Copart Board Grants CEO Adair 20 Million Options As His Only Substantive Pay For 10 Years
Adair would draw a $1 salary with no bonus or further equity, and the option is forfeited if shareholders do not approve it.
Copart's board approved a nonstatutory stock option on 20,000,000 shares for CEO A. Jayson Adair on Wednesday, according to an 8-K filed Friday. The grant is meant to be his only substantive pay for the next 10 years and depends on a shareholder vote.
What the 8-K says
The board acted on the Compensation Committee's recommendation. The option sits outside Copart's 2007 Equity Incentive Plan, as amended and restated, under a stand-alone award agreement.
It splits into four tranches of 5,000,000 shares each, with exercise prices of $26.27, $35.03, $43.78 and $52.54 per share. Copart shares closed at $27.87 at Friday's close (market data).
The option has a 10-year term. Apart from certain perquisite programs the Compensation Committee approved, it is intended to be Adair's only substantive cash or equity pay for those 10 years. He is expected to receive a salary of $1 each year, with no bonus and no additional equity awards.
No part can be exercised before stockholders approve it at the 2026 annual meeting or a special meeting after it. If approval is not obtained, the option is forfeited in its entirety.
Vesting, clawback and change of control
The option becomes exercisable on the fifth anniversary of the grant date, provided Adair is still CEO then.
Vested shares carry a service-based clawback: 10% of the shares, exercised or not, are subject to clawback for each whole or partial year of the 10-year term after his service as CEO ends. Shares received on exercise, to the value of the after-tax gain, must also be held through the 10-year term.
If he leaves through death or disability, the portion whose 30-trading-day average closing price before termination exceeds its exercise price vests, and the clawback and holding period are waived on those shares and any earlier-vested ones. Anything unvested otherwise is forfeited.
In a change in control, unvested tranches vest immediately before it if the price paid per share exceeds their exercise price, subject to his continued service. Those shares stay under the clawback and holding period. If he is then terminated without cause, resigns for good reason, or dies or becomes disabled, both are waived, subject to a release of claims in the company's favor.
The option is also subject to Copart's Compensation Recovery Policy.
The next step is the shareholder vote, at the 2026 annual meeting or a special meeting after it.
Sources
- 8-K Filing — COPART INC (CPRT) — SEC EDGAR
