Coffey International (COF) executive directors John Douglas and Urs Meyerhans might have managed to tip themselves a little extra bonus from the takeover offer by Tetra Tech.
Filings with the ASX yesterday show that chief executive officer Douglas acquired 2.8m shares, and chief financial officer Meyerhans 1.4m, through an incentive grant. The cost of the shares, still held within a trust and still subject to vesting conditions, was based on the average traded price in the five trading days up to 30 June 2015, which, you guessed it, was before the takeover.
Shareholders approved these incentive grants at the annual general meeting on 15 October, just one day after the takeover was announced, meaning shareholders would have overwhelmingly voted prior to knowing about the takeover offer.
In the event of a takeover the board basically has discretion as to whether the shares vest. Experience tells me the board, tickled pink with the takeover, will probably allow it. The cost of these shares to Douglas and Meyerhans is $0.14, compared to the current share price of $0.41, which would mean a net gain of $756,000 and $387,000 respectively. That’s a nice Christmas bonus.
Now I’m thankful for the takeover offer. And the cost of these share issues will most likely be borne by the acquirer Tetra Tech, rather than current shareholders, assuming the offer goes through. So it’s not really our problem. But they are supposed to be long term incentives as part of the remuneration package for the 2016 financial year. There’s every chance these two directors will be cashing out in full halfway through a year they only work half of.
Meanwhile shareholders have suffered a 50% loss since Douglas took office in 2011.
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