Why did Clarus give Kanders 500,000 shares of restricted stock this year?
He's getting paid $250K + bonus + options for part-time work.
He got a special grant of 1 million options when he signed his employement contract last year.
There's no strike price. It's not an option. Clarus has given the stock to Kanders.
It vests is Kanders is fired without cause. Clarus wants to acquire an operating business. Over time it might make sense for a senior employee of that operating business to become CEO of Clarus. The BOD could ask Kanders to step aside. His restricted stock would then vest. This actually gives Kanders a $3mm incentive to get himself fired.
It vests after 10 years regardless of the share price at that time.
It vests if there is a "change in control." A "change in control" would cause CLRS to lose the tax benefit of its NOL, but hey, Kanders would actually benefit from it.
$15 is just a fig leaf.
You really have me puzzled. You state the following:
" In order to make money he just needs for the stock to vest and there are several ways that could happen without the stock hitting $15. "
How can Kanders make money on this 500,000 share arrangement if the stock never hits $ 15. Based on his filings of this issue, I must be missing something, but I cannot see how he can make money when the market price of the stock is below his strike price of $ 15.
Can you clear this up.
<< for Kanders to be able to make money on this restricted stock, the market price of the stock would have to exceed $ 15. >>
No. In order to make money he just needs for the stock to vest and there are several ways that could happen without the stock hitting $15.
This 500K grant occured just 2 days after Kanders assumed the position of CEO at another company (AH).
G&A expense was $1.5mm last quarter even though Clarus has only 5 employees. G&A expense includes travel payments to Kanders Aviation - wonder who owns that...
Here's the only way the current share price could make sense to me: CLRS invests $90mm next year in a business that earns a highly predictable 15% pretax annual ROE. If you discount that backwards at a rate of 10% and assume no additional share issuance then the current price looks OK after 9 years of earnings.
Are there businesses available for acquisition with a highly predictable 15% ROE (after paying the lavish expenditures of the Kanders executive team)? Actually I don't know.
If you assume a higher ROE and/or a lower discount rate then the present value (and attractiveness of CLRS shares) increases.
Seems like CLRS might work out for shareholders and it might not. But Kanders has guaranteed that it works out for him.
I bought CLRS in the 4s and sold in the 5s.
Ok, I agree on the voting right part. That, however, is small potatoes as he already owns close to 10% of the company using his own money in the open marketplace.
On the issue of dividend payments, surely you must realize that none of us got into CLRS for a dividend payment, and neither did Kanders.
I clearly sense your frustration, though I cannot tell why. How long have you been in CLRS ? From where I sit, I see that the stock went from 3.50 when Kanders started buying it in Feb. of 2002 to a value more than twice that. That is better than I was able to get on my GE, MSFT, and INTC stock.
So, my point is still valid, for Kanders to be able to make money on this restricted stock, the market price of the stock would have to exceed $ 15.
Look at the Form 4. The 500,000 share option award, that he got in April of this year has a strike price of $ 15.00 / share.
I don't know about you, but I would be really pleased if Kanders exercised this option anytime soon, or at least within a year. I hope he makes plenty of money on exercising this strike price of 15 option.
It's restricted stock, not an option. It has no strike price. It is currently worth $2.5mm.
It automatically vests if CLRS trades at $15, or under a variety of other conditions, one of which will inevitably be satisfied.
Anybody have any idea why Kanders was given these shares in addition to annual salary, annual bonus, annual option grant, and the special option grant he received when he signed his contract?