VERY significant event in processIt sounds like the direct share award is in process. Many people will not understand the significance of this:
- The easiest way to reward management is through a CSOP stock option plan.
- Senior management is often awarded huge amounts options. (I am sure many of you have seen this in companies with large floats).
- This is not taxable until the options are exercised and shares acquired.
- Generally mgmt does not exercise until a buyout occurs.
However there is a ceiling on the amount of options which can be issued. I believe it may be 10% of the outstanding float (but not sure of the exact number,assume it is set I think in the Canada Business Corporations Act)
So companies with low floats are faced with a dilemma if they want to reward mgmt and give them a position in the company for say turning the company around. Which is for sure what our new CEO has done.
The only option is a direct share award. This is a taxable event. That means the new mgmt will be on the hook for a huge tax bill next April.
It is reasonable to assume they would not take the shares and the related tax bill unless they were SURE that the company is viable.
I believe the trials are going VERY, VERY well and mgmt is now confident that GROW is a GO!