General Meeting 2025– does it pass the pub test?, page-4

Without delving into the details, it looks like a gravy train. But the details are rather important, and when I started going through the announcement and the conditions on the incentive shares - and loan forgiveness - it doesn't seem too bad.

You're right in saying it includes share price targets, but that's for an unconditional takeover bid not a valuation of the company. There are two methods of returning value to shareholders: by returning capital via a dividend or share buyback, or by selling the company. Either way they go, in order to retain the incentive shares (which I note will be a substantial part of the company) then the return in capital to shareholders over the next five years must be at least 30c/share/year, with the first milestone they have to meeting being in three years time. They have to meet each target in order for the shares to be retained, so on or before five years from issue, shareholders need to receive at least $1.50/share in either capital return or by sale of the company. Given we have seen nothing, some firm commitment to returning cash to shareholders doesn't feel like a terrible idea.

From my reading - please correct me if I'm wrong - the 'loan' portion of the deal for incentive shares means that they still pay 40c/share, but they don't have to pay that until after they too have received that capital return. If they don't meet the conditions of the incentive share issue - the return of capital - they don't get the shares anymore, and the loan is cancelled.

The loan forgiveness one got me initially, but again, looking at the detail it appears to be a way to discharge any liability the directors might have by way of loan in the event of a takeover bid or dissolution of the company. I don't know the original conditions of the loan, however the forgiveness of previous loans for incentive shares will only happen if the company is sold by 30 September 2029, or the assets are sold and distributed via a dividend or share buyback.

All this being said, I would like to see some clarity in how the board and management values the company, as that will guide how their recommendations on potential takeover bids. By owning such large stakes in the company it is in their interests to secure the best price, too. The performance targets look pretty weak from a takeover/sale perspective, but if it were to be met by dividends then that would be a great outcome for everyone involved - directors included.