total direct compensation for the 2012, 2013 and 2014 fiscal years. Finally, the Compensation Committee has reserved negative discretion to reduce the actual payout under Mr. Cappelli’s Apollo Global awards to a maximum of three times the target number of shares awarded.
The variable performance-based annual cash incentive plan for our named executive officers is subject to a maximum dollar limitation per participant that cannot in any instance exceed 200% of annual base salary.
Adjustment or Recovery of Awards
At present, we do not have any specific policies to adjust or recoup prior bonus payments or equity awards in the event we are required to restate the financial results on which those payments or awards were based. We have decided to defer the implementation of such a policy until the Securities and Exchange Commission issues regulations governing such recoupment policies.
Equity Retention Guidelines and Hedging Policies
In the 2013 fiscal year we updated our equity retention guidelines for the named executive officers. Because of the large drop in our stock price in the last few years, we decided that using a base salary multiple alone was not the most appropriate measure of equity retention to use and that some absolute level of share ownership should also be included in the guidelines. Under the amended guidelines, each of our named executive officers is expected to attain and retain a level of qualifying equity securities, either in the form of shares of our Class A Common Stock or certain equity incentive awards under which such shares may be acquired, with an aggregate value on each periodic measurement date equal to lesser of the applicable multiple of annual base salary or number of shares as follows:
Equity Retention Guideline (Lesser of)*
Base Salary Multiple
Number of Shares
Ownership guidelines (dollar and share thresholds) will be reduced by 50% for Section 16 Officers beginning at age 62. This reduction is intended to permit individuals to begin an orderly process of diversification as the executive approaches normal retirement age of 65.
Because Dr. Sperling and Mr. Sperling are the owners, either directly or through a voting trust of 100% of the Company’s Class B Voting Stock, our guidelines do not impose any specific equity retention obligations on them with regard to the Company’s Class A Common Stock.
On a cumulative basis, a covered individual must retain at least 50% of the net shares (after-tax) acquired upon the vesting of restricted stock units. A covered individual must acquire (and thereafter maintain) the required stock ownership within five years of becoming an individual covered by the guidelines (except that individuals covered by the previous guidelines have five years from the date the guidelines were amended this fiscal year in order to meet the required stock ownership under the guidelines).
We also amended our guidelines this fiscal year to prohibit covered individuals from purchasing or selling any publicly traded options for our securities, including the trading of any call or put, the writing of any call or put, hedging or the use of collars.
We do not have any policies prohibiting executives from holding our securities in margin accounts, pledging our securities as collateral for loans or entering into pre-paid variable forward sale contracts covering our securities. However, executive officers are not permitted to engage in short sales of our securities.