a question, page-6

00JackPearce,

I totally agree with you that companies require excellent managers and it is fair that they require financial incentives but from what I can gather and using my limited investing experience your incentive
hurdles seem low and static going into the future.

Investor Presentation – Extraordinary General Meeting,

Performance rights plan, Page 17

So if AZG in years 2013, 2014 and 2015 hit NPAT of $9.5M management excluding the CEO will split $5.94M or currently $3.92M (5.94 * .66 because 1/3 is currently unallocated)?

Forecast NPAT,NET ASSETS 2012, Page 18, 19

NET ASSETS (Shareholders Equity) $59,255,845
Net Profit After Income Tax $16,544,004

Using lowest incentive hurdle of $9.5M ROE would equal ~16%. As the business grows, as touted so would shareholder's equity. Using a static $9.5M NPAT hurdle a lower ROE would be required to receive bonuses going forward. A lot of investors use ROE as one of the most important investment ratios and there are several engineering companies out there with impressive ROE's. Why should we invest in a company whose managers are being rewarded for peer compared mediocrity when we ourselves can go out and buy the shares of the high ROE engineering companies? Would'nt ROE or EPS hurdles be more appropriate?
And what would the vesting period be? It currently seems to me that AZG is an investment you hold for one or two years and sell out ala Matrix Composite reversion to the mean.

Cheers