bookarelli, malvernmoe is correct in saying these are free...

bookarelli, malvernmoe is correct in saying these are free shares. JW has no downside from these shares, only upside.

JW does not have to pay for the shares if the market value is less than the loan amount.

He also has 10 years to pay off the loan. Almost certainly JW will not pay off the loan from his own money.

The loan will reduce over time from FEX dividends.

Although the reference price for the shares is 23.0c, JW will benefit from the upside in the share price but has no obligation to meet any downside in the share price.

Neither is the $2.3m share loan reflected in the balance sheet. This is off-balance sheet and no consideration for the shares is reflected in the accounts until the shares vest.

For accounting purposes, the shares are treated as share options with an initial Black Scholes valuation of $1.833m and this amount is amortised to the P&L as share-based payments over the 10-year period of the Plan/Loan.

You will see in the 2022 Annual Report there is an amount of $59,182 treated as remuneration for JW relating to the option amortisation treatment. This is just an accounting entry and is not a cash transaction. It is charged to the P&L and is how Accounting Standards require it to be treated. The Accounts also say there is still 9.69 years of the $1.833m still to be amortised over the remaining 10 year period.

The upshot is that the shares are not only free, but they generate significant annual dividend revenue for JW in cash even though he has not paid anything for them and depending on the future share price, may never pay anything for them.

I hope this helps in your understanding. Thank you for asking the question.