The retractable syringe powerhouse Unilife Medical Solutions has again raised the bar in setting standards in corporate governance.
Unilife has rejigged its remuneration package, first announced in July, to "continue to motivate [the] outstanding ongoing efforts" of its chief executive, Alan Shortall.
The company has proposed that on top of the annual options package and $200,000 cash bonus Shortall is entitled to, he should be given a "bonus" 10 million shares, or 5 per cent stake in the company, partly as a result of the company's "initial public offering" in 2002. Impressive, given Unilife did not have an initial public offering but was instead backdoor listed into the shell of the former mineral explorer Musgrave Block.
The original proposal was for Shortall to get a bonus 5 million shares. The bonus, worth $2.3 million at yesterday's share price, apparently is also a result of Shortall's "instrumental role" in signing several distribution agreements, several capital raisings, obtaining regulatory approval for his company's products, signing some exclusive partnerships and the acquisition of a company called Integrated BioSciences.
It is also unclear if Shortall will also be rewarded for the $57 million in losses the company has racked up since its listing, or the 92 per cent slump in Unilife's share price since its 2003 peak.
And it appears the payment of the 10 million shares is not dependent on whether Unilife, which has been developing its syringes since 1996, actually sells one. The group had promised to have its syringes flying off the production line in early 2004.
The bonus is subject to a shareholder vote at the November 28 annual meeting. Unilife also appears to be factoring in the inflation rate of some sub-Saharan African nation into its pay scales. Only four months after offering Shortall a $360,000 base salary, the figure has been lifted to $420,000. Shortall will also get 7.5 million options with an average weighted average price of 33c an option. Shortall also has had his termination benefits tweaked. If he is terminated he will be entitled to an extra $525,000.
OPTIONS FOR EVERYONE
At least the Unilife board is showing some restraint. Another resolution is for the chairman, Jim Bosnjak, to be given 1 million options. And there is also a proposal for up to 20 million shares - or 10 per cent of Unilife - to be given in new shares to the founders of the company, Roger Williamson, Joseph Kaal and yes, Alan Shortall. This is on top of the options and 10 million shares Shortall will already get.
The company will have to make an annual $6.5 million net profit within the next six years for 10 million of the shares to be granted. For the extra 10 million shares, it will have to post a $12 million net profit within the same time. Apparently the deal has something to do with settling "differences which have arisen between the company and the founding shareholders" over a clause of the original acquisition agreement when Unilife was backdoor listed.
UNI Price at posting:
23.0¢ Sentiment: None Disclosure: Held
