Tuesday, April 29, 2008

Shareholder Benefits Plan

One of the proposals in the Schedule 14A proxy filings is an exchange program for employees (non-executives/directors) to receive a smaller number of options but re-priced at the price if/when it is implemented. The filing goes in great detail to show the "benefits" to shareholders by helping to retain employees and motivating them to do well. While it seems unfair to shareholders, it is probably to our benefit to vote for it as it is reasonably well crafted. Anyway, while thinking about this, I was also thinking how we can work with management/board to actually look after shareholders who have stuck with the company (I know, what a concept, huh?)

Anyway, I am by no means an expert in this but there have been other companies that have crafted plans that benefit shareholders. By todays filing and all the compensation details we have read the last few months/years, it is apparent that this company atleast knows how to craft compensation plans. I would like to start a discussion on a Shareholder Benefits Plan. We have had discussions with management/board regarding a stock buyback but this is not the only way it can directly benefit existing shareholders. Some ideas could be:
  • Special warrants - issued to shareholders that give it a right to buy certain number of shares (correlated to existing holdings) at a certain price.
  • Special dividend - a one time payout may actually "slightly" annoy the shorts :-)
  • Preferred (convertible) shares - that pays a dividend and convertible to common shares (where did we hear that before :-)
  • Others?

The management/board has consistenly mentioned that they are for shareholders so this is definitely something they should address and shareholder groups can rally upon. I hope that the shareholder base can provide other suggestions and we can bring it up with management/board. Heck, I'll even call Thomas Toy to discuss the employee exchange program AND the shareholder benefit plan that should be on that proxy statement or be brought up in a special shareholder session.

PS... it does seem that with the retention bonuses, all the RSUs, the employee exchange program, new CEO (compensation) and all the newly minted shares (on top of all the accumulated ones all these years) given to all the executives/board, we may be getting close to the point that there is a unanimous consensus to really work for the share price going up now, huh? :-)

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