Finsbury Food Share Discussion Threads

[aleman] 13/7/2011 11:05

I've been around long enough to have seen it many times - and been screwed over by directors in other ways. That's why my reaction to the generous options here may seem a bit harsh to those who haven't had it happen to them much. I'm not an ungenerous/unenlightened person. I would happily give 10% of my company pro-rata to all the employees for free, right down to the sweeper, to motiviate them but they would have to hang onto the shares for a long time (10 years for full allotment) before they could sell. I would be less concerned if the price was set at a higher level to motiviate them like they used to be in the 80s rather than just giving them free money if the stockmarket picks up when Greece gets sorted.

I vote in all AGMs and I have voted in favour of about 1/4 of remuneration reports this year even though they almost all have some kind of options/bonus scheme. They are just generally getting too greedy. It is refreshing when you get a well run company where the directors treat options/bonuses as just a bonus (a small addition to basic salary) rather than an opportunity to slowly take the company off you, even as you still haven't regained your original stake.

[bonio10000] 13/7/2011 10:54

Aleman - FD's have a role, but it is always overstated.

If you roll into a business where the reporting and accounting systems are already in place with a decent staff, what does the FD do? Press a button to generate the monthly cashflow and have lunch with the bank manager?

Anyone with a brain could do it.

Plus the other issue is where is the risk to the person with the options? Did they take a reduction in salary to reflect the gain of this additional potential remuneration? No.

Is there any downside risk to them? No, they just don't take up the options.

Unbelievable system really. If the price drops further, you can bet they will just issue more options at a lower price as well. Seen that done all over the place.

[aleman] 13/7/2011 10:51

I'm interested, Boffster, although I'm not clear what your intentions are. Why would we want a new thread?

[aleman] 13/7/2011 10:48

Our FD at work used to be extremely cautious on stock waste assumptions in monthly accounts at work and post an exceptional surplus at the year end stocktake which seemed to keep other directors happy. Our Technical director was my boss and used to occasionally tell me what we did in the month - usually a small loss as a struggling textile business that eventually closed. I used to ask him if the year end gain meant that we had actually made a small loss or small that profit that month. His answer was always I don't know - it depends on how much we gain at the stocktake. Is it surprising that a company that allowed constantly poor estimating behaviour went bust? I just mention it as a warning that accounts can say whatever a company wants them to say, at least for a while. (Which is why options and other bonus schemes should be longer term than 3 years.)

[boffster] 13/7/2011 10:45

No-one joining my committee then?
Would anyone like a new thread?

[aleman] 13/7/2011 10:38

The bean counters earn their options by fiddling the numbers so they can all get their options when the share price is low and sell when it's risen.

[bonio10000] 13/7/2011 10:11

Always interested when FD's get options.

What exactly does a bean counter do to deserve such reward? Do they invent the product of the innovative marketing schemes to boost demand?

Nope. As one, I should know. Hence their share in the rewards are disproportionate.

[aleman] 13/7/2011 09:52

markt's posting is welcome by me even if I don't know why he is so bearish. It's polite and reasonably well argued and he may spot something I miss one day.

How would options affect profits? It's just a discounted share issue that alters earnings distribution rather than earnings, isn't it? Where'e the cost to the company? Is there a tax on benefits in kind because it is an unauthorised scheme?

[markt] 12/7/2011 18:50

I dont think I've posted on co. prospects today.....merely joining in on the subject of directors and options....started by yourself and Alemain.

bearish view of prospects..... I have posted in the past about debt and probably about small profit imo when employing over 2k people and large debt.....while many posters seem to think that the next 5 years are already 'done and dusted' with profits banked and debt reduced to X million in say 2016...which I think is an overly optimistic view...many risks out there..as well as opportunities...(but the supermarket do their best to nail those down to the minimum !, whoops, being bearish ! ;-) )


all the bullish points....I dont need to post....sure that everyone else does that !

a mix of views is healthy I think....

and FIF board has always been polite/courteous ....and I've kept in line with that I think...

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generally for all shares people take the optimistic view and ignore risk, completely wrong imo.

If you own say 10 shares ...in a bumpy market ...over 2 years ...it is almost gteed imo that 1 or X of the 10 will report trade is not as good as hoped and see the share price fall

people ignore that imo...wrongly imo

for individual share picking people need to price in risk imo..or consider it

FIF was 85p was cash raising in 2007/8...and went to 120p. 20p now, x years later. Proof that risks exist.

