Intercede Share Discussion Threads

[davidosh] 22/8/2011 11:54

I intend to speak to the chairman of the Remcom this week to try to get questions answered and prevent further public embarassment on these issues or we shall be meeting head on at the AGM and it would be a shame to have the meeting dominated by this subject.

If any of you have questions you want me to raise with him then do post them here. I will do a full write up afterwards as I will advise him that I intend to make my findings public. That may of course force the terms to be disclosed as he will not want me to be the one advising shareholders nor making the AGM a confrontational event.

[fft] 22/8/2011 11:47

But disconcerting if, as per post on Fool, that they wont tell shareholders what the conditions are....

Shareholders having to write letters to directors to enforce company law to disclose information doesnt seem an ideal way forward and does bring into question where the loyalties and aspirations of the directors lie.

[felix99] 22/8/2011 11:43

all options usually becomew exercisable on a bid so wouldnt be surpised at that at all. FWIW I dont think RP and co are that greedy but think this is something dreamed up by advisers of the fat cat variety .

I think if we can band together and have a good moan then the strike price might be reconsidered.

I have seen lots of options given out at 1p - its quite common for LTIP type schemes - perhaps not in options but in free shares which vest in the future in variable amounts depending on the criteria and performance met.

My issue is the number issued as a % of share capital . Unless it has been done as a poison pill or something - but then I would expect really tough conditions linked to share price performance and only a small proportion of the options vesting without a bid , if that is what they were designed to do.

[pyman] 22/8/2011 10:20

just talked with a broker re the 1p strike on options. He agreed it was very odd. I trying to find other examples but to no avail.Standard is to offfer options at a 10% discount to current share price and while I agree that options are a good incentive for managment this seems little more than a give away as long as they hit targets they already have 550% in the bag! options should be linked to share price performance- the true measure of a managments ability and this is not the case here.It would be interesting to know if thye become exersisable in the event of a bid regardless of eps performance targets being hit. The terms must become public knowledge!

[daz] 18/8/2011 11:23

David,

I'd support a protest vote if the conditions of the options aren't made available to shareholders but I only have a small fraction of the overall shares.

1.2m shares does look overly generous on first sight, when the directors are already paid a reasonable sum.

I'm hoping to go the AGM, although it is a trek on the train

[igoe104] 18/8/2011 10:21

I agree with you totally pyman.

i think now we know why where wasnt a divi annoucement. i think the company would have been smart to annouce a special divi to share holders, they wouldnt be as much of a fuss as there is now.

[pyman] 18/8/2011 09:54

I find it rather staggering that the options are excersiable at 1p. This is unsual: I would normally expect strike price to be set at current share price. I m a long term holder too and begining to think that the momentum has not built fast enough.A bid now would perhaps be not so upsetting ..

[davidosh] 18/8/2011 09:04

Just out of interest what percentage of the company is owned by those of us who post here ?

We could certainly have a protest vote over the options by voting against the acceptance of the report and accounts or Andrew Walker who is up for re election. There is no opportunity to vote directly on this issue but we should be able to request sight of documents relating to these awards on the day. It is our legal right to have the company make available all contracts relating to the directors employment terms.

I would prefer to get to speak to the directors first before getting aggressive though as there must be an explanation from the Remcom as to why they were set this way.

[davidosh] 17/8/2011 16:20

For those who are not members of ShareSoc it is free to join and Intercede is currently a company in discussion...



The August newsletter is exceptionally good and relevant.

www.sharesoc.org

[aphrodites] 17/8/2011 15:06

davidosh

Thanks for that.

As I said in my previous post, I feel there is more than meets the eye behind the recent weakness in the share price and some of the strange goings on that we have seen recently.

It will be interesting to see if Roger Lawson gets any satisfaction from his letter to Mr. Parris. Somehow I doubt he will. And it doesn't help for Andrew Walker to refuse to give any details of the eps targets!

Could this be the start of putting in place a defence against a hostile approach?

