If you do the math with this style of performance rights the hurdle seems far to low compared top the return and the subsequent dilution to ordinary shareholders IMO
It requires no financial contribution . As such it does not align with shareholders interests IMO.
If management want to align themselves with holders they should buy on market and risk their own money not get given freebies IMO.
I understand the tax benefits and no risk by participants but I believe they are getting paid very well for company size and performance.
Why not issue to normal holders options with similar low hurdles so we too gain from sucess of company and if they succeed the company gets capital injection.? Yes I know the costs but they don't have to be listed etc etc.
Frankly the low historical base of company sales and a 3 year average makes these incentives and what i see as low hurdles a gift IMO but happy to see someone do some maths and show a different story.
Wow just masses of confetti stock paper for this company 2.2 billion shares and a market cap of 17.5 million bucks so if you work out what they have to do to give holders a return??
Maybe it is worth a punt day trading it for a pip and if there is volume to do so.
Did anyone attend the AGM???
The below hasn't copied well from the AGM announcement so look at it there to look at tables.
5.4 LTI Performance Rights
(a) The Existing Plan provided for long-term employee incentives as a key element of its approach to the
remuneration of its executives and Key Management Personnel. The Remuneration Committee and the
Board have reviewed the operation of the existing long-term incentives in light of the objectives of its
broader remuneration strategy, and general market conditions.
(b) The Existing Plan was based primarily on a single measure, being total shareholder return measured over
a 3 year period. Following the review of long-term incentives, the Board has approved changes to the
long-term incentives designed to improve the rewarding of performance that drives long-term growth
and delivers Shareholder value while promoting the retention of its executives and Key Management
Personnel. The proposed changes add 2 further performance measures, and the three measures for longterm
performance to be adopted from 1 July 2016 (LTI Performance Measures) will be as follows (subject
to review and amendments on an annual basis by or as approved by the Board):
(1) Total Shareholder Return (TSR) - will be measured by reference to both the change in Share price
over 3 financial years and any dividends paid by the Company during the same period. The
following example sets out the methodology for the calculation of the change in Share price
component of TSR in respect of LTI Performance Rights offered in respect of the financial year
ending 30 June 2017:
the starting point for measuring the change in Share price component of TSR will be the
20 Day VWAP following the Company lodging an Appendix 4E with the ASX in respect of
the financial year ending on 30 June 2016 (Initial Share Price);
the end point for measuring the change in Share price component of TSR will be the 20
Day VWAP following the Company lodging an Appendix 4E with the ASX in respect of the
financial year ending on 30 June 2019 (Final Share Price);
the average percentage increase in TSR will be measured by calculating the change
between the Initial Share Price and the Final Share Price and dividing by 3 (to account for
the 3 year period) and accounting for any dividends paid (Average TSR Percentage
Increase). For example, if the Final Share Price is 100% higher than the Initial Share Price
(accounting for any dividends paid), the average percentage increase in TSR for the 3 year
period will be 33% (being 100% divided by 3);
if, following the determination of the Final Share Price which is expected to occur in
September 2019, the Average TSR Percentage Increase is:
less than 15%, a zero weighting shall be applied for TSR as an LTI Performance
Measure and the LTI Performance Rights will be automatically forfeited;
15
15% or more but less than 40%, a minimum 30% will be applied to the
weighting for TSR as an LTI Performance Measure provided that for each
additional 1% above 15% in respect of the Average TSR Percentage Increase, an
additional 2.8% will be applied to the weighting for TSR as an LTI Performance
Measure; and
40% or more, the Participants will achieve a 100% weighting for TSR as an LTI
Performance Measure;
(2) Sales - will be measured by reference to the actual sales recorded over 3 financial years as a
percentage of budgeted sales revenue for the same period (Sales Percentage). The following
example sets out the methodology for the calculation of the Sales Percentage in respect of LTI
Performance Rights offered in respect of the financial year ending 30 June 2017:
the Company will set budgets for the Company’s sales revenue for each of the 3 financial
years ending on 30 June 2017, 30 June 2018 and 30 June 2019 and will record the actual
sales revenue achieved by the Company for the same periods;
the Sales Percentage will be determined by dividing the total sales revenue actually
achieved by the Company across all 3 financial years by the Company’s budgeted sales
revenue for the same total period; and
if the Sales Percentage is:
less than 100%, a zero weighting shall be applied for Sales as an LTI
Performance Measure; and
100% or more, a maximum weighting shall be applied for Sales as an LTI
Performance Measure; and
(3) Net Profit After Tax - will be measured by reference to the actual net profit after tax recorded
over 3 financial years as a percentage of actual sales revenue for the same period (NPAT
Percentage). The following example sets out the methodology for the calculation of the NPAT
Percentage in respect of LTI Performance Rights offered in respect of the financial year ending 30
June 2017
the Company will record the actual sales revenue for each of the 3 financial years ending
on 30 June 2017, 30 June 2018 and 30 June 2019 and will record the actual net profit after
tax achieved by the Company for the same periods;
the NPAT Percentage will be determined by dividing the total net profit after tax actually
achieved by the Company across all 3 financial years by the total sales revenue actually
achieved by the Company for the same total period; and
if the NPAT Percentage is:
less than 10%, a zero weighting shall be applied for Net Profit After Tax as an LTI
Performance Measure; and
10% or more, a maximum weighting shall be applied for Net Profit After Tax as
an LTI Performance Measure.
