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Incentives & Just Greed and Dilution at Mission Marketing

Tom Winnifrith
Friday 20 July 2012

I see that AIM listed Mission Marketing (TMMG) is screwing its shareholders today but of course it announces it in a way that makes you think that the company is doing you a favour. I am not sure about the fundamentals here (although superficially they look attractive) but any company that is addicted to systematically transferring value from shareholders to senior staff is not one that I would feel compelled to own shares in. Having said that this stock was tipped just 5 months ago at 19.125p on so, we are already 46% ahead on that t1p. Not bad. However, the statement reads:

The Mission Marketing Group plc, the national marketing communications and advertising group, announces that the Remuneration Committee agreed yesterday to issue nil-cost options under the The Mission Marketing Group plc Long Term Incentive Plan (the “LTIP”).

The total number of new LTIP options issued yesterday was 1,450,000, representing 2% of the Company’s issued share capital, taking the total number of LTIP options in issue to 4,113,000. LTIP option awards may be satisfied by shares held by The Mission Marketing Group Employee Benefit Trust and/or through the issue of new shares, as appropriate. The vesting of LTIP options is dependent upon achieving profit targets over a three year period.

What are the targets that Mission has to meet in order for it to hand out shares at no cost to senior staff? You kind of know that they will not be that ambitious. It is always the way. Staff in this industry are well paid anyway. And so now they get to do their job, trousering suitcase full of wonga for doing so, and then get 2% ( actually with all the LTIP stuff it is 6%) of the company for nothing. Bargain.

Given that there are stacks of fit birds and plenty of cocaine swirling around in the advertising world I think I see scope for an enjoyable career change here Okay, only joking. About the cocaine certainly. And for the avoidance of doubt and law suits there is no suggestion that anyone at Mission does drugs. I am sure that all its staff are purer than the driven snow.

If you wish to align the interests of key staff and shareholders here are three suggestions for the hapless buffoons who sit on this company’s Remuneration Committee:

1. When making an announcement like this tell shareholders and potential new shareholders what the targets are. Transparency is not a crime it is a virtue.

2. Make the purchase price on the options at least a 20% premium to today’s share price ( which its itself 20% down on where it was 3 years ago). Align the interests of key staff 100% with those of long suffering shareholders. What is being proposed is simply a transfer of value from existing shareholders to staff. If the targets to get the shares really are ambitious ( as they should be to be a target) then given that the shares trade on an historic PE of 7, that debt is now under control and that Mission has just served up an upbeat trading statement the shares should fly (if ambitious targets are met).

3. Resign at once and get in better NEDs to sit on a remuneration committee – ones who actually bat for shareholders as they are meant to do.

So investors and staff would BOTH gain. Is that to much to ask?

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About Tom Winnifrith
Tom Winnifrith is the editor of When he is not harvesting olives in Greece, he is (planning to) raise goats in Wales.
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