RE:RE:RE:RE:May 12 - Director Skippen sold 165,700 at 2.30-2.31shareholders1 wrote: And on your point re effect on employee performance, if you are correct, why issue any options at all? If you are correct, no dilution is necessary.
Imo, options should only be issued to replace salary that need to be paid (in other words, dilution instead of reducing cashflows). As to salaries, the only reason salaries are higher is because that's the value the market attributes to the skills of the employee, because numerous studies have shown that long term work performance has a very low correlation to remuneration (short term and used occasionnally, it can indeed boost performance).
Holding stock as an insider is not a sound decision. Imo, it's more to appease shareholders and the old way of thinking that a higher salary leads to higher performance. Just like you don't pick one stock an put all your money into that single stock, insiders should consider the stock they own as part of their portfolio and have a proper weighting to that value. If they hold 1 million in stocks in their company and aim at a max 20% allocation per stock owned, then they need to hold 4 million in other stocks before adding. Not only that, but being an insider means you can trade roughly 4 months out of 12, so there is a negative side compared to holding other stocks. You will say, but they know more about the stock they own... That's true, they likely have a very good knowledge of the business they're part of, better than 99% of "outside" investors, yet the share price is set by the "outside" investors, which can be incredibly frustrating. Lastly, owning the stock comes with scrutiny of your buys and sells which can be annoying. You want to buy a house, need extra cash and sell shares? It appears in public and shareholders will question your sale (even internally, the other people in the management will question you), and then you might have to justify your trading, while if you took money instead of shares and invested in another company, you wouldn't have to go through this.
Anyway, my own personal opinion on stock ownership by the management and the board is that while I like it when they participate and hold shares, it rarely has any effect on the outcome regarding my investment. I've held shares in business where insider ownership was high and the business was going nowhere in the end, and I've held shares in business that doubled yet had very low insider ownership.
Lastly, regarding Quarterhill, I do believe that management is overpaid for what they have delivered (in terms of growing the business or improving the performance of the business). My view includes both base salary and the options they grant themselves. Still, I think that the shares are underpriced compared to the global value related to the assets they hold which I why I hold shares.