MCE

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23.0¢ matrix composites & engineering limited

I asked myself "what would Elon Musk have done had he been at...

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Colonel B Ron

287 Posts.

19/01/17

17:23

Post #: 22008878
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Originally posted by Jimmy_C ↑

Interesting comment. I'm assuming you're referring specifically to the SESRP/SESARP scheme that relates exclusively to the senior executives, and not the MPRP/EPRP schemes that are open to more junior staff.

3.7m SARs were issued to senior management (KMPs) this year, with an implied aggregate grant value of $410k (split between 5 KMPs) given the SARs were valued at $0.11 at time of issue. The SARs are in the money only if MCE stock is >$0.53 in FY18, so in a case where management fails to generate shareholder value (i.e. get the stock price up), the SARs will expire worthless. But, if we put our rose-colored glasses on and say that MCE hits $1.50 by FY18 (an obviously very bullish scenario - certainly more bullish than i am), then the dilution suffered by shareholders (i.e. the real cost of the plan) will be: ($1.50 - $0.53) * 3.7m SARs / $1.50 share price, which equates to 2.4m new MCE shares being issued. Given there's currently 94m shares on issue, the SAR conversion under this scenario - where shareholders would have more than tripled their money in a 3-year period - represents a 2.5% dilution of the company's equity capital. My question to you is: would you really be that annoyed to see the 5 KMPs be issued stock representing a dilution of common stockholders by 2.5%, if that same management team had more than tripled the value of your equity in 3 years? That seems like a pretty reasonable deal to me.

In regard to 'lacking imagination' or not having a single achievement to their credit aside from devising a new executive incentive scheme, what would you suggest management to have done differently over the last few years, amidst the sharpest downturn their industry had seen in 2-3 decades (probably the sharpest downturn any of them had seen in their executive careers)? You have the benefit of hindsight, so i imagine you'll be able to come up with an extensive list - i'd be interested to hear.

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I asked myself "what would Elon Musk have done had he been at the MCE helm"
I guess he sets the benchmark for imagination and the likes of you would have no concept of what imagination is. Whilst everyone in the organisation including, staff, shareholders contactors suffer and have to take a haircut those running the show can only think of how they can best manage a few extra bob for themselves. In my view the whole concept of executive bonus and incentives is destroying what is good with capitalism.

MCE Price at posting: 41.5¢ Sentiment: Sell Disclosure: Not Held
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