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What is the situation BTW regards the old debt story ?

Need to pay 5M deferred consideration by March 2012...and interims said 37M debt and 50M total facility including against orders....

can the 5M be paid or will FIF need to ask if possible to defer again ?

some of the loan facility is against orders....so may not be able to go up to full 50M....
on other hand many people will be hoping that profits (or is it free cash flow !) will have reduced the amount of debt.....so...new debt can be taken on...lurvely !...and for a year or 2 more the bank debt does not reduce perhaps !......zzzzzz......hence low P/E...I agree, I'm banging an old drum !

and if the debt increases at all ....maybe some shareholders will say/think/act.....'stuff this'....Ive waited enough years to see this bank debt go down, now it is going back up, I dont want to wait another 1 or 2 years, I'm off....

[boffster] 12/7/2011 18:06

I think share price is referring to your rather bearish view on the company's prospects. Not to say you are wrong of course (although I think you are) :o)

[markt] 12/7/2011 17:52

...if you are having a dig at me...
perhaps you should also have a dig at Boffster and Alemain who have posted along similar lines.

[spaceparallax] 12/7/2011 17:43

Thankyou Markt, I think we understand your agenda.

[markt] 12/7/2011 17:37

this big option package has to be reported against the annual report for profits ?

I think yes.

What is the reduction in yearly profits as a result ?

[markt] 12/7/2011 17:28

there were 4.9M options...mostly exerciseable from 14p to 106p

because the directors have screwed up in managing the shareholders money and the share price is now 20-22p....the previous options were/are not of much interest...

so they issue a big batch of new ones.....

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sadly.....if the directors do not make money out of these options and the share price reduces to say 10p.....

then......
in the future they will replace these new 20.5p options with new options at 10p....
to ensure that one day the directors will make some money......but it is not the same for shareholders !!

and in 2010...no dividend to shareholders

[markt] 12/7/2011 17:23

sadly the same story for many years imo

(but one can vote against the accounts I guess...writing to institutions to try to get their support/votes is perhaps one choice that may gives more power)

interesting that the FT is giving it coverage....

incidentally TCG going down the plugholes recently....and the CEO has large yearly benefits and probably picked up shares along the way....and many shareholders on the msg board are describing his words in company accounts as being "lies"

its all wrong....

and often the workers dont even get a crumb from the table even though they do most of the work.....but they lose if the dirs. screw up while the dirs. may still make money out of it all...

The UK ....which gave rise to Cityslickers, News of the World phone hacking, pensions mis selling....et al.
And the phone hacking stuff will not encourage honest companies to do business with the UK. Not good publicity.
And the Prime Minister, and hence the Govt. of the country, is closely related to it all.

Ethics appear to be long gone.

[markt] 12/7/2011 17:05

Aleman
you raise an interesting point I think about control of a company.

With this 10% or so...and the 28 % or so that Mr Lightbody owns..gives 38%..could the directors join their votes together with A.N.Other and have over 50% of the company and control it ?
....if add the LFI shares to the directors shares if exercise these options then would have over 50%

(FIF is almost definitely the biggest contributor/payer to the the subsidiary of LFI, City Group...the operation of which provides benefit to Mr D.C.Marshall and at least one of his sons who is a director)

and perhaps they could then vote through whatever they wanted to !.....

[jpjp100] 12/7/2011 16:19

Yes, I am happy to potentially have my gains diluted in exchange for properly incentivising the management to maximise shareholder value over the near mid term

If I wasn't, I could always sell my holding in protest or invest enough to have a real say - 5% say

small shareholders are (rightly imo) inconsequential to the decision making process in listed companies, it has ever been thus

[boffster] 12/7/2011 16:18

Will you be voicing your displeasure Aleman?

[aleman] 12/7/2011 16:03

And you would have had another 20p+ for yourself without their options dilution. They might have granted themselves more by then. Has the company any bonus schemees in place, as well? Most companies like to cover all the bases when feathering their nests these days.

It isn't just the money either. It's about voting capability at future AGMs and being able to push through measures unpopular with small shareholders.

[jpjp100] 12/7/2011 15:56

I would expect to see a trading update towards the end of this month, going into the close period up to the prelims

Its £64.7k per penny share price rise

I hope they get £10m between them - that takes the share price to nearly 200p and I would be pleased with that, wouldn't you?