Ann: Clarification Statement, page-11

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Mr_Tones83

323 Posts.

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16/09/21

11:47

Post #: 56112924
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Originally posted by itchy15: ↑

Obviously I've never been involved in this kind of industry before, but I find this quite fascinating. I've not seen this kind of fee arrangement before.

For my old hat thinking, performance of the company's management team and their ability to deliver against their plan is what would drive fundamental value, which theoretically, would eventually be reflected as share price growth (or depreciation). Vert Capital are just external advisors to support capital plans, so it's interesting to see that their performance fees are tied to share price growth of a business that they don't have full control over. So overall, management drive the share price, not an external service provider. I'm not saying this is a bad thing as I guess it means they are inclined to act in the interest of RFR. But the most interesting thing imho is that it openly reads like, if they can manipulate our share price to this level then they'll get their bonus. (The cynic in me always thought these convo's maybe happened offline, not openly published etc, as a target as to whether the business relationship continued). Curious to hear experiences from those in the know, if this is a standard KPI in fee structures?

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I've seen similar incentive plans like this before for corporate advisors. Basically a way of attempting to align their interest in boosting the stock price. You're right to be sceptical though, it can lead to a pump and dump-type boom and bust. Depends on the quality of the advisor really.

RFR Price at posting: 9.7¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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