apg - no more shares for directors

I recently had a bit of a rant against giving more Partly Paid shares to APG directors. This was a knee jerk post at the time, as I felt directors were getting benefits while shareholders were not.
Now that I have had the weekend to think about it, I am feeling really insulted as a shareholder. Please consider these facts before you return your proxy forms.


The Staff Share Purchase Plan is not a good system – it does not align shareholders best interests with director’s interests.

The Staff Purchase Plan states: “Partly Paid to 1 cent shares on issue shall not exceed 7.5% of the Fully Paid Ordinary shares on issue”
With 1,024,654,367 FPO now on issue , the P.P. shares can now be increased to 76,849,077 limit. Directors want to issue up to 76,800,000

It rewards the directors for poor capital management. The more shares they issue (which depletes the value of our shares) the more P.P. shares they can issue to themselves. And this is exactly what has occurred here.


The Staff Purchase Plan states: “Partly Paid to 1 cent shares shall be issued at 95% of the 5 day closing market average prior to AGM”

Using Fridays close of 4.4 cents as the market average, this means directors would only have to pay 3.2 cents for their shares.
Cynics may be thinking that this could act as a disincentive to directors talking up the share price prior to the AGM.



The Staff Purchase Plan states: : “Partly Paid to 1 cent shares balance shall be payable within 10 years”

This would mean that directors would not have to pay for their P.P. shares until they are certain of making a profit. In the meantime they pay no interest cost, and are never at risk of making a loss. In all my long years as a APG shareholder I cannot remember a director paying down his P.P. shares.

Directors have little skin in the game – they do not feel the same financial pain as shareholders.
Even the smallest shareholder has more money invested than director Robert Harrison who has 5 million P.P. shares at no cost to himself ( but $50,000.00 cost to shareholders)
A shareholder would only need $5000 to be more invested than chairman Terry Cuthbertson . He took up his entitlement to 166,667 shares at 3c back in 2004 but has spent no more. He presently has 6.1 million P.P. shares ($61,000.00 cost to shareholders)
Mike Turbot has 6.8 million FPO shares but he has not purchased any shares since he took up his entitlement to 166,667 shares at 3c back in 2004. If you took away his present holding of 11.3 million P.P. shares ($113,511.00 cost t to shareholders) he would fall out of the top 20 shareholders list



The is NO BENEFIT TO SHAREHOLDERS to allocate any more shares to directors.
Directors are already extremely well paid.
Directors already have enough P.P. shares to be motivated, rewarded and retained.
This allocation of another 15.4 million shares is not without considerable cost to shareholders. Apart from the obvious reduced share value through more share dilution, the payment of 1cent on the partly paid shares will cost shareholders $154,000.00



I will be voting against all 4 items of the Staff Purchase Plan.
The reason I am voting against item 3.4, where the actual staff (not the directors) get some P.P. shares, is that I do not understand who will be getting these shares. The allocation of these shares ( once approved by shareholders) is up to the directors – and we have never been told what staff has received them.

I would have expected that John Winter – (General Manager, Technical Development) the acknowledged genius behind APG’s new technologies would have received a large part of the staff allocation. Yet his shareholding ( including his own purchases) is only 7.67 million.
To put this into perspective I researched back to November 2004 - since then 20.5 million P.P. shares have been issued to staff .
I believe these P.P. shares should only be issued to incentivise and retain key staff.
In view of APG’s very small staff numbers, where have all the other shares gone.????



APG shareholders can make a difference with this vote.
In the last Staff Share Purchase Plan vote in 2009, only 26.3% of the total votable shares were in favour ( 0.6% voted against)
That means that a huge 73% of shareholders did not cast a vote for the last Staff Share Purchase Plan.

If you are an APG shareholder, and have an opinion on this issue - return your proxy form – you could make a difference.

Wilcox