and benefits