Dear Fellow Shareholders (maybe boardmembers?),
As we approach the upcoming shareholder meeting (next year), I wish to express concerns regarding the resolutions to issue substantial performance options to key executives and board members, including CEO Oleg Vornik andChairman Peter James and others (https://www.droneshield.com/investors 24/11/2023 Notice of General Meeting/Proxy Form).
- Substantial Dilution of Shareholder Value: The proposed issuance of 15,000,000 performance options to the CEO and additional options to other board members represents a considerable portion of the company's total shares (https://www.droneshield.com/investors 24/11/2023 Notice of General Meeting/Proxy Form). This dilution can potentially erode shareholder value, diminishing the worth of our investments again.
- Recent Stock Sales by Executives: Notably, CEO Oleg Vornik and others recently sold substantial amounts of stock amounting to over AU$3 million. This raises questions about the timing of thesenew option grants and the message it sends about the executives' confidence inthe company's long-term prospects.
Insider selltransaction 2023
30 Oct 23 AU$50,980 Oleg Vornik 201,104 AU$0.25
30 Oct 23 AU$5,098 Jethro Marks 20,111 AU$0.25
30 Oct 23 AU$25,490 Peter James 100,551 AU$0.25
27 Oct 23 AU$1,193,565 Oleg Vornik 4,369,880 AU$0.27
27 Oct 23 AU$598,038 Peter James2,184,941AU$0.27
27 Oct 23 AU$119,608 Jethro Marks436,988AU$0.27
06 Jul 23 AU$831,396 Oleg Vornik3,400,000AU$0.25
05 Jul 23 AU$660,413 Peter James2,716,666AU$0.25
12 Jan 23 AU$796,687 Peter James3,000,000AU$0.27
12 Jan 23 AU$1,908,339 Oleg Vornik7,233,334 AU$0.26
(simply wall.st/stocks/au/capital-goods/asx-dro/droneshield-shares/ownership)
- Alignment with Company Performance: While performance-based compensation is standard, the sheer size of the proposed grants seems disproportionate, especially considering the company's financial position. The losses and dilutions over the past years and the ambitious revenue targets necessitate a more prudent approach to executive incentives.
- Governance and Shareholder Interests: As shareholders, our primary interest lies in the long-term growth and stability of DroneShield.
It is essential for governance structures tosafeguard shareholder value, particularly in light of the ambitious outlook for2024-2028, where Droneshield projects annual revenues of AU$300-$500 million (https://www.droneshield.com/investors 29/08/2023 2023 Half Year Results - Investor Presentation).However, it raises concerns when executive incentives, such as option vesting, are set at the AU$200 million revenue mark, which seems low compared to thefuture revenue targets of AU$300-$500 million. This discrepancy could suggest that the executive compensation plan is not fully aligned with the company's potential for growthand may not sufficiently incentivize the leadership team to reach the higherend of our revenue projections.
In conclusion, while I recognize the importance of incentivizing management, the proposed resolutions appear to disproportionately favor executives at the expense of broader shareholder interests. I propose a more modest allocation of shares coupled with a loftier revenue milestone for option vesting, ensuring that executive incentives are closely aligned with the ambitious growth and profitability goals they aim to achieve.
Disclaimer: That are just my opinions. I do not guarantee that my thoughts or numbers are correct. I have probably made mistakes. Doyour own research.
Professional Disclaimer: The views expressed in this text represent my personal opinions based on publicly available information and should not be construed as investment advice. I encourage all recipients to conduct their own due diligence and consult with professional advisors before making any investment decisions related to these matters.
Respectfully,
IadmitIdontknow
PS. What are your opinions?
(20min delay)