Here is the whole script written by Marty after his visit to TSIG headquarters:
Part II
E) Robert Gordon/Executive Compensation: ===================================================================
1. What great performance in your management of TSIG during 1998 justifies doubling your pay and granting you 5 Mm shares of the company? After all, you reduced the sales by 50% only while the losses have been reduced by only 30% and will you voluntarily reduce your pay back to the level of 1998 until you show you can indeed grow the top line as your intentions indicates and stop shipping a $1 dollar product wrapped with a $12 dollar bill (roughly the performance of last year, the year before you managed to wrap those sales a little less costly, each dollar of sales was wrapped with a $9 bill).
ANSWER: This was discussed in earlier posts I made from St. Petersburg almost two weeks ago. IMO, Rob Gordon is underpaid for the enormous number of hours he puts into our company and for what he has accomplished in such a short time. However, and this is an important “however”, I saw the payroll sheets for 1998 and 1999 to the present. Rob Gordon did not take his salary for many months in 1998 and has not drawn a salary check so far in 1999. The salary will accrue, however, and will be owed to him when the company can afford to pay him. He obviously is doing his very best to assure that this company is successful.
2. What justifies establishing option plans of 47.5 MM shares for a company which had only 30MM shares at the beginning of 1998, is there a model of any other company where such a ratio is practiced?
ANSWER: The justification is, IMO, quite simple. If we all want TSIG to become the major force and eventual superstar we anticipate, then it is incumbent upon the Company to hire the best personnel and staff and consultants possible. Some are paid in cash, but as in most companies where people who are considering coming on board see great future growth potential, the options they receive are far more important to them then their salary. If anyone questions this I suggest they pay a visit to Silicon Valley. They will learn very quickly that the options employees receive are far more important to them than their salary. Once the cashflow becomes positive and as these management people continue doing their job and bringing in additional business… the entire matter, IMO, becomes moot. The shareholders of Amazon.com (which showed a recent loss of $1.89/share) has over 150MM shares outstanding and just raised the authorized to 1.5 Billion (yes… BILLION) shares… and I don't see their shareholders crying. TSIG will, IMO, become far more profitable and in a much more rapid time frame than any other company in our sector.
3. What is the distribution of these 47.5 MM shares between the various executives of the company, how many of these options were actually granted so far, and does this number include the 30 MM shares or so exercised last year.
ANSWER: TSIG.com has established three separate Employee Benefit and Consulting Services Plans totalling 47.5MM shares. All shares covered by these plans have been registered in seven separate Form S-8 registration statements. Shares and options under these plans have been granted to qualified consultants, advisors, officers, directors and employees of the Company and its subsidiaries.
Many of the shares and options under these plans were granted as long ago as 1996 to consultants, advisors and employees who are no longer with the Company. Approximately 40MM of these options have been exercised, the underlying stock sold, and the shares included in the float, so there is very little “overhang”. Of the remaining 7.5MM available, the majority have not yet been granted.
The directors and senior management of TSIG.com own “options” as follows as of 12/31/98 (per 10K): (fixed font would have given better allignment, but would have spread it across the entire page... it should be easily understandable)
<Person> <Approximate Total> <Vested 3/1/99>
Robert Gordon 0 0
Paul Henry 1,150,000 853,360
Michael Gordon 125,000 41,665
John Hwang 1,750,000 503,572
James Guild 1,750,000 194,438
All these options are exercisable at 0.30/share. The options for Messrs. Henry, Hwang, and Guild vest over three (3) years, while Michael Gordon's vest over one (1) year.
Directors and senior management own “shares” as follows as of 12/31/98:
<Person> <approximate total>
Robert Gordon & Family 14,060,000
Paul Henry 35,000
Michael Gordon 304,000
ALL shares owned by control persons have to be sold pursuant to a registration statement or under Rule 144.
4. What is the status and intention regarding the 41M shares/options RG holds.
ANSWER: This is a complete misconception. Robert Gordon does NOT have 41MM shares or options or a combination of either. His shareholdings and granted options are listed above. In order to protect the company's financial viability, it signed a contract with Rob Gordon that IF in the event the company needed cash (which it obviously does not since the PP was put into place and with the other alternatives being worked on) and IF Rob Gordon gave the necessary funds to the company at the time… then and then only would these options (so many shares per contract) go into effect. As of this date, this is also a moot point and Rob Gordon has no further options than are listed above… i.e.: zero.
5. In light of the fact that to date TSIG has not been profitable, how is the huge salary increase for Rob Gordon justified?
ANSWER: asked and answered (see above)
7. Would Rob Gordon consider waiving this salary increase until after TSIG becomes profitable? Pay for performance?
ANSWER: asked and answered. De facto, that is exactly what he is doing. Although his salary will accrue and be payable to him at some time in the future when the cashflow is positive and can sustain it… he is not drawing any paychecks at this time at all.
F) Reverse Split: ===================================================================
1) What is the likelihood of a reverse split?
ANSWER: There are no plans for a reverse split and there have been no discussions about it.
