3967 days ago
The company is delighted to announce that it has issued shares to a) grow the business by acquisition b) to provide working capital to grow the business c) in response to institutional demand or d) all of the above. Very rarely does a company say that it is issuing shares because it is running out of cash. The reality is that this is all too often the reason. And some companies seem rather keener on issuing shares than others. The reason: management and shareholder misalignment.
Nigel Wray always bangs on about this and he is right. When you invest in a business you want the CEO and other key personnel to want exactly the same thing as you which is, if we cut to the chase, the share price to go up with a few dividends as a bonus.
Now it is very rare for a PLC director to have no skin in the game at all via shares. When that is the case you really have to ask why? However if you skim through the annual reports of all too many AIM companies you will see that the shareholding of the main men (and women, lest I be accused of sexism) is, in absolute terms, not great. And relative to their total compensation it can often be trivial.
