incentive options - what incentive, page-13

kse3137

I won't go into the whole question of mangagement looking after themselves or feathering their own nests. I think that happens in most listed companies.

The incentive side I will discuss however. You ask where the incentive is in an option exercisable at 89c?

I will grant you one thing, they don't have to do anything at the moment to be in the money. But.... that does not mean there isn't an incentive.

Effectively MPO is doing a placement of shares to Management at 89c for 400,000 shares. Take the share price of $1.20 a week or so again and that is a discount of 31c, so cost to all other shareholders of $124,000. Divide that roughly by share on issue of 183m (I re-iterate just rough)... and the effective cost we are paying is $0.000677595... So no effect whatsoever on the share price. Yet everyone is throwing up their hands and whinging.

Everyone needs to step back and put themselves in the shoes of management. In total there are 2,850,000 options in the money at the moment, with 3,903,087 out of the money.

Now everyone can cleary see the incentive in the ones that are currently out of the money. They have a target they have to get the price to before they would make any profit by exercising.

But the incentive provided by the ones that are in the money are probably even larger!!! I can assure you if I was working for MPO, then if I had say 500,000 options in the money, I wouldn't go you ripper, I don't need to do anything.

I would be thinking... right my 89c options are in the money at the moment by 16c (current price of $1.05). If we get this company really moving, if we can develop our assets and build share holder value, and the share price reflects that and goes to say $2.37 (just for you Port+), then the options are in the money by $1.48. A return on the current 16c of 825%. Instead of having $80,000 worth of value (16c x 500k), I would then have $740,000!!! That is $660,000 of incentive right there my friends!!!! And if they can get the share price to $2.37 or so, I will be happy for them to have it! I am glad they have this incentive so that their interests are aligned with mine of a higher share price!