TIDMPPIR TIDMPPIX
RNS Number : 2088J
ProPhotonix Limited
10 June 2014
June 10, 2014
ProPhotonix Limited
("ProPhotonix" or "the Company")
DIRECTOR DEALING AND NEW REMUNERATION POLICY AND 2014 STOCK
INCENTIVE PLAN
ProPhotonix Limited, (London Stock Exchange - AIM: PPIX and
PPIR; OTC: STKR), a designer and manufacturer of LED illumination
systems and laser diode modules with operations in Ireland and the
United Kingdom,today announces director share option award and new
remuneration policy and incentive plan.
Raymond Oglethorpe, Chairman and Non-Executive Director,
provides the following information:
The ProPhotonix Governance, Nomination and Remuneration
committee, in conjunction with Abbiss Cadres LLP, has been
deliberating how the Company's remuneration policy can support the
recovery to profitability and the creation of value for
stockholders. The committee believes that an effective remuneration
policy, closely linked to the Company's objectives, is a vital part
of that recovery. Therefore, the committee has implemented a new
equity incentive plan and specific performance criteria associated
with option grants for its senior management. This communiqué sets
out more information on the new equity incentive plan and the
remuneration policy ProPhotonix is implementing for its senior
management.
Background
The Company previously granted options under its various option
plans including the current 2007 Stock Incentive Plan ("2007 Plan).
The 2007 Plan is now exhausted and without the capacity to provide
a meaningful equity incentive to the Company's key individuals or
provide the desired level of alignment with stockholder interests.
Taking account of the cash constraints on the Company, the
committee has concluded that share options remain the best way of
incentivising and retaining key individuals to drive improvements
in stockholder value over the medium to long term. Accordingly, the
committee and board have approved and implemented the 2014 Stock
Incentive Plan.
2014 Equity Incentive Plan (Summary)
-- A new equity incentive plan to replace the current 2007 Plan that will cease to operate
-- 8,200,000 shares reserved for initial award to key senior management
-- 2,000,000 shares reserved for awards in the future to new hires and other employees
-- 2,000,000 shares (or 5% of the share capital, if less) will
become available for equity awards under the Plan in each
subsequent year
New remuneration policy for senior management
Summary
In order to incentivise the achievement of its objectives, the
Company has implemented a new remuneration policy for its senior
management with the following elements:
-- A one-off substantial performance based option grant to key
senior management at market value
-- No further grants intended to said senior management through
the end of the three-year measurement period
-- Cliff vesting on December 31, 2016 at different levels
dependent on achievement against the performance target (zero below
50% up to 100% vesting at 90% attainment)
-- 10 year option term
Performance measure
The performance measure is the driving factor behind the new
policy. As Tim Losik, President and CEO, explained in our 2013
annual report, the key to ProPhotonix's future prosperity will be
growth in revenue and attainment of positive cash flow leading to
net profits. The committee believes that a performance measure
linked to positive cash flow over the performance period is a
proper performance metric. Broadly, the target is EBITDA equal to
90% of the term debt and lease principal payments, and all interest
payments, which are due during the performance period. Such
payments would, on the basis of current obligations, amount to
approximately $3.0 million in total. Achievement of this objective
will result in full vesting. The committee and board believe that
achievement of the objective will result in the creation of
significant stockholder value.
Director Dealing
The one-off awards of 8,200,000 performance based options
granted June 9, 2014 are issued at market value of $0.038 per
share. Tim Losik, President and CEO, received 3,500,000 of the
awards with the balance of 4,700,000 going to other members of the
management team. The amount of option grant takes into account the
one-off nature of the grant with no further intended awards to
these individuals for the three years of the performance
period.
Impact of awards
The maximum potential dilution from all options (including out
of the money options of 9.0 million shares June 9, 2014) will
increase from 17.3% to 27.1% as result of the one-off award
(assuming the performance target is achieved in full). The
committee believes the proposed level of grants is both necessary
and justifiable, given that vesting fully is dependent on the
achievement of targets which, if achieved, should result in the
creation of significant stockholder value.
In conclusion, the committee and board considers the new
remuneration policy a key part of the Company's path to
profitability. By linking the potential rewards under the option
grants to the Company's strategy of achieving sustained positive
cash flow, the committee believes that it provides a consistent
alignment between the senior management team and stockholders.
Contacts:
ProPhotonix Limited Tel: +1 603 893 8778
Tim Losik, President and CEO ir@prophotonix.com
N+1 Singer Tel: +44 (0) 207 496
Andrew Craig/ Ben Wright 3000
Nominated Adviser and Broker
About ProPhotonix
ProPhotonix Limited, headquartered in Salem, New Hampshire, is
an independent designer and manufacturer of diode-based laser
modules and LED systems for industry leading OEMs and medical
equipment companies. In addition, the Company distributes premium
diodes for Oclaro, Osram, QSI, Panasonic, and Sony. The Company
serves a wide range of markets including the machine vision,
industrial inspection, security, and medical markets. ProPhotonix
has offices and subsidiaries in the U.S., Ireland, U.K., and
Europe. For more information about ProPhotonix and its innovative
products, visit the Company's web site at www.prophotonix.com
Cautionary Statement
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements
other than statements of historical fact, including without
limitation, those with respect to ProPhotonix's goals, plans and
strategies set forth herein are forward-looking statements. The
following important factors and uncertainties, among others, could
cause actual results to differ materially from those described in
these forward-looking statements: uncertainty that cash balances
may not be sufficient to allow ProPhotonix to meet all of its
business goals; uncertainty that ProPhotonix's new products will
gain market acceptance; the risk that delays and unanticipated
expenses in developing new products could delay the commercial
release of those products and affect revenue estimates; the risk
that one of our competitors could develop and bring to market a
technology that is superior to those products that we are currently
developing; and ProPhotonix's ability to capitalize on its
significant research and development efforts by successfully
marketing those products that the Company develops. Forward-looking
statements represent management's current expectations and are
inherently uncertain. ProPhotonix undertakes no duty to update any
of these forward-looking statements. All Company, brand, and
product names are trademarks or registered trademarks of their
respective holders.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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