These are the rights voted in resolutions 7 ( David) and ( 8) Shane that were voted for at the AGM that totalled 25 million rights. So shareholders already gave the green light for these to be issued.
The other 8,333,333 are to either an existing employee, or new hire. If they are for an existing employee, then it’s probably based on a similar approach to that for David, ie. salary…. If it’s for a new hire, then possibly a sign up incentive for a senior hire in the USA, along the approach taken for Shane/
Note, rights to employees don’t need shareholder approval once a plan it voted for.
They didn’t need approval for Shane as he is an employee, not a director, so I am assuming they put that up for transparency.
For the KPI’s, I expect / hope those for directors to be made public, but probably not for employees.
At the AGM, I argued that there is no appetite amongst shareholders for any more dilution, and suggested the Board consider buying any shares issued under the incentive scheme on the market, to neutralise the dilution, similar to what the banks do in their Dividend Reinvestment Scheme.
This was deemed too complex because the incentives rights are not shares as such, just an entitlement to shares, which convert to shares at the recipients request… this may occur a year or 2 after vesting, so the share price may be totally different.
So to counter act that the company would have to buy the shares on market at the time the rights are granted, and hold them on trust until the employee applies for the rights to be converted to shares and issued.
Too complex and too expensive to set up.
I accepted that at the time, but in hindsight, I should have suggested then that the company just buy the equivalent number of shares on market , and cancel them immediately … so at least the net effect will be no dilution when the rights eventually get converted and issued.
I assume that would require a shareholder vote as a special resolution to approve as it would not be a general buy back as such. My argument is BRK may not have the cash to conduct a general BB during the SWIsH FFD period, but should have the financial capability at least neutralise any incentives issued along the way, even if it means buying the shares back before the recipient requests the rights to be converted and shares issued.
This might be naive of me in terms of what ASIC rules apply to “ targeted “ buy backs, ( not really targeted though as buying on market) but you never know.
Cheers
Dan
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