Re: 10mm vs. 25mm - I think it's simply to avoid voting over & over again.
I actually didn't read the full proxy section until just now because I was literally drafting an email to Mulholland but then realized just about all of my questions/concerns were addressed in the incentive section of the proxy itself (available here - https://www.cytodyn.com/investors/sec-filings...-filings#)
The below helped me so figured I'd share since it comes direct from the proxy and answers everything I planned on emailing Mulholland about.
Sounds like they approached this in a thoughtful fashion and recognized they needed outside experts specifically in this area to help them do so, and they did that. I'm leaning towards being satisfied with this approach to the business as long as I don't think any of them are outright lying (which could open them to lawsuits I'm sure...) or being disingenuous.
Again, not trying to convince anyone, just sharing a bit of my personal due diligence, the back & forth on this board here is very helpful, pro's & con's to everything.
Bold/italics are from me, not the proxy:
1. Outside consultants were used to help guide them - Mercer & Pay Governance
2. 1% annual "Evergreen Increase" is explained here and is not uncommon practice (2014 link below shows 4% is a common #, previous poster said 2% at his biotech firm in the past, 1% doesn't seem outlandish): "Providing for a source of additional shares each year under the Plan will also save the Company the cost of having to continuously request stockholder approval for increases in our equity compensation plan, which we have done several times over the past three years. "
See - https://www.investopedia.com/terms/e/evergreenoption.asp
See - http://streeterwyatt.com/2014/05/19/biotech-i...vergreens/
3. They are well aware of the dilution concerns:
"We are cognizant of the dilutive impact of our equity compensation programs on our stockholders, and our Compensation Committee balances this concern with the need to maintain competitive compensation practices and the need to attract and retain management talent. "
and
"According to materials provided by our compensation experts, the current dilution of our 2012 Plan (unvested shares and unexercised stock options and warrants granted as compensation, as a percentage of common shares outstanding) is below the 25th percentile of our peer companies, and total potential dilution even accounting for the 25,000,000 increase in shares keeps us below the peer 25th percentile."
4. They admit this is not a precise science and were balancing several unknowable variables leveraging the advice from the outside consultants:
" It is difficult to exactly predict our need for shares under the 2012 Amended and Restated Plan, as events that are currently unknown to us could cause the shares authorized under our Plan to be used more quickly or more slowly than we estimate. These circumstances include, but are not limited to, the future price of our common stock, future hiring activity, payout of performance-based awards in excess of target in the event of superior performance, and promotions during the next few years. However, based on guidance from our compensation consultants, and following our compensation philosophy of “pay for performance” we determined that an increase of 25,000,000 shares was an appropriate increase to our equity incentive plan."
5. RSU, PSU, options, restricted stock, etc. are all part of the plan:
"The 2012 Plan provides for the grant of nonqualified and incentive stock options, stock appreciation rights or SARs, restricted stock, restricted stock units or RSUs, performance shares, non-employee director awards and other stock-based awards. "
6. Re: Point #5, yes, can they just ignore RSU/PSU/restricted stock/etc. and grant outright awards, of course... has that been their MO, not that I can tell... and they write:
" Supports our pay-for-performance philosophy . Stock-based compensation is, by its very nature, performance-based compensation. We believe a significant portion of total compensation for our executives should be incentive compensation in the form of long-term incentives that are tied to the achievement of challenging and important business results critical to the Company’s success. Incentive compensation helps focus our executives on the Company’s desired business results and motivates them to make decisions and take actions that produce those results."
3.5 hours and counting, I expect forward progress, but leaps & bounds will be a nice surprise.
I actually didn't read the full proxy section until just now because I was literally drafting an email to Mulholland but then realized just about all of my questions/concerns were addressed in the incentive section of the proxy itself (available here - https://www.cytodyn.com/investors/sec-filings...-filings#)
The below helped me so figured I'd share since it comes direct from the proxy and answers everything I planned on emailing Mulholland about.
Sounds like they approached this in a thoughtful fashion and recognized they needed outside experts specifically in this area to help them do so, and they did that. I'm leaning towards being satisfied with this approach to the business as long as I don't think any of them are outright lying (which could open them to lawsuits I'm sure...) or being disingenuous.
Again, not trying to convince anyone, just sharing a bit of my personal due diligence, the back & forth on this board here is very helpful, pro's & con's to everything.
Bold/italics are from me, not the proxy:
1. Outside consultants were used to help guide them - Mercer & Pay Governance
2. 1% annual "Evergreen Increase" is explained here and is not uncommon practice (2014 link below shows 4% is a common #, previous poster said 2% at his biotech firm in the past, 1% doesn't seem outlandish): "Providing for a source of additional shares each year under the Plan will also save the Company the cost of having to continuously request stockholder approval for increases in our equity compensation plan, which we have done several times over the past three years. "
See - https://www.investopedia.com/terms/e/evergreenoption.asp
See - http://streeterwyatt.com/2014/05/19/biotech-i...vergreens/
3. They are well aware of the dilution concerns:
"We are cognizant of the dilutive impact of our equity compensation programs on our stockholders, and our Compensation Committee balances this concern with the need to maintain competitive compensation practices and the need to attract and retain management talent. "
and
"According to materials provided by our compensation experts, the current dilution of our 2012 Plan (unvested shares and unexercised stock options and warrants granted as compensation, as a percentage of common shares outstanding) is below the 25th percentile of our peer companies, and total potential dilution even accounting for the 25,000,000 increase in shares keeps us below the peer 25th percentile."
4. They admit this is not a precise science and were balancing several unknowable variables leveraging the advice from the outside consultants:
" It is difficult to exactly predict our need for shares under the 2012 Amended and Restated Plan, as events that are currently unknown to us could cause the shares authorized under our Plan to be used more quickly or more slowly than we estimate. These circumstances include, but are not limited to, the future price of our common stock, future hiring activity, payout of performance-based awards in excess of target in the event of superior performance, and promotions during the next few years. However, based on guidance from our compensation consultants, and following our compensation philosophy of “pay for performance” we determined that an increase of 25,000,000 shares was an appropriate increase to our equity incentive plan."
5. RSU, PSU, options, restricted stock, etc. are all part of the plan:
"The 2012 Plan provides for the grant of nonqualified and incentive stock options, stock appreciation rights or SARs, restricted stock, restricted stock units or RSUs, performance shares, non-employee director awards and other stock-based awards. "
6. Re: Point #5, yes, can they just ignore RSU/PSU/restricted stock/etc. and grant outright awards, of course... has that been their MO, not that I can tell... and they write:
" Supports our pay-for-performance philosophy . Stock-based compensation is, by its very nature, performance-based compensation. We believe a significant portion of total compensation for our executives should be incentive compensation in the form of long-term incentives that are tied to the achievement of challenging and important business results critical to the Company’s success. Incentive compensation helps focus our executives on the Company’s desired business results and motivates them to make decisions and take actions that produce those results."
3.5 hours and counting, I expect forward progress, but leaps & bounds will be a nice surprise.
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