Directors on the ENU scale (FY2020 perspective)
Quote:
Originally Posted by
Entrep
Planning to buy more SPK than any other share, just waiting for the right time.
Some choose when to buy their Spark shares. Others, like directors for example, have less choice. Their buying and selling is restricted to a limited window, after both the full year and half year result release dates. But how many shareholders know the Spark directors are 'forced' shareholders, no matter what they may think about the prospects of the company? This was first mentioned in AR2017 p90:
"All non-executive directors are encouraged to hold Spark shares. Subject to personal circumstances (that should be discussed with the Chair, or in the case of personal circumstances of the Chair, with the Chair of the Audit & Risk Management Committee, as appropriate) there is an expectation that each non-executive director will hold an amount of shares equivalent to the non-executive director base member fee to be purchased over a three year period from the date of their appointment or in the case of directors appointed before 1st July 2017 over a three year period from that date."
Using this information I thought it would be interesting to draw up a list of the non-executive directors and see how they sit on the ENU shareholder scale, where E stands for 'Enthusiastic', N stands for 'Neutral' and 'U' stands for 'Underdone'. AR2020 p103 shows Chair fees of $368,700 and non-executve director fees of $145,200. The Spark share price closed today at $4.75.
That means for a 'neutral' position, a non-executive director must hold: $145,200 / $4.75 = 30,568 shares
And to be neutral, the Chair must hold: $368,700/$4.75 = 77,621 shares
Lined up against these standards, how is the board doing? Because the share price goes up and down, for the purposes of this exercise I will describe any holder of shares within 10% of the 'neutral number' as 'neutral'.
Number of Spark Shares held by Directors (AR2020)
Director |
Enthusiastic |
Neutral |
Underdone |
Alison Barass |
37,716 |
|
|
Paul Berriman |
|
|
20,000 |
Warwick Bray |
|
|
0 |
Pip Greenwood |
|
33,325 |
|
Ido Leffler |
|
32,000 |
|
Charlie Sitch |
|
32,729 |
|
Justine Smythe (Chair) |
375,201 |
|
|
Good marks for Justine Smythe and Alison Barass, showing their enthusiasm for the company via their shareholdings.
Pip Greenwood, Ido Leffler (joined the board 2014) and Charlie Sitch (joined the board 2011) are playing the game by the book, with their minimum holdings. Pip Greenwood did not join the board until April 2018. By the rules she had until April 2021 to accumulate a satisfactory holding. So I do give Pip some bonus points for 'getting in early'.
Paul Berriman has been on the board for ten years. So it isn't a good look for him to be snubbing the minimum shareholding requirement. Warwick Bray has the excuse of only joining the board in September 2019. By the director share accumulation rules, he would not be expected to finally accumulate his required holdings until September 2022. But he seems in no hurry to accumulate his Spark shares, which is not a good look.
So there you have it. Under ordinary circumstances it would be good to see so many of the board with 'skin in the game', overseeing the business with their 'owner's eye'. However, having read and understood the minimum share ownership requirements for non-executive directors at Spark, the 'Enthusiasts' are cancelled out by those 'Underdone'. Overall director engagement with Spark, as expressed via shareholdings of the non-executive directors, looks a bit ho hum. But I will be polite and call it 'neutral'.
SNOOPY