What is interesting to see is that the previous Approved and Unapproved options, each granted in 2000 and 2002, were at 47p and 40p respectively. Why when the company is in a much improved state of health and obviously a sitting duck for a takeover are options being granted at 1p!!!!!!!!!!!!!!!

This is developing a very strange smell about it. It could be distinctly pleasant or nasty whichever way you wish to read the tea leaves.

[davidosh] 17/8/2011 13:58

Just for your interest ShareSoc are looking into the issues raised and there is a discussion now in the Pub on TMF

[wjccghcc] 17/8/2011 13:13

AFAIK most companies don't disclose the share option terms in an RNS nor in the annual report. I think they do have to make the LTIP scheme available to shareholders if requested though? David would know.

[fft] 17/8/2011 12:52

No one could possibly be suggesting that the price has been engineered down from 80p to 55p just for the benefit of the directors options... could they...

I find it very strange that the terms werent included in the RNS. How can any shareholder be expected to give a view until they know it. And if they dont announce the terms before the AGM, how can the motion be supported ?

[aphrodites] 17/8/2011 12:38

These share options have clearly been discussed and in the melting pot with the Remuneration Committee for some time.

Dare I speculate that the 1p price is more acceptable with the share price at 55p than 85p would have been!!!!!!!

And we all know how easy it is to hit the IGP share price on little volume and a few whispers to the MM's that there is selling in the wings.

I am totally behind the directors awarding themselves options if at the same time they are creating shareholder value. And of course if they have a suspicion that there is an unwelcome predator in the wings what better way of lining their own pockets while at the same time giving themselves a little more share ammunition to fight off an approach. In a private company of which I am a non-executive director we are presently going through exactly this sort of discussion. But I must admit a price of 1p for options has never entered out discussions!!

One could also conclude that vetting the options against meeting certain earnings per share targets over a three year period can only be good for shareholders and the share price. Providing of course the formula is taxing on the directors. Hopefully, the Board will be open with shareholders at the AGM about the STIFF criteria they will be setting themselves.

This of course questions what sort of results we are going to see them announce. Stiff criteria announced on the back of excellent results would suggest the Board is expecting spectacular trading going forwards and shareholders will not question the options at all. But a disappointing set of results this time with stiff criteria backed by an upbeat Chairman's statement might appease the situation. Should we prepare ourselves for this?

I do not like announcements like this which leave shareholders in the dark. On the other hand if my analysis is backed by excellent results then I am with WJC and I will not object to the options.

However, I feel there is more than meets the eye behind the recent weakness in the share price. And I do not believe the recent set-back in the markets has caused the fall from 85p to 50p. Mr Parris purchase of only 10,000 shares was strange in itself and if the company was half-minded it could have easily arrested and reversed the fall by buying 200,000 shares in the open market.

I have not been particularly impressed with finnCap's involvement with IGP. This is yet another example recently of some highly paid numb-head advisor,not being in touch or even caring about the small shareholder, and understanding the need to ensure there is more transparency behind what is going on.

The AGM could be very interesting.

[davidosh] 17/8/2011 12:17

They have a blocking stake for a lowball bid with directors and the somewhat linked Azalia Trust holding 34%. The two executive directors received very nearly half a million last year with profits under two million and forecast to go lower. The remuneration committee are the non execs who have been on the board for ten years or so since 2000 and 2002.

I will also be at the AGM and feel we need to know the eps hurdles. I have held IGP for five years and the shares floated at 60p so you could argue that an eps target on a market average 15 multiple would need to be 10p at least to give long term holders a fair return and align the directors with shareholder interests.

[strollingmolby] 17/8/2011 12:01

It certainly appears large in quantum, but the Board must reveal the relevant hurdles for us to understand when they may vest.

A further thought, may it also have been hastily put in place as an extra defence against a lowball offer (ie by raising the total t/o cost)? Could be way offbeam with that, and greed is the main motivating factor...

[shanklin] 17/8/2011 11:28

Given the options are worth circa £625k at the current depressed SP, I would like to think there would be no need for any annual bonuses. This feels like corporate theft from ordinary shareholders.