G) Good new coming ??: :~) ===================================================================
1. Is there significant good news coming which might raise the stock price?
ANSWER: “We
Part II
E) Robert Gordon/Executive Compensation: ===================================================================
1. What great performance in your management of TSIG during 1998 justifies doubling your pay and granting you 5 Mm shares of the company? After all, you reduced the sales by 50% only while the losses have been reduced by only 30% and will you voluntarily reduce your pay back to the level of 1998 until you show you can indeed grow the top line as your intentions indicates and stop shipping a $1 dollar product wrapped with a $12 dollar bill (roughly the performance of last year, the year before you managed to wrap those sales a little less costly, each dollar of sales was wrapped with a $9 bill).
ANSWER: This was discussed in earlier posts I made from St. Petersburg almost two weeks ago. IMO, Rob Gordon is underpaid for the enormous number of hours he puts into our company and for what he has accomplished in such a short time. However, and this is an important “however”, I saw the payroll sheets for 1998 and 1999 to the present. Rob Gordon did not take his salary for many months in 1998 and has not drawn a salary check so far in 1999. The salary will accrue, however, and will be owed to him when the company can afford to pay him. He obviously is doing his very best to assure that this company is successful.
2. What justifies establishing option plans of 47.5 MM shares for a company which had only 30MM shares at the beginning of 1998, is there a model of any other company where such a ratio is practiced?
ANSWER: The justification is, IMO, quite simple. If we all want TSIG to become the major force and eventual superstar we anticipate, then it is incumbent upon the Company to hire the best personnel and staff and consultants possible. Some are paid in cash, but as in most companies where people who are considering coming on board see great future growth potential, the options they receive are far more important to them then their salary. If anyone questions this I suggest they pay a visit to Silicon Valley. They will learn very quickly that the options employees receive are far more important to them than their salary. Once the cashflow becomes positive and as these management people continue doing their job and bringing in additional business… the entire matter, IMO, becomes moot. The shareholders of Amazon.com (which showed a recent loss of $1.89/share) has over 150MM shares outstanding and just raised the authorized to 1.5 Billion (yes… BILLION) shares… and I don't see their shareholders crying. TSIG will, IMO, become far more profitable and in a much more rapid time frame than any other company in our sector.
3. What is the distribution of these 47.5 MM shares between the various executives of the company, how many of these options were actually granted so far, and does this number include the 30 MM shares or so exercised last year.
ANSWER: TSIG.com has established three separate Employee Benefit and Consulting Services Plans totalling 47.5MM shares. All shares covered by these plans have been registered in seven separate Form S-8 registration statements. Shares and options under these plans have been granted to qualified consultants, advisors, officers, directors and employees of the Company and its subsidiaries.
Many of the shares and options under these plans were granted as long ago as 1996 to consultants, advisors and employees who are no longer with the Company. Approximately 40MM of these options have been exercised, the underlying stock sold, and the shares included in the float, so there is very little “overhang”. Of the remaining 7.5MM available, the majority have not yet been granted.
The directors and senior management of TSIG.com own “options” as follows as of 12/31/98 (per 10K): (fixed font would have given better allignment, but would have spread it across the entire page... it should be easily understandable)
<Person> <Approximate Total> <Vested 3/1/99>
Robert Gordon 0 0
Paul Henry 1,150,000 853,360
Michael Gordon 125,000 41,665
John Hwang 1,750,000 503,572
James Guild 1,750,000 194,438
All these options are exercisable at 0.30/share. The options for Messrs. Henry, Hwang, and Guild vest over three (3) years, while Michael Gordon's vest over one (1) year.
Directors and senior management own “shares” as follows as of 12/31/98:
<Person> <approximate total>
Robert Gordon & Family 14,060,000
Paul Henry 35,000
Michael Gordon 304,000
ALL shares owned by control persons have to be sold pursuant to a registration statement or under Rule 144.
4. What is the status and intention regarding the 41M shares/options RG holds.
ANSWER: This is a complete misconception. Robert Gordon does NOT have 41MM shares or options or a combination of either. His shareholdings and granted options are listed above. In order to protect the company's financial viability, it signed a contract with Rob Gordon that IF in the event the company needed cash (which it obviously does not since the PP was put into place and with the other alternatives being worked on) and IF Rob Gordon gave the necessary funds to the company at the time… then and then only would these options (so many shares per contract) go into effect. As of this date, this is also a moot point and Rob Gordon has no further options than are listed above… i.e.: zero.
5. In light of the fact that to date TSIG has not been profitable, how is the huge salary increase for Rob Gordon justified?
ANSWER: asked and answered (see above)
7. Would Rob Gordon consider waiving this salary increase until after TSIG becomes profitable? Pay for performance?
ANSWER: asked and answered. De facto, that is exactly what he is doing. Although his salary will accrue and be payable to him at some time in the future when the cashflow is positive and can sustain it… he is not drawing any paychecks at this time at all.
Hope this helps anyone investigating the comapny.
Pat T. |
