4DS issues 28.5m options to management 😮 …. how about getting some runs on the board for a change?

In what must be the most eye brow-raising news this morning, 4DS Memory (ASX:4DS) said it will be issuing a total of 28.5 million options to management and consultants at 3.7 cents!! 

If there has been one Tech company on ASX that has let shareholders down over the last few years, it’s 4DS. So, at the very least, the timing of issuing these options is very poor, to say the least.

 

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4DS is rewarding underperformance

Over the years, 4DS has had to inform the market multiple times that it is having issues getting its technology to work. Specifically, the company is having production and yield issues with its test wafers, which has meant a pushout of commercialisation by at least 2 to 3 years already.

The CEO responsible for 4DS’ development strategy, Guido Arnout, retired earlier this year. But the 2nd in line when it comes to responsibility for the company’s development issues is arguably the Chief Technology Officer (CTO). But 4DS is giving Ting Yen 20 million options at 3.7 cents! Again…poor timing.

On top of that, 3.7 cents is just a 12% premium to Friday’s close. Whatever happened to options being a long term incentive?

 

Circumventing shareholders

But there’s more news that should upset shareholders. In order not to have to ask shareholders for permission to grant options to the Chairman, Wilbert van den Hoek, 4DS simply increased his stake in the so-called Sale Bonus Pool from 25% to 38.5%. This bonus pool comes into effect if and when 4DS is sold. Part of the proceeds would go into this pool that management would then share in.

But we believe investors should have an opportunity to vote on whether or not the Chair should get any sort of reward at all in light of the company’s abysmal performance in recent years. He already saw his remuneration jump from $50,000 a year to $150,000 just last month. And the buck should stop with him when it comes to overall accountability.

 

 

Shareholders must be numb

We haven’t seen much outrage on Social Media this morning and 4DS’ share price hasn’t moved much. Investors must be numb by now.

We have owned 4DS shares in the past, but said farewell a few years ago after a solid run-up in the share price. We because of the ongoing development issues we never got back in, despite seemingly attractive share price levels in 2022. We believe the development issues are of a structural nature and given the choosen technology, which includes materials (PCMO) that are currently not used in semiconductor fabs, we expect commercialisation may be a very drawn-out process, if the company ever gets there.

 

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