Executive directors of local e-commerce behemoth, Kogan.com, Ruslan Kogan and David Schafer are set to receive $50 million in bonus options if a new long-term incentive plan is approved. It comes after Kogan.com announced a 150% year-on-year jump in gross profit for the month of April 2020.
The news was revealed in a trading update to investors on Tuesday morning.
The company has proposed a new Long Term Incentive (LTI) plan for Mr Kogan and Mr Shafer which “retains and incentivises the Executive Directors well into the future”, presented by its remuneration committee.
The bonuses would provide CEO, Ruslan Kogan, with 3.6 million options and 2.4 million to CFO and COO David Shafer – around $30 million and $20 million worth respectively.
The proposed option grants are at the approval of the board and shareholders, with a vesting condition that neither can resign prior to the approval of its FY23 financial report.
An exercise period is to be agreed between the parties.
The exercise price is based on a three-month weighted average ending April 30 – where shares dived amid the impact of COVID19.
Kogan.com foreshadowed the incentive update with news it has delivered total shareholder return of 343.89% between its IPO in July 2016 to the end of April 2020.
For the month of April, gross sales climbed over 100% year-on-year, whilst adjusted EBITDA lift over 200%.
“[Ruslan and David] have been fundamental in building and growing the high performing company we see today, and shareholders have been rewarded with an exceptional return on their investment since IPO,” claims Kogan.com Chairman, Greg Ridder.
“Recent performance of the Company highlights the solid foundations of our business – with strong customer appeal, multiple revenue streams, diverse supply chains, and world-class proprietary systems and processes.”
Tuesday’s trading update reveals active customers grew to 1.94 million as at April 30, with an incremental 139,000 active customers in the month.
Financial year-to-date adjusted EBITDA to the end of April jumped by over 40%.
“The proposed LTI grant (which will be by way of options over ordinary shares) involves at-risk equity with an additional service condition of at least three years,” says Chairman Ridder.
“Other than usual annual reviews, no changes to the modest fixed remuneration of Ruslan and David are proposed”
“The Remuneration Committee has received advice from an independent expert and believe that the proposed option grant will generate long term shareholder value. We believe the grant is in the best interests of all shareholders.”
Shares in Kogan.com are up 6.34% to $8.89 before just before midday.
