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ASX Announcement

3 December 2021

Issue of Performance Rights and Options

Performance Rights

HRL Holdings Limited (ASX:HRL) wishes to advise that it has issued 1,694,549 new performance rights to participants in accordance with the Company's FY2022 Long Term Incentive Plan.

The Company advises that a total of 2,086,339 performance rights issued under the FY2020 and FY2021 Long Term Incentive Plan have now lapsed and have been cancelled as the service conditions for vesting were not achieved.

Further the Company advises that a total of 3,401,410 performance rights issued to the CEO and CFO under the FY2020 and FY2021 Long Term Incentive Plans have now been cancelled and replaced by a new Executive Option Plan (refer details further below).

The impacts on the number of performance rights on issue are outlined in the below table:

FY2022

FY2021

FY2020

LTI Plan

LTI Plan

LTI Plan

Number of performance rights issued

-

4,088,723

4,880,961

New performance rights issued under the FY2022

1,694,549

-

-

LTI plan

Performance rights lapsed due to service conditions

-

(813,060)

(1,273,249)

not being

Cancellation of CEO and CFO performance rights

-

(1,633,394)

(1,768,015)

Total LTI performance rights on issue

1,694,549

1,642,239

1,839,697

A summary of the Performance Rights LTI Plan is included in Appendix 1.

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Executive Option Plan

The Company advises that it has issued a total of 15,000,000 options, under a new scheme, to the CEO and CFO in replacement of the previously issued and future performance rights schemes. A summary of the options issued are outlined below:

First

Second

Third

Tranche

Tranche

Tranche

Number of options - CEO

4,000,000

3,000,000

3,000,000

Number of options - CFO

2,000,000

1,500,000

1,500,000

Grant Date

3/12/2021

3/12/2021

3/12/2021

Exercise Price

$0.12

$0.12

$0.12

Vesting Condition A

HRL share price of at least $0.21 at

FY2024

FY2025

FY2026

twenty VWAP Trading Days following the

release of the Annual Report for the

relevant financial year:

Vesting Condition B

Recipient to remain employed with HRL

FY2024

FY2025

FY2026

until at least twenty VWAP Trading Days

following the release of the Annual

Report for the relevant financial year:

Expiry Date

3/12/2026

3/12/2026

3/12/2016

A summary of the Executive Option Plan is included in Appendix 2.

The recipients of the Executive Options are:

Number of

Percentage of

Options

Options

Steven Dabelstein - CEO

10,000,000

66.67%

Michael Harvey - CFO

5,000,000

33.33%

Authorised by the Board

Paul Marshall

Company Secretary

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Appendix 1 - Summary of Performance Rights LTI Plan

  1. The LTI Plan is a long-term incentive scheme aimed at creating a stronger link between an eligible employees' performance and reward whilst