I don't agree with the proposal to grant director and management...

I don't agree with the proposal to grant director and management options. The quantity of options is excessive - for example, the 5 million proposed for the MD and 4 million to the Chief Scientific Officer equal more than five percent of the company's issued capital. Other management's options add to this.

Let's look at the reasons the company gives for the proposal:

1. As a reward for considerable past performance

Why should we reward past performance when (a) the MD's remuneration has been in the top tier of Australian biotech companies (just outside the top 10) and (b) he has received 100% of his Short Term Incentive Scheme remuneration for his work for the period he has been with VLA? Do we really need to double up his pay?

2. To retain the valuable staff.

Why do they imply that the MD and other staff won't stay with VLA without a huge increase in options? The MD already has 1.6 million options at an exercise price of 33 cents (0.4 mill to vest next January). Based on today's price, the value of these options is $430,000. But by staying with VLA, and based on a takeover offer of say $2.50 a share, the gain for the MD will be increased by $3 million. This gain could occur in only six months...surely anyone would stay hard at work to achieve this goal?  Instead, it is proposed that the MD will receive an additional 5 million options at 58c ex price....so if a T/O occurred at $2.50 in six  months, he would gain a further $10 million! For staying with the company!!!!

3. To reward their future work.

Why is it suggested that they be paid before they do the work??? Why can't they be paid like everybody else as, or after, they work? And if their performance is remarkably good, then the remuneration scheme in place will reward them with maximum bonus for such work.

Last Tuesday's notice doesn't give much detail - more will be forthcoming in the Agenda for the AGM. We assume that the options would vest upon the hurdle of 'corporate development'. These words seem to be code for a takeover...so if a takeover, or a major JV benefiting shareholders occurs, then the options will vest and the MD would pick up another $10 million on top of his $3 million gain from his existing options if a deal were struck at $2.50.

If, however, the options don't vest immediately with a takeover, but only at the tranche dates of 30/11/16 and 30/11/17, then then there will be a massive  disincentive for agreeing to a takeover before these dates...the MD won't get the gain from the additional shares.  I don't think this outcome could occur - the directors wouldn't be so stupid to encourage 'corporate development' to be delayed. So we can assume that the options will vest with a takeover and that if a takeover occurred in only a few months, the senior management's rewards would be terribly excessive.

Who pays for the largesse to senior execs in the event of a T/O?  WE do...the shareholding of the company is diluted and remaining shareholders don't get as much as they would have without this unfair scheme.

It's fine for the management to believe that shareholders may soon be well rewarded by corporate action. If they think it so likely, I encourage them to buy shares on the open market, as we do. It should be noted that the MD has bought not one share on the market since his employment more than eighteen months ago, and that the CSO has virtually none. Why not?