re: Ann: Notice of Annual General Meeting/Pro...
What do folks here think of Resolutions 4 and 6 regarding financial assistance for employees to exercise vested options?
Of note is the proposed nature of the loans being non-recourse. e.g. if the market price is 25c and the employee has options at 20c strike price and takes a loan from IPR to exercise said options. If in future the market price falls to 17c (so 3c/share under the nominal loan value) IPR has no rights to recover the 3c difference from the employee.
Essentially all risk in exercising the options is removed from the employee and transferred to existing shareholders. The argument for this is that the employees are critical to the success of the company which I do agree with.
Currently the options have a 2 year expiry after vesting. The proposed loans would be for a period of 3 years. So effectively there is a transfer of risk to existing shareholders for the employee to have an extended risk free period of 1 year.
Could they not simply extend the expiry date on options to the 3 years?
In that case employees can hold vested options risk free for the same 3 year period and if the market price drops below the strike price there is no dilutive effect on existing shareholders (which there would be under the loan situation where IPR is now selling these shares on market to recover what they can of the loan value).
IPR Price at posting:
11.0¢ Sentiment: Hold Disclosure: Held
