REL: 1019 HRS Rakon Limited
GENERAL: RAK: Rakon Long Term Share Incentive Plans
Rakon Limited Long Term Share Incentives
Rakon's Board of Directors has resolved to grant 1.35 million restricted
shares to senior executives in the company to align and reward them with
successful realisation of Rakon's growth objectives over the next 3 to 5
years ("Restricted Share Plan"). Rakon's Board has also resolved to issue
850,000 share options to key managers and employees ("Share Option Plan").
These Plans replace recently expired employee share schemes.
Key elements of the Restricted Share Plan are as follows:
- Rakon will issue ordinary shares in the Company for the benefit of the
executives, which will be funded by an interest-free limited recourse loan.
Shares will be issued at $1 per share.
- The issued shares will be held by a trustee on trust for the executives
until certain performance hurdles are satisfied. Provided these performance
hurdles are satisfied, shares will be awarded to the executive and the
associated loan will be repaid through a cash bonus paid by the Company.
- The performance hurdles are based on annual earnings per share targets for
the 2011, 2012 and 2013 financial years. Assuming these targets are met an
award will be made annually from the share grant. The shares will then
transfer to the executives 2 years following the award (i.e. if awarded,
shares will transfer to the executives in May of 2013, 2014 and 2015).
Key elements of the Share Option Plan are as follows:
- Options will be issued with the right to acquire ordinary shares at the 20
day VWAP of the share price as at the issue date.
- Share options vest evenly over a three year period with the first 1/3
vesting in May 2011.
- In order to exercise the option to acquire shares, Rakon's share price must
achieve at least a benchmark return from the issue date. This benchmark
return has been set at 20% compound per annum thereafter.
Rakon's Chairman Bryan Mogridge commented that the Board was very pleased to
put the Plans in place. He noted the performance of the group of executives
and employees covered by the Plans were critical to Rakon realising the
substantial growth opportunities that exist and resultant increases in the
company's earnings over the next 3 years. Rakon recently reported that it
was comfortable with analysts' consensus estimate of EBITDA of NZ$25 to NZ$30
million for the FY11 year. Based upon market opportunities that exist the
Board are planning for solid earnings growth in FY12 and FY13. Mogridge
noted that the issue price and target returns for the Restricted Share Plan
were established to ensure rewards were realised only if actual returns met
the Board's expectation over the next three years rather than just a simple
improvement in company's share price which is not currently reflecting the
company's immediate and future earnings prospects.
Rakon's two most senior executives, Brent Robinson and Darren Robinson are
not participants of the Plan due to the fact they are substantial
shareholders of Rakon.
End CA:00196522 For:RAK Type:GENERAL Time:2010-06-25:10:19:56