(15-10-2014, 12:22 PM)GFG Wrote: [ -> ] (14-10-2014, 11:06 PM)NTL Wrote: [ -> ] (14-10-2014, 04:16 PM)GFG Wrote: [ -> ]As mentioned way earlier in this forum, I am also generally uncomfortable with share option remuneration with immediate vesting periods, and with management selling out almost instantly upon vesting. The rationale for using share options as remuneration is to have management interests tied in with common shareholders, but if the vesting period is immediate, the price is at the market price or lower, and if management sells out immediately, then the whole exercise is simply to use the shares as "currency" to reward management and that's a real negative IMO.
Can you quote a few examples of this happening?
It's really a bitch to go through the past records to find these, it's readily available data on sgx site:
ALLOTMENT AND ISSUE OF NEW SHARES PURSUANT TO EXERCISE OF OPTIONS UNDER THE VALUETRONICS EMPLOYEE SHARE OPTION SCHEME
The Directors of the Company wish to announce that on 18 February 2014 it received written exercise notices for an aggregate of 2,987,500 ordinary shares in the capital of the Company (“Option Shares”) arising from exercise of options granted under the Valuetronics Employee Share Option Scheme. Details of the number of Option Shares and the exercise price thereof are as follows:-
Number of Options exercised
Number of Option Shares
Exercise price per Option Share
Aggregate exercise price
1
350,000
350,000
S$0.150
S$52,500
2
850,000
850,000
S$0.160
S$136,000
3
1,787,500
1,787,500
S$0.174
S$311,025
TOTAL
2,987,500
2,987,500
S$499,525
In satisfaction of the exercise of options under the ESOS, the Company had issued 2,987,500 new shares in the capital of the Company (the “New Shares”) on 24 February 2014.
The New Shares, when allotted and issued, rank pari passu in all respects with the then existing ordinary shares in the capital of the Company (“Shares”).
Immediately upon completion of the issue of the New Shares, the number of issued and paid-up capital of the Company has increased from 365,388,750 Shares (excluding treasury shares) to 368,376,250 Shares (excluding treasury shares).
Note exercise price: $0.15,$0.16,$0.174
Announcement dated 26 Feb 2014.
I cant rem the price then, but it is certainly very substantially above the exercise price.
as recent as 19 Aug 2014
ALLOTMENT AND ISSUE OF NEW SHARES PURSUANT TO EXERCISE OF OPTIONS UNDER THE VALUETRONICS EMPLOYEE SHARE OPTION SCHEME
The Directors of the Company wish to announce that on 16 August 2014 it received written exercise notices for an aggregate of 1,637,500 ordinary shares in the capital of the Company (“Option Shares”) arising from exercise of options granted under the Valuetronics Employee Share Option Scheme. Details of the number of Option Shares and the exercise price thereof are as follows:-
Exercise price $0.174
In Aug, the share price was prob above $0.40?
In AR 2013, Hung Kai Wing was listed as no.4 top SH with 27,714,737 shares
In AR 2014, he's no.7 with 14,202,237 shares
I rem there were other disposals after exercising options, in 2012 and earlier too when I previously analysed this
Those announcements quoted are exercising of options, and selling of shares. But they do not indicate that the directors sell them off immediately right after.
Anyway, since I asking you to do the exercise, I should do my part too.
Based on AR13, those options with prices are granted from 2010 to 2011. Vesting period starts from 2012 to 2013, which is 2-3yrs after they are granted, and those options are exercisable from Aug2012 to Oct2013. The option prices of $0.15 to $0.174 are issued based on share prices at 2010-2011. As I mentioned in a previous post, they offer options at around 20% below the prices then, and I do not know if this is the usual practice.
If you refer to 19Aug announcement on grant of options, the option price is $0.406, which is 20% below the price of $0.50 then. They are only allow to exercise after 2-3yrs too. Guess you won't see them exercising them if the price stay at current level.
As for Hung exercising his options in Feb, and selling off his shares in Apr this year, this is probably due to him stepping down from Valuetronics board. Well... At least that is what I think as employees usually lost their options once they left the company.
Other incidents of selling of shares:
- In Mar2012, 2 of the directors sold their shares right before they announced the shutting off their licencing business. That incident really did left a sour mark to me.
- Since 2010, Wong (Director, Plastic Division) did some massive sales of his shares over an extended period until he went down the radar, and out of the Top20 list. No options were ever granted to him, as only the EDs are entitled to options.
There are no other announcement that I can find that the directors were selling. Exercising options, yes, to collect dividends. Selling shares, no.