Dear Michael,
Can we please put our personal differences for aside for just a little while in order to try to come to a compromise? I'm sure it will be beneficial to all.
FYI My firm acts as a legal advisor to more than 50 public companies trading on the TSE and the MSE. We work with Groome Capital, Latimer, Nesbitt, Scotia... I am specialized in securities law and do financings day in day out. To show you my good faith, I'm even willing to send you a copy of my CV which will more than prove to you that I am more than competent to help management resolve this very serious problem.
I really appreciate the fact that you are still posting on this forum and are willing to listen to us (even if you think otherwise). Please let's get this thing resolved amiably.
As for options they are not set in stone, I have not authorized the solidification of price, yet,I have made a statement of my intentions, but I am interested in the comments of this thread, and treating fairly employees
Mr Jacobs, one of the main reasons why companies issue stock options with a 12-18 exercise delay is to allow the options to mature and therefore give the beneficiary a better chance at exercising said option at a discount to market price. A longer delay means a better chance at being in the money over said period. It is a privilege... However, it can be a handicap when such options are issued under a stock option plan since shareholders have only authorized the issuance of X number of options under said plan. Thus, management has to use discretion in issuing options under such a plan in order to respect sharholders' decision of only allowing a set number of options to be open until exercised or until they die out. Repricing options, especially options issued under an inventive plan, should in my opinion be illegal and I'm working very hard with the QSC and the ME/TSE for such a disposition to be adopted. By repricing options issued under an incentive stock option plan, management is indirectly doing something they are not allowed to directly!!!!! Since there is a fixed number of options, said number should be respected. By cancelling options you are indirectly increasing the max number of shares. Let me put it this way : a company promises that they won't increase the number of shares authorized after issuing the max number of shares allowed... then the company decides to do a reverse split. ?? What's wrong with this picture. One would say nothing right? Wrong because usually by doing so, they usually do not reverse the number of shares authorized and thus increase said number by the split factor. If it was a 5 for 1, it's as if they increased the authorized by 5X. You're pretty much doing the same thing IMO
By repricing options, management is in a win win situation in that they issue options every other 6 months and reprice them accordingly when the time is right. Take a independent view and tell me if that is really fair. It's as if you get an option to either pay your lotto ticket or not. If you have the winning number you pay the 1$ and you win. If not, you refuse to pay the ticket. Is it really fair?
I looked over the info provided by Jack regarding the options. Why reprice them when they can be exercised until mid 2000 at 2.09? Do you not have confidence in having a much higher stock price by then? If so, what kind of message are you sending to shareholders? Should we be all selling our shares because management is not confident in having a 2.09 stock price by mid 2000? Is it greed? Are you willing to sacrifice investor confidence for an extra 0.70$?
My interest lies in being balanced with all. I am listening.
If you want to be balanced I would not touch those options period! Options should be issued once a year at every other annual meeting. When new employees are hired, management should issue stock options to those individulas because as you said, Pyng should be competitive... But please, think about it twice before issuing such options right and left because you have a set number of options that can be issued under the Plan. If not, they're are more stringent rules for options being issued normally (not under an incentive stock option plan).
If you want to put all employees on the same playing field, I suggest you proceed and offer them to participate in a private placement. As you well know, since you are not dealing at arms length you only have the right to have one sweetener therefore you decide if you want a the allowed % off the market price or the warrants to go with it. I suggest the warrants since they will in a way act as an incentive allowing the employees to eventually purchase addtional shares at 1.75-1.80 (130%). This way, they pay in advance for the shares plus they get a simili option (a warrant). I'm sure it would be less frustrating for the shareholders since at least you are paying in advance for some shares.
Some have suggested a "rights offering" which I have not considered
If you want to get further financing a nice gesture would be to issue rights as dividends allowing each shareholder to purchase additional shares at 2.09 (for example) for the next 6, 12 or 18 months. Unlike management, I'm sure most of us would be very happy and thankful for such an opportunity to purchase shares in the future.
Well, I really hope you consider some of the things mentioned in this post.. I usually charge 225/hour but I am willing to work this one out for free :-)
Looking forward to hearing your opinion ...
Kind Regards
AK |
