Everyone, including me, is tired of this theme.
However, I will, again, provide you with some clarity.
Your argument has now diminished from a broad based attack that the proposal was a totally free give away of value and without any merit whatsoever to a somewhat esoteric concern that the proposal is motivated by an intension, or a possibility, to defraud existing Fenix shareholders of future dividend payments.
Your main concern, and what you claim is a simple concern that nobody will answer, is:
"While the loan is given to JW, before he repays or forfeits the shares, he will receive dividends for those 10 million shares. And in a couple of years time, he can forfeit the shares after receiving some pretty nice dividends. For JW, no money down, no commitment, but a nice little earner off the back of work he had no involvement in."
So, lets run that completely fanciful scenario down:
Let's pretend FEX pays out, say, 20c in fully franked dividends over the next several years. This is a good outcome and presumably will be based on a business that has value and therefore a value represented by its share price (a dividend paying company will presumably attract holders).
Over that period of time Welborn will have received dividends for tax purposes and, assuming he is in the highest tax bracket, will have a tax liability, after franking credits, on the grossed up amount received. So he will pay tax on circa 26c of income with a franking credit and will pay a tax bill. Of the remaining net amount, 10c (or 50% of the total dividends received) will have been allocated to reduce his loan balance which will then be sitting at 13c per share.
In this scenario it would make no sense to forfeit the shares unless they were less than 13c each. The net amount of dividends received will be only several cents per share and would hardly be worthwhile exercise for several years of work especially when you consider JW already has acquired 1.5 million shares on his own personal account.
So, in fact, no "nice little earner" can possibly be achieved by not repaying the loan. The value in the arrangement is in paying for the shares and owning them. The scenario you describe is rubbish and certainly represents no motivation. The facts are that Welborn has already acquied 1.5m shares himself and has agreed to an incentive arrangement where he can acquire 10m more at a price of 23c.
"no money down, no committment" ? Well again you are wrong. JW has already acquired 1.5m shares and is putting down 23c per shares on 10m more. This does represent a committment. More importantly, he is the Chairman of the company. This is a committment and a very public one which I expect he will work very hard on. This myth you present that he will have no involvement or connection with the outcomes of the company from here on is ridiculous.
You ask: "How is this fair, or of value to FEX shareholders?"
It is fair because the incentive works to align the Chairman perfectly with the creation of value for shareholders.It is fair because the company has attracted, and will continue to attract, directors who can work for shareholders. If shareholders benefit then so does he. That is the value. Some will think that value is over rated and will vote against. I have no problem with that view. I have a problem with the rubbish you are presenting and the use of false information to bully and manipulate and lobby for an outcome.
The fact is that JW can receive any gain in value of these shares (above the price he is paying for them of 23 cents), and any dividends they accrue, and that IS the whole point of the incentive. It is fair in that it represents additional value generated to what the market was currently recognising at the date of his appointment. To me it is aligned and makes sense as ALL of the shareholders will be enjoying the same appreciation in value and the same dividend payments.
And Rod, I am surprised you think the loan would ever be forfeited? Given your association with the company do you really think that the company's share price could ever get so low as to justify writing off your shares in return for the post tax remains from 50% of the dividends paid out?
The company suffers no cost in providing the loan.
Lets get on with it!
J9
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