Options, RSU and Phantom SharesAfter the spinoff at the end of 2017, one of the first activities in 2018 for VMD was to award stock compensation packages to senior management. Each year, in January they make the awards and have committed to a maximum of 20% of the authorized shares over a ten year period. The awards to Directors is done in the late summer and is at a much smaller scale. Here are the aggregate awards since the spinoff.
| Options granted to management insiders |
| Date of Grant | Options granted | Exercise Price | Expiry date | 1/3 Vesting |
| 04-Jan-18 | 563,737 | 2.27 Cdn | 04-Jan-28 | Yrs 1, 2 & 3 |
| 17-Jan-19 | 786,452 | 5.49 Cdn | 17-Jan-29 | Yrs 1, 2 & 3 |
| 17-Jan-20 | 640,835 | 7.44 Cdn | 17-Jan-30 | Yrs 1, 2 & 3 |
| 21-Jan-21 | 524,711 | 10.63 Cdn | 21-Jan-31 | Yrs 1, 2 & 3 |
| 18-Jan-22 | 371,102 | 5.21 US | 18-Jan-32 | Yrs 1, 2 & 3 |
| 18-Jan-22 | 252,345 | RSUs | 18-Jan-25 | Yrs 1, 2 & 3 |
| 18-Jan-22 | 123,692 | Phantom Sh | 18-Jan-25 | Yrs 1, 2 & 3 |
A year ago on Feb 16, 2021 the closing price was $13.14 Cdn. The total value of the above awards would have been roughly $17.1 million Cdn. Note: This excludes the 2022 awards.
The closing price of Feb 15, 2022 was $5.29 Cdn. At this price the total value of the above awards would be roughly $3.7 million Cdn. Note: This includes the 2022 awards.
If the share price were to recover to the price of one year ago, then the total value of the above awards would be $24.5 million Cdn. That is a significant incentive.
It is noteworthy that the expiry dates for the 2022 RSU and Phantom share awards are much shorter than the option expiry dates.
The share price decline has seriously eroded the value of the above awards but there is now a huge incentive for management to show that they can address the uncertainty of the CMS repayment, grow patient numbers at a 40% rate in their core business and engage in promotion of the company to new investors to expand the PE multiple.
It is helpful for shareholders to realize that management could have exercised these awards when the share price was in the low teens. They did exercise some options that they carried forward from pre-merger days just as those options were expiring. Coincidently that was done just prior to the release of the OIG report. So they did manage to extract some value before the negative impact caused by the OIG report.
In the last year, they lost their two largest passive investors according to 13G filings. CI Investments and Claret Asset Management sold 4.7 million shares. The selling of their holdings were instrumental in the recent steady persistent decline was because those shares had to be picked up by the retail market during a time when the company's performance was lackluster due to the pandemic. The trade volume on Feb 15, 2022 suggests a capitulation on that day so perhaps we will start seeing a rising price. A private Alabama based investment fund, Forager Capital, purchased 1.3 million shares which suggests that local networking with investors might be worthwhile. Institutional buyers hesitate when they see persistent offloading by big investors. They may decide to pick up shares if there is an upward momentum.
I am hoping for some meaningful post-pandemic guidance in the annual filing and CC. We should soon see an announcement as to the date for this release. Senior management is accountable to the shareholders and they could benefit with a refresh of their approach to reporting.