Mega Brands Inc MBLKF

RE: RE: money is flowing

[FFHWatcher]

Probably not the best compensation plan that I have seen but also not entirely as bad as what a few others wrote.  Approx. 50% of both Bertrand bros. compensation was in the form of options and Share Unit Awards.  Keep in mind that the Bertrands contribute 33% and 27% (Marc and Vic) of their base salary into the purchase of stock option grants over the next 3 years and those options vest over the next 5 years.  Therefore, that annual compensation of $3M that you are seeing for Marc could be reduced by $1.7M...if they screw up the turnaround.  For example, the options that they were granted 5 years ago are now expiring worthless.

It is also worth noting that Marc and Vic both invested $750k and $500k in the restructuring in early 2010.  While that is nice, shows confidence, was invested at a very difficult time, etc., they were paid $500K (Marc) and $400k (Vic) more in cash compensation in 2010 compared to previous years.  Therefore, the corporation has given them additional cash compensation in 2010 that almost pays them back the entire amount they invested earlier in the year and their investments approximated 6 months of their annual cash compensation.  So, it was an absolute big investment but on a relative scale, not so big.  I like that the senior executives are investing 20% of their base salaries over the next 3 years into the purchase of their stock options (Bertrands are ev en higher at 33% and 27%).

I think it is also worth keeping in mind that while all shareholders got hosed and diluted all to crap, so did the Bertrand family.  I don't know how much money they were able to extract from the company over the years, but I am assuming their dad's 21M shares used to be worth a lot more than $10-12M.