CEO Option HistoryHello fellow Verde shareholders:
With the release of the SEDI report on Friday I have updated my stock option tracking report for CEO Cristiano Veloso and provide the summary table below. It provides the yeat the option was granted, the number of shares covered, the strike price for the share purchase and the expiry year of the option granted. I also track the vesting amounts and dates, but have hidden those columns to get the spreadsheet to fit reasonably well on this board.
The spreadsheet then details the eventual disposition of each option grant: was it exercised or did it expire without being used. For options that are still within their expiry limit, the final column shows how many shares are still available under each option as at March 12, 2021.
I believe this table illustrates well the background story regarding CEO options at Verde. All of the 1,375,723 5 year options issued between 2007 and 2013 at strike prices between $1,20 and $8.30 eventually expired unexercised and so truned out to have no value or benefit to Mr. Veloso. The Company had enjoyed a period of high share prices in the market then went into a steep decline, making the compensation mechanism intended to motivate and reward CEO management and leadership performance inoperative and ultimately in this time period unsuccessful.
In 2014, 1,500,000 new options were issued at $0.42 with again a 5 year expiry timeline. This was a grant that was 125,000 shares greater than the sum of ALL the annual option grants over the preceeding 7 years, and at a price 65% lower than the lowest price of any of the past options. I can imagine shareholders back in 2014 would have pondered the very reasonable question as to why the Compensation Committee of the Verde Board of Directors saw fit to issue an option grant of this magnitude and pricing to the incumbent CEO. After 7 years as CEO at the helm of Amazon Mining now Verde Potash, and with the share price having hit a low of 20 cents in December 2013 under his stewardship, it could in no way have been as a reward for past outstanding performance.
After granting options 7 times to the CEO between 2007 and the share price all time low in 2013, all of which failed to produced the intended and desired performance outcome, it appears they "doubled down" and increased the size of the grant by 6 times the previous largest grant of 250,000 in an effort to provide an incentive of sufficient magnitude to generate a changed (improved) result.
No options were then granted in 2015 and 2016, presumably because they believed the existing 1,500,000 were sufficient to still be providing the appropriate performance carrot. With the shares tracking all the way down to 13 cents in early 2016 I would suggest the effectiveness of the use of stock options by the Board during this time had in reality been a 10 year failure. After the failed and discarded initial corporate objective to become a successful gold exploration and development Company in Brazil, its regeneration as a fertilizer/agritech enterprise was, for many good reasons, taking a great deal longer than was initially promoted, and I would suggest recognized in 2016 as requiring a great deal more time before success might be realized.
I believe this is the reason that the next round of stock options being offerred (492,308 priced at $0.40 in 2017) suddenly were given a 10 year lifespan versus the 5 year expiry of the previous 8 rounds. Perhaps the Compensation Committee had reappraised the performance intention function of the options and concluded that they would need to give the CEO a longer window in which to demonstrate his leadership abilities and to guide the Company and its share value to a point where the strike price of 40 cents would be represent a bargin price and an appropriate reward for the CEO responsible for this turnaround. Rather than the focused(?) timeline of 5 years, they concluded that a 10 year window had the approriate motivating incentive to produce timely performance.
Current shareholders are well aware of the recent situation regarding the VSOP, and I believe the chart below speaks for itself. As I have shared before, I believe the circumstances of our Comapny has changed significantly for the better, and all due credit to Mr. Veloso for this turn around. But this change needs to be recognized by the Comensation Committee and the Board, and in order to appropriately discharge their significant fiduciary responsibilities to the Comany and its stakeholders, the terms of the 2015 Stock Option Plan (renewed in 2018) need to be examined, reassessed and amended. I am assuming that Verde shareholders expect to see a very different Stock Option Plan presented for their approval at the 2021 AGM. Should the Board fail to bring forward a suitable "best practices" plan at that time, then I would encourage all Verde shareholders to exercise their voting rights and reject the proposed version, sending the Board back to theior advisors to reconsider and try again at the 2022 AGM.
| Verde Agritech Plc CEO Compensation Review | | |
| Cristiano Veloso Stock Options Issue and Exercise History | |
| | | | | | | Remaining | |
| | Options | Strike | Option | Option Outcome | Options at | |
| Year | Granted | Price | Expiry | Expired | Exercised | 12-Mar-21 | |
| | | | | | | | |
| 2007 | 250,000 | $ 1.20 | 2012 | 250,000 | | - | |
| 2008 | - | | | | | - | |
| 2009 | 250,000 | $ 1.20 | 2014 | 250,000 | | - | |
| 2010 | - | | | | | - | |
| 2011 | 125,723 | $8.30, $7.14 $6.20 | 2016 | 125,723 | | - | |
| 2012 | 500,000 | $ 3.40 | 2017 | 500,000 | | - | |
| 2013 | 250,000 | $ 3.53 | 2018 | 250,000 | | - | |
| 2014 | 1,500,000 | $ 0.425 | 2019 | | 1,500,000 | - | |
| 2015 | - | | | | | - | |
| 2016 | - | | | | | - | |
| 2017 | 492,308 | $ 0.40 | 2027 | | 492,308 | - | |
| 2018 | 1,092,308 | $ 0.61 | 2028 | | - | 1,092,308 | |
| 2019 | 150,000 | $ 0.63 | 2029 | | - | 150,000 | |
| 2020 | 150,000 | $ 0.40 | 2030 | | - | 150,000 | |
| 2021 | 750,000 | $ 1.22 | 2031 | | | 750,000 | |
| | | | | | | | |
| | 5,510,339 | | | 1,375,723 | 1,992,308 | 2,142,308 | |