(c) The financial targets which will apply in respect of each of the LTI Performance Measures and the
weightings which will be given to each of the LTI Performance Measures when determining the LTI
Performance Rights entitlements of the Participants are subject to review and amendment on an annual
basis by or as approved by the Board.
(d) In respect of the financial year ending on 30 June 2017, the Remuneration Committee has determined
that when calculating the number of LTI Performance Rights which will be offered to the Participants, the
LTI Performance Measures will be weighted in the manner set out in the following table:
16
Participant Title Value of Share
entitlements to be
issued as LTI
Performance Rights (if
100% of LTI
Performance Measures
achieved for the
financial year ending on
30 June 2017)
LTI
Performance
Measures
Weighting
Total
Shareholder
Return
Sales Net Profit After
Tax
Graeme
Sumner
Managing
Director
$255,938 (being 65% of
current fixed
remuneration of
$393,750)
33.3% 33.3%% 33.3%
Neville
Walker
CFO $68,985 (being 30% of
current fixed
remuneration of
$229,950)
33.3% 33.3%% 33.3%
Martin
Johnston
GM
Engineering
$67,320 (being 30% of
current fixed
remuneration of
$224,400)
33.3% 33.3%% 33.3%
(e) In respect of long-term incentives offered to Participants generally under the Performance Rights Plan, it
should be further noted that:
(1) LTI Performance Rights can be issued annually, subject to performance, and may be varied by or
approved by the Board;
(2) the maximum number of LTI Performance Rights offered to a Participant in respect of a particular
financial year shall be determined by reference to the 20 Day VWAP following the Company
disclosing its financial results for the previous financial year to the market by lodging an Appendix
4E with the ASX.
By way of example, in respect of the LTI Performance Rights offered to Participants for the
financial year ending on 30 June 2017:
the maximum number of LTI Performance Rights shall be determined by reference to the
20 Day VWAP following the Company lodging an Appendix 4E with the ASX in respect of
the financial year ending on 30 June 2016;
the Company has lodged an Appendix 4E with the ASX in respect of the financial year
ending on 30 June 2016 and the 20 Day VWAP has been determined to be $0.0073;
if each of the Participants achieve 100% of their respective LTI Performance Measures (as
set out in the table in section 5.4(d) above) and are therefore entitled to their respective
maximum number of LTI Performance Rights, then the number of Shares which would be
issued to the Participants (based on the 20 Day VWAP price of $0.0073) is set out in the
following table:
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Executive Name Title Target No. of Shares
at 100% (12 months to
30 June 2017)
Graeme Sumner Managing Director 35,059,932
Neville Walker CFO 9,450,000
Martin Johnston GM Engineering 9,221,918
Total 53,731,850
(3) LTI Performance Rights offered in respect of a particular financial year will vest on 1 October
immediately following the 2nd anniversary of the end of that financial year, provided that the
Company has received its audited financial statements for the most recent financial year
(occurring mid-September each year). By way of example, LTI Performance Rights offered in
respect of the financial year ending on 30 June 2017 will vest on 1 October 2019;
(4) LTI Performance Rights will be offered for nil consideration; and
(5) in the event of any capital raisings by the Company, the number of LTI Performance Rights
offered in respect of any particular financial year will not be adjusted. However, in the event of
any capital reorganisation of the Company, including capital consolidations or bonus issues, the
number of LTI Performance Rights offered in respect of any particular financial year will be
adjusted to take account of the effect of such capital reorganisation.
(f) Notwithstanding the above provisions in this section 5.4, in the event that a Merger or Sale Event occurs
at a consideration value per Share equal to or exceeding $0.012 per Share, the Remuneration Committee
may, subject to Board approval, agree to permit the immediate vesting of all earned, but as yet unvested,
LTI Performance Rights, such vesting to occur contemporaneously with the closing or settlement of the
Merger or Sale Event.
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