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Screenshot of a breaking news alert e-mail from Q2 2017
KVB shares (HKG:8077) are still trading below their July 2013 IPO price.
Share price trades down, so…. let’s give management more stock.
LeapRate Exclusive…. Hong Kong based retail forex broker KVB Kunlun has made its first major grant of stock options to its senior employees since the KVB Kunlun IPO last summer. In total, KVB has issued 40 million options representing about 2% of KVB’s currently outstanding shares.
The options are exercisable at HK$0.414 per share, roughly KVB’s current share price — and about 10% below KVB’s HK$0.452 IPO price. All options are for four years, with some having a one-year wait (vesting) period and some having a two-year wait period.
So who got them?
The options are being divided among 68 employees of the company, although not exactly evenly. KVB Kunlun CEO Stefan Liu gets nearly a quarter of them (9.52 million), and his right man in running the company Frederick Ng Chee Hung gets 10%, or 4 million. KVB’s Australia office head Stephen McCoy got 800,000.
The KVB options grant contrasts sharply with the strategy being employed by this summer’s other forex IPO, Plus500. Unlike KVB, Plus500 has decided to keep its ownership slate clean and is not granting options to employees, including senior management. And unlike KVB, which is down from its IPO price, Plus500 shares have soared, roughly tripling in the past six months to give Plus500 a market value of more than $500 million.
The argument on whether or not to use these kind of ‘golden handcuffs’ for employees is a long and complicated one, with some very smart management gurus on both sides of the issue. On the one hand the Board wants to focus management and employees at all levels on increasing shareholder value (i.e. growing the share price), and want employees incentivized accordingly. However having everyone’s fortune’s at a company tied to the share price, which employees cannot control at least on a day to day basis, can prove a huge distraction to doing the things which actually build value.
For more information on KVB’s option grant click here.