As @chakay has mentioned, the options are free, however the exercise price is still 87.5% of the VWAP of the relevant quarter
It's not as if Richard is getting 500K (or $2M at current SP) worth of shares per quarter for free
If you assumed the share price remained static at $4 for the rest of FY18, but Richard hit all his targets, his effective benefit is only circa $1M which isn't too bad for CEO of $550M marketcap company
Assuming the SP grows $2 per quarter moving forward (bullish but doable), based on my calcs if I'm understanding it correctly, it's:
If SP moved from $4 to $6 = VWAP is $5
$5 x 87.5% = $4.375 option exercise price
($6 x 500,000) - ($4.375 x 500,000) = $813K effective benefit for the quarter, or $3.6M per annum
If he can deliver that sort of share price growth, I'm happy with that level of reward
(20min delay)