[wjccghcc] 17/8/2011 11:21

On the one hand, they haven't issued themselves any options for the last 9 years so I don't begrudge them doing it now. On the other, David is right - it is necessary to know the conditions attached and I will be asking at the AGM.

If the scheme is to further align the directors with shareholder interests, then I'm fine with it. In that case, I would like to see the director bonuses reduced this year.

[davidosh] 17/8/2011 11:01

No share buybacks but a very healthy award of share options this morning ! Any comments or some of you stunned ? What are the actual eps hurdles that are referred to ?

Pursuant to this Plan, the following Executive Directors and Persons Discharging Managerial Responsibilities (PDMRs) were granted options over ordinary shares exercisable at 1 penny per share ("Options") on 16 August 2011:


Name Role Number of Options Awarded
---------------- ---------- --------------------------
Richard Parris Director 567,029
---------------- ---------- --------------------------
Andrew Walker Director 374,094
---------------- ---------- --------------------------
Jayne Murphy PDMR 302,536
---------------- ---------- --------------------------

Vesting of the Options is conditional on the Company meeting certain earnings per share targets over a three year period.


Surely we need to know the conditions if shareholders are to approve this ? The share price was 83p only a month ago so this is a million pound giveaway in stock at a penny a share !!

[aphrodites] 07/8/2011 09:10

At volatile times in the market like these it is always welcome to see the CEO of a company buying his own company shares in the market. But one does have to question what message Richard Parris was trying to give to the market, if one at all.

We all know how illiquid the market can be in IGP shares but to buy only 10,000 shares does beg the question as to what he was trying to achieve!

Today we hear that the chairman and chief executives of Barclays spent £1.5m between them buying shares. Similarly, the executives of LloydsTSB were buying their shares in the market in size on Friday. And, bosses at Inmarsat, the satellite company, invested £2.6m.

I know IGP is not a major company and the salaries of staff are not in the same league as the bankers' but IGP's Board and especially its advisors really should try to get their acts together if they want to send a message to the market.

To buy only 10,000 shares at 56p and then to see sellers at 50p afterwards does not exactly inspire existing shareholders into thinking we have a finely tuned executive team and its advisors working with our interests at heart to create and maintain shareholder value.

The company bought shares from its staff earlier this year at a higher price than 56p and of course it has the authority from shareholders to buy back its own stock in the market. The question now is does Richard Parris's purchase preclude the company from buying shares? I am not suggesting for one minute that Parris is acting ahead of the company buying shares in the market. But has his action restricted the company from buying shares in the market especially if it forces the price back above 60p which could easily happen?

If the company was prepared to buy its staff shares at a much higher price earlier this year it should certainly be prepared to put some of its cash mountain into the market to buy shares in the low 50p's.

Come on Mr Parris, and your so called professional advisors, stop dithering around and please get your act together. Let's see a determined effort to send a clear message to the market about what you are endeavouring to achieve. Either co-ordinate all your directors and yourself to buy more shares in the market or let's get the Board to agree to buy 200,000 to 300,000 in a share buy back from the cash mountain you hold.

The share price should not be down here.

[fft] 05/8/2011 03:42

Good point aphro. So, if there is no placing imminent, i wonder whether there was any reason for the drop from 75p in the last few weeks (prior to the general panic that has occured in the last couple of days).

[aphrodites] 04/8/2011 20:49

fft

The reason for this is to dismiss the idea that there is going to be a placement and some form of acquisition.

No Board member would be able to buy in what would have to be a closed period ahead of such an announcement.

But don't forget IGP has those shares it bought off staff at a much higher price!!!!

[fft] 04/8/2011 17:31

bit bizarre to release a director purchase RNS after normal hours. But it was only 10k...

[daz] 04/8/2011 16:25

You can get in now for less than Richard Parris has just paid, you might need a strong stomach with everything in freefall though.

[courant] 27/7/2011 11:23

Interesting rant about MBOs in undervalued small-caps in Herald's interims today, (hopefully not) relevant to IGP holders:



Regards,