Qualifying Gain from Deferred Compensation Plan
Qualifying Gain. Qualifying Gain means the net value accrued upon exercise of an option using a stock-for-stock payment method (i.e., the amount by which the total value of the shares exercised exceeds the total value of the shares used to pay the exercise price). For example, a director elects to defer the Qualifying Gain accrued upon exercise of an option to purchase 1,000 shares of Common Stock at an exercise price of $20 per share when the Common Stock has a current fair market value of $25 per share. The director delivers 800 shares of Common Stock (worth $20,000) to pay the exercise price. In return, the director receives 800 shares of Common Stock worth $20,000 and the directors Account (as defined below) is credited with a Qualifying Gain of $5,000.