My attention this morning was drawn by an RNS from TrakM8, a company I used to own shares in but, thankfully have not since 2017.
TrakM8 has proved a pretty awful investment for its shareholders, with its share price declining by some 70% in the last year alone and by more than 90% since its peak in late 2015. This is on the back of disappointing revenue growth, declining profits and weak cashflow, ultimately necessitating placings at 65p in 2017 and at 22p last year.
Whilst shareholders have taken a battering, today’s announcement shows that the directors responsible for this underperformance are not to suffer a similar fate. To ensure that directors still “win” options that were previously exerciseable at an average price of 144.6p have now been reissued with an exercise price of 33.5p – and new options awarded with the same exercise price. Overall, the directors and staff will take an additional 8.2% of the company if the options are exercised
What is the purpose of awarding options to staff and directors? It is surely to align their interests with those of shareholders and reward them for good performance. Repricing options (and/or issuing fresh lower priced options) completely defeats this purpose, ensuring rewards can be obtained even if performance is poor. A real case of “heads I win, tails you lose”.
Shareholders should object to these unacceptable option awards in the strongest possible terms.