Seriously? Downey’s shares are freely tradable once issued, he’s not required to put any risk capital towards the holding or deliver on any performance milestones. By every definition this is the worst structure possible for shareholders.
Let’s follow your logic. If the shares are intended to be compensation for consulting then Downey should invoice the company as he completes this supposed consultation over time. If he’s content to be issued shares in compensation then I agree that it’s a reasonable agreement. But that’s not what’s happening in this situation at all.
Your next point is the lien. This is a moot point as it’s a limited recourse loan. If this was a commercial arrangement there would be full recourse over the loan and based on the conflict of providing an interest free loan to a Director it would also be reasonable for the shares to be escrowed. IMO the only reason Downey hasn’t placed his free shares in escrow is because he wants the flexibility to trade them. And based on my research the Directors have taken advantage of this opportunity in the past. Can you speculate why these free Director shares are not in escrow?
You stated this agreement operates like a call option but this is entirely incorrect. Options issued to Directors generally have a strike price above the current market price and in order to receive the shares the Director has to fund the exercise. In other words, the options are worth nothing if the share price does not perform and the director does not put his hand in his pocket. That’s an entirely different arrangement to this one.
And finally, you stated “notwithstanding the above, it is always a good thing for Directors to buy stock on market.” He hasn’t bought on market and IMO it’s deceptive for you to make that statement as it’s untrue.
It’s hardly surprising there were so many votes recorded against this resolution. And perhaps that’s why John Goody has commenced selling again.
Add to My Watchlist
What is My Watchlist?
