Abbeycrest Share Discussion Threads

[knowing] 14/4/2010 12:50

I don't dispute that baner but the incentive is there for them and if they deliver the price will be significantly higher.

[baner] 14/4/2010 12:44

knowing

that does by no mean per se justify the issuing of the excessive number of options! with your way of reasoning - why not give the management options over 30% - or 40,50,or 60%?

[knowing] 14/4/2010 12:31

Well the targets are clear and if achieved will mean a good return for shareholders buying at these levels.

[davidosh] 14/4/2010 12:20

It was only passed through by a narrow majority though and less than 40% of shareholders actually voted FOR it. Not terribly convincing and cannot have been properly agreed with major holders in advance.

[lomax99] 14/4/2010 11:20

Unsurprisingly the suggested option arrangements have now been passed, whilst they look eyewatering at least we will be sitting on a c. 160% clear return, based on the current SP, in c. 2 years if the Directors are to qualify for the final tranche(50%) of the options being issued.

[knowing] 14/4/2010 09:41

Seems everyday a 25K+ trade goes through.

[knowing] 13/4/2010 15:15

Must be close to moving after the recent buying.

[knowing] 13/4/2010 12:15

Limit cut back to 50K again at full offer.

[knowing] 13/4/2010 09:33

Good retail figures today. Hopefully people also spending on the high end too.

[daz] 09/4/2010 15:24

Davidosh,

Thanks for the input re the ABI guidelines. I always thought the ABI were too cosy with directors, so to see their own generous guidelines being exceeded puts some perspective on the situation here.

Gyllenhammar, with the 30% stake has to be the key shareholder and he ought to have more self-interest than the fund managers. I think he knows that a 20p target for ACR's shares isn't easy to achieve. I think the company would have to be earning something closer to 3p per share to reach the target, so maybe he feels, that if they hit that target then good, the value of his stake has increased and if they fail, then he won't be diluted.

Agree, with regards to the costs. The circular can't even decide whether the options are approved or not, which has a significant bearing on the exercise price and therefore the costs, so how on earth can someone vote on that.

If the general meeting wasn't at 10:00 in Leeds, I might have thought about going along but it's too long a journey from the south and with the meeting being next week on the 14th, there isn't much time to try and do something about it. Might try ringing the company though.

[davidosh] 09/4/2010 13:14

Whether the overall options are generous or not I cannot believe that the chairman of the Remcom would not have consulted with all the major holders in advance especially as it is going to be voted on. It will look awful if this is defeated. Presumably the majors have had input or discussed this issue. Anyone spoken to any of their co-owners ?

The scale of options seems high as under ABI Guidlines a maximum 5% for larger companies and 10% for a smaller company – the higher number (10%) requiring very "stretching performance criteria" Here Abbeycrest shareholders will give away options over 15.5% of the share capital!

Additionally the 15.5% is on whatever number of shares Abbeycrest have outstanding! So if they merge and issue another 100m shares, management can be given options over 15.5% also of the enlarged number. This does seem crazy to me.

Guidance from the ABI says a minimum three years should pass before Options vest and become exercisable. Here, 20% vest Day 1 with no criteria, 30% after one year and the rest after 2 years only! Why so early in the recovery process and it does not incentivise long term committment. The strike price is the same after 10 years – the present value of the strike price is thus less than 50% of the "nominal price" – no cost of capital incl risk reflected what so ever.

As there is no presentation of the costs of all this to the company and its owners! Shareholders are assumed to vote on something they do not know the cost of! How can shareholders know if these are "stretched performance criteria" when there is no "forecast" of "financial objectives" to compare with ?

I have only studied this briefly but just wondering why the large institutional holders are presumably going against the ABI guidlines if I am correct in assuming this has been pre discussed with them. I often come up against dozy/lazy instos when battling away in small caps so just thinking that it may be happening here. Any thoughts ??

[daz] 09/4/2010 13:03

Baner

With Gyllenhammar having 30% of the company, he would certainly have been consulted, so I think it can be taken as read he will vote it through. He probably had a hand in setting those share price targets, as it gives him an exit strategy as well.

I suppose the other thing is that with the company being so small the value of the options isn't huge, the company would be valued at £14.6m at 20p, so they would share approx £1m between them, if the exercise price is 9p.

Simon Ashton is paid 150,000 and the other directors £100,000 according to the placing document, so this is a big part of their potential remuneration.

Still think the proportion of the company being optioned is way too generous though.

[lomax99] 09/4/2010 12:35

Yes, they are generous. Full details of the scheme are on their website at:

[baner] 09/4/2010 12:25

DAZ

i totally agree with you - this is a staggering option scheme - transferring significant potential values from the owners to a management team that has not at all proven themselves yet. what is even worse is that these are "exploding options" - the more shares the company issues, the more options the team can give themselves!

maybe this should be read as that the management team are convinced results will be much better than the "vesting criteria".

is this not something the larger shareholders; Gillenhammer and the institutions, could and should turn down at the EGM?

[daz] 09/4/2010 12:14

Lomax99

Thanks for bringing that to everyone's attention. While I'm in favour of aligning the directors and shareholder interests through the use of options, to grant options to the directors for 12.72% of the entire company is staggering.

I'm not sure the EPS targets are that challenging, as we're already into year 2 of the turnaround when the benefits of the new strategy should already be coming through.

At least though the share price targets are much more difficult, this company is never going to be that highly rated especially after what's happened recently, so applying a p/e of 7 to 2012 earnings of 1.7p gives a share price of only 12p, so I think they will have to go some to get the price above 20p

[knowing] 09/4/2010 10:57

Now that would be nice for all. Presently 50K available online.

[lomax99] 09/4/2010 10:31

I have just had a look at the proposed executive share (re RNS on 19/3/10), it certainly incentivises the Directors. It potentially gives them options over 12.72% of the share capital, rights to these options occurs in 3 tranches:

1) 20% now, with an exercise price of 9p
2) 30% by 30/6/11, if the mid-market price is at least 13p for 20 trading days during the year up to that date AND fully diluted EPS are at least 0.93p
3) 50% by 30/6/12, if share price is at least 20p for 20 trading days in that year and fully diluted eps is at least 1.67.

Let's hope they hit their targets - particularly the final one, which is only just over 2 years away.

[knowing] 08/4/2010 14:58

Makes a nice change to see some volume. A couple more days like this should see the price on the move.

[knowing] 08/4/2010 12:31

Wonder if that 250K was what has been holding it back?

[lomax99] 08/4/2010 11:30

Hi Knowing. I have just added again, I have been in this one for a while. Unfortunately these two purchases are just averaging down - I'm sure that I would end up regretting it if I did not pick up a few at this level.

[knowing] 08/4/2010 11:21

Hi lomax. Just noticed the buying today so hopefully we might see a little action later. Good luck.

[lomax99] 08/4/2010 11:08

Added a few more this morning, hopefully we may get an update at the AGM on 14th April.

[knowing] 07/4/2010 22:34

Pretty busy this year

[knowing] 07/4/2010 15:10

I don't think it is going to take alot of buying to get this moving upwards. Happy to hold these and API.