The 600,000 optionsIt's interesting to contemplate what was behind the board's recent decision to grant 600,000 options to CEO Nick Forbes.
Note that right after the disclosure the share price dropped. So someone took it as a negative. To jump to that viewpoint would seem to me rather short-sighted.
A little background. Forbes had already been granted 100,000 options when he became CEO and the previous CEO, Alvin Pyke, received ONLY 100,000 options for his whole time at TLA. So the 600,000 option grant was extraordinary in the context of TLA history.
So how to interpret this? It seems to me there are two things we might read into it.
(A) Forbes is doing a brilliant job of running the company and now the board is acknowledging this. The plan to move beyond level guages is gaining traction due to astute moves by the CEO. And his efforts to pump up sales (level guages or otherwise) are working. (Consequence of this: Q4 numbers are going to be really good.)
(B) Because fossil fuels are currently hot there was a real danger that some other company would poach TLA's CEO. The 600,000 options were given to induce Forbes to stay with TLA even if he were doing only an okay job.
So which is it? I suspect some of both. But was it 50-50 or maybe 70-30 or 30-70?
No way to know and I doubt this is the sort of thing the company is going to talk about in the MD&A.
My gut tells me that (A) must be a big part of the answer. I don't think those board members are the kind of people who would grant a new CEO 600,000 options unless they were rather dazzled by what he was accomplishing.
Not a sure thing. It is possible that some other company tried to hire him away and he came to the TLA board and told them that 600,000 options was what it would take to keep him--and they went along with it.
That would be the 10-90 explanation. But I just doubt that could be the essential reality here. That would fit better with granting him, say, 200,000 options. Maybe 300,000.
My conclusion: that option grant should be taken as a pretty solid indication that Q4 (plus the story going forward) is going to make people sit up and take notice.
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Top marks for the TLA top people in making the strike price 50 cents instead of 45 (or whatever the market price at the time was). Nice way of showing shareholders that they haven't forgotten them.