I'm actually struggling with the McGrath announcement, copied below.
According to the announcement, McGrath "sold approximately 7% of his shareholding in Uecomm Limited", having sold 335,000 shares on 23rd July 2003.
To be correct, this would mean that McGrath held 4.8m shares in UEC (pre-sale), and yetd this is not confirmed by reference to the Top20 shareholding list (ie: where #20 held ~600,000 shares @28 March 2003). John Lungren current remains UEC's largest shareholder with ~4.0m shares (ASX/R-280303).
To be sure of what McGrath actually holds in the way of shares takes some effort, despite the apparent disclosure details included in today's ASX Release (ASX/R-280303).
In fact, what McGrath holds remains a mixture of shares (perhaps, restricted), Options (certainly, restricted, and well below their hurdle rates), and Performance Rights (also, below their hurdle rates).
1,266,800 shares are held by McGrath under the 2001 Share Loan Plan, bearing an exercise price of 11.84c.
2,500,000 options are held under the 2001 (1.0m) and 2003 (1.5m) Option Plans.
A further 770,713 performance ("rights") shares are also apparently held under the 2003 Share Plan.
Few, if any, of the Options, however, have currently vested in McGrath (ie: capable of being immediately exercised, with all pertinent exercise conditions having been satisfied). The same is likely to be the case with the Performance Rights.
The main conditions attaching to the 2001 Options comprised 25% of the Options being available once the share price hit 30c, a further 25% @60c, 25% @$1.00, and 25% @$2.00.
If these same conditions have also been carried over to into the 2003 Options, then it would mean that, as of the 24th (not the 23rd, when McGrath actually sold), 625,000 Options would currently be vested in McGrath (ie: 250,000 under the 2001 Option Scheme, and 375,000 under the 2003 Option Scheme).
Until today, few, if any, shareholders would have known anything of the number of Options previously (or recently) granted to the CEO, or of any of the conditions attaching to the exercise of those Options.
Assuming that the Performance Rights also possess the same exercise hurdles (unless they have also been tempered by time), then ~193,000 (presumably, 200,000) Performance Rights have, in the past week, vested in McGrath.
That said, today's ASX Release indicates that the above mixture of Loan (ie: restricted) Shares, Options and Performance Rights are all still held by McGrath, although only 1,266,800 of which can be counted as shares, and upwards of 625,000 can be counted as being vested in Options, and ~200,000 as being vested in Performance Rights.
So, where did the shares come from that McGrath appears to have sold?
The answer to this appears to lie in the strange matter of the issue of 333,300 shares under the General Share Plan (see ASX/R-280103). At the time, the details of this particular issue were never explained, although the acquisition price attaching to the issue was 15.13c.
Given that this matches quite closely in the number the actual number of shares sold by McGrath last week (ie: 335,000 sold), the two appear to have a very high probability of concurrence (ie: to be connected with each other).
So, if he sold on the 23rd, when the price opened @25c, peaked a@29c, and closed @27.5c, it is likely that he averaged somewhere around 27 -28c on the disposal. Assuming 28c was realised on the sale, the gross proceeds would have been $93,800, vs ~$50,700 paid, for a net gain (before selling costs) of $43,100. Of this amount, tax will be at the highest marginal rate (ie: of 47%+1.5%). This is because the shares, if they reflected those the subject of ASX/R-280103, were sold in <12 months, meaning that the net gain (after tax) on the sale could have been as little as $22,200.
In my view, this is negative, as: 1) the original holdings /allotments were never fully disclosed to the market (ie: the fact that there was an issue was disclosed, but not of the recipient details, exercise details, etc); 2) shareholders (other than UEL /ALN) were never informed as to the incentive packages associated with the CEO (although, vague reliance on this can be drawn from the original 2000 Plans); 3) the new aura associated with corporate governance has suggested that shareholders should be permitted to consider and vote upon the allotment /issue of any Options, Loan Shares, or performance Rights to sharheolders (in this regard, take for instance, AMP, HVN, the Banks, etc); and 4) today's disclosure announcement is, intself potentially misleading, as not all of the claimed 4.8m gross holding is represented in shares, or even in Options /Performance Rights which are capable xof imemdiate conversion into beneficially held shares, as at today's date.
Continuous disclosure and principles of corporate governance are being practised, but the gaps /errors involved do not translate to "good" corporate governance. The question, therefore, is how the market will reactc to this, tomorrow.
---------------------------------- 18/2003 28 July 2003
Uecomm Statement in Relation to Share Sale by CEO
Uecomm Limited advises that it has been notified by the Chief Executive Officer, Mr Peter McGrath, that he has sold approximately 7% of his shareholding in Uecomm Limited.
Although Uecomm is not legally obliged to provide this disclosure, it is doing so in the interests of good corporate governance.
Mr McGrath sold 335,000 shares on 23 July 2003, which represents approximately 7% of his total equity interest in Uecomm. The transaction occurred in the 30 day trading window provided for Directors and employees following the release of Uecomm’s 2003 half year results last week. The shares were originally purchased by Mr McGrath at the time he joined the company in mid 2001.
Mr McGrath retains a substantial equity interest in Uecomm consisting of 1,266,800 shares under the 2001 share loan plan, 1,000,000 vested options under the 2001 option plan and 1,500,000 options and 770,713 performance shares (“performance rights”) under the 2003 option and performance share plan which are subject to performance and time based hurdles.
