Subsequent Events |
12 Months Ended |
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Dec. 31, 2015 | |
| Subsequent Events [Abstract] | |
| Subsequent Events |
SUBSEQUENT EVENTS
On March 1, 2016, the Board of Directors declared a cash dividend of $0.05 on each share of common stock outstanding. Such dividends are payable on March 24, 2016 to stockholders of record on March 16, 2016. Payment of any future dividends on shares of common stock will be at the discretion of the Company’s Board of Directors.
On March 1, 2016, the Board of Directors approved, subject to shareholder approval, the Natural Health Trends Corp. 2016 Equity Incentive Plan (the “2016 Plan”). Under the 2016 Plan, the Company may grant (i) incentive stock options, (ii) nonqualified stock options, (iii) restricted stock, (iv) restricted stock units, (v) stock appreciation rights (“SARs”) either in tandem with an option or alone and unrelated to an option, (vi) performance shares, (vii) award shares, or (viii) stock awards. The maximum number of shares available for issuance under the 2016 Plan totals 2,500,000 shares; provided, that the number of shares reserved for issuance under the 2016 Plan will automatically increase on January 1st of each year during the term of the 2016 Plan so that the number of shares that may be issued under the 2016 Plan consistently remains equal to 17.7% of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, inclusive of the shares reserved for issuance under the 2016 Plan. In no event, however, will the application of the adjustment in the preceding sentence result in a reduction of the aggregate number of shares available for award under the 2016 Plan below 2,500,000 shares. The 2016 Plan was established in lieu of the Natural Health Trends Corp. 2007 Equity Incentive Plan (see Note 5) which was terminated by the Board of Directors on March 1, 2016.
On February 25, 2016, the Company amended a supply agreement with one of its suppliers in order to maintain worldwide exclusivity in return for purchasing a minimum of $9.4 million of product annually on average over the next three years, plus certain raw material guarantees. If the Company does not purchase the minimum product as required, then a Cure Payment, as defined, will be due to the supplier. The term of the agreement is three years commencing on February 25, 2016 and shall automatically renew for successive three year terms unless notice of termination is provided by either party.
In February 2015, a purported shareholder derivative complaint was filed in the Superior Court of the State of California, County of Los Angeles. The shareholder derivative complaint purports to assert claims on behalf of Natural Health Trends Corp. for breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement and corporate waste against the Company’s executives and directors. The shareholder derivative complaint also purports to assert claims on behalf of the Company for breach of fiduciary duty based on alleged insider selling and conspiring to enter into several stock repurchase agreements, which allegedly harmed the Company and its assets. The shareholder derivative complaint alleges, inter alia, that the Company made materially false and misleading statements regarding the legality of its business operations in China, including purportedly running an illegal multi-level marketing business. The case is in its early stages and the Company has not yet filed a response.
In January 2015, two purported class action complaints were filed in the United States District Court for the Central District of California. The class action complaints purport to assert claims on behalf of shareholders under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder against the Company and certain executives. The class action complaints allege, inter alia, that the Company made materially false and misleading statements regarding the legality of its business operations in China, including purportedly running an illegal multi-level marketing business. The cases are in their early stages and the Company has not yet filed a response.
On January 12, 2016, the Board of Directors authorized an increase to the Company’s stock repurchase program first approved on July 28, 2015 from $15.0 million to $70.0 million. During February 2016, pursuant to the stock repurchase program, the Company authorized its broker to proceed with the purchase of shares of the Company’s common stock in the open market. The open market repurchases completed in February resulted in the Company purchasing a total of 507,797 shares of its common stock for an aggregate purchase price of $12.1 million, plus transaction costs. As of March 4, 2016, $47.9 million remained available under the $70.0 million stock repurchase program.
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