RE:Big increases in options and stock units granted. Hi Twenty,
Here are the options granted over the past few years with the associated strike price:
2017 – 2,205, 018 with a strike price of $1.70
2016 – 1,389,039 with a strike price of $2.78
2015 – 1,406,876 with a strike price of $6.52
2014 – 1,066,415 with a strike price of $5.85
2013 – 835,752 with a strike price of $7.81
2012 – 636,233 with a strike price of $8.28
The grant in 2017 is 57% higher than the largest in the last 5 years and the largest grant I could find going back as far as 2000. This is unprecedented and difficult to explain given the financial performance of the business. They may have needed all these options to attract this pile of new high-priced executives, but seriously at a $1.70. A very good question to ask the chairman at the AGM with the shares trading well under $2.
At the same time, no executive or any other insider including the directors has dipped into their own pockets to buy a single share. Again, I think this speaks to an undisclosed agreement with Fairfax because this is too obvious an anomaly. The CEO has been on the job for a year and hasn’t bought a share. Cite another example of this type of leadership.
The granting of options is intended to motivate and retain executives and align the interests of management with shareholders. It doesn’t necessarily guarantee success as evidenced by all of the past options granted that are underwater. At $1.70 they should be motivated to goose the share price either through financial performance or privatization. These options vest over 4 years so they won’t get rich overnight unless a takeover is launched which will automatically trigger the vesting of them.
Fairfax will move sooner than later on Torstar to prevent them from getting even more goofier with the granting of options.