Datalex shareholders have been urged by a leading advisory firm to vote against the travel retail software company’s remuneration report at its annual general meeting next Thursday, after its new chief executive received a $238,928 (€219,800) sign-on bonus and stock options that activate sooner than normal.
The company hired Jonathan Rockett, the former managing director and chief financial officer of mobile top-up firm Ding, as chief executive last November, succeeding tech industry veteran Sean Corkery.
Institutional Shareholder Services (ISS), a leading global proxy advisory company that makes voting recommendations to large investment groups, said it does not support special awards to people joining a company “save for exceptional situations and only if accompanied by an appropriate explanation, as the awards are undermined should the recruit fail to deliver [on] expectations”.
ISS also took aim at how 3.7 million share options were granted to Mr Rockett, as they vest annually over three years.
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“The vesting period is not in line with local market standards, which expect long-term incentive awards to vest no earlier than three years from the date of grant,” ISS said.
ISS has also called on investors to vote against the re-election of non-executive director Peter Lennon, a corporate lawyer with Ronan Daly Jermyn who has been on the board for the past 31 years.
The advisory firm has taken exception to the fact that Mr Lennon, who is not considered an independent director given the length of his time on the board, is chair of Datalex’s remuneration committee. ISS’s governance policy is that remuneration committees should be comprised solely of independent, non-executive directors.
A spokesman for Datalex declined to comment on the ISS report.
The agm takes place as Datalex advances plans to carry out a share sale to repay €13 million of high-cost loans from its main investor, Dermot Desmond, and secure working capital to invest in growing the business. Market sources estimate that Datalex will seek to raise as much as €30 million in the second half of this year.
[ Datalex plans share sale to repay €13m of high-cost Desmond loansOpens in new window ]
Mr Desmond, who has provided loans through his Tireragh Limited vehicle, has agreed to extend the term of the loans by six months to July 1st, 2025. He will provide a new €10 million facility, if needed, should the equity raise not be completed. The loans carry an 18 per cent interest rate; some €1.9 million of interest was owed as of the end of last year.
The billionaire owns about 41 per cent of Datalex and has been a consistent provider of loans since the company was rattled by an accounting scandal five years ago.
The extension and offer of additional loans as a backup plan allowed Datalex to sign off on its accounts on a going-concern basis. This essentially means the company has the funding to remain in business for at least the next year.
Datalex posted a net loss of $9 million last year and had net liabilities of $17.6 million.
The company’s auditors, Deloitte Ireland, highlighted in the annual report that “a number of material uncertainties exists that may cast significant doubt on the group’s and parent company’s ability to continue as a going concern” should Datalex not raise equity to repay the Demond loans and fund working capital needs.
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