IS Aerogrow up for sale -SEC Form 8-K 5.02 compensatory arrangement of officer

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anonymous (not verified)
IS Aerogrow up for sale -SEC Form 8-K 5.02 compensatory arrangement of officer

I was looking into AERO stock and found this rather interesting news / SEC filing on Mar 27 indicating additional payment of up to 500K for certain key officers in the even of sale of the company.   

So I am speculating if one of the options AERO is considering is sale of the company since this filing basically ensure that the officer get a cut if sale of the company is over $2 Million since their options are likely underwater.   AERO current fiscal year end is Mar 31 so financials would not be out till end of Apr or beginning of May and looking at the preliminary operating margin, profit margin, EBITDA, return on assets, return on equity are all significantly negative.  With $9M debt outstanding, 13.5 Million share, $2.67Millon market cap and a negative book value per share, I am wondering if the debt holders are getting more concerned and putting pressure on the company...

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Form 8-K for AEROGROW INTERNATIONAL, INC.

27-Mar-2009

Change in Directors or Principal Officers


Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.
On Monday, March 23, 2009, the Board of Directors of AeroGrow International, Inc. (the "Company") adopted a Liquidity Performance Award Plan (the "Plan"), which provides compensation to certain executives (the "Covered Executives") in the event of a Company Sale (as such term is defined in the Plan) if certain conditions are met.

The Covered Executives qualify for a payment under the Plan (an "Award") if
(a) the value of all cash, securities, and other consideration actually received by the holders of the Company's outstanding capital stock in connection with the Company Sale is $2,000,000 or more, and
(b) the Covered Executive is employed by the Company at the time of the Company Sale.
All Awards will be reduced by any proceeds received by a Covered Executive in respect of Company stock options held by such Covered Executive. The aggregate maximum amount payable to all participants under the Plan is $500,000. Under the Plan's formula, the following Covered Executives are eligible for the listed Awards:


Jervis B. Perkins       President and Chief Executive    $150,000                        Officer
H. MacGregor Clarke     Chief Financial Officer and      $100,000                        Treasurer
Jeffrey M. Brainard     Vice President of Sales           $50,000
All other participants                                   $200,000
(in aggregate)
 

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MaryH (not verified)
I ended up looking at Form 3

I ended up looking at Form 3 and found that the 3 main beneficiaries of the new bonus scheme on sales have recently been granted options at $0.18 so basically they are guaranteeing themselves a higher sizable bonus regardless on sale. Definitely conflict of interest..

option granted 3/4/09
option excercisable 4/9/09 to 3/4/14

Name Role Price #options Total
Jeff Brainard VP sales 0.18 100,000 227,331
Clarke E. McGregor CFO 0.18 200,000 350,000
Jervis B Perkins CEO 0.18 300,000 550,000

MaryH (not verified)
I was not happy when I saw

I was not happy when I saw this filing since basically the Exec want to be paid first and that is conflict of interest since they already received significant additional options recently at around 0.18 vesting very quickly to 5 years out..  Which I suspect will be more focused in trying to sell the company with their payout clause intact than to improve and run the business profitably. 

 

BB (not verified)
Nice find, Mary. I mentioned

Nice find, Mary. I mentioned it in your post about the latest 8-K without seeing this first. I keep a close eye on AERO and keep hoping something will come along but it's looking pretty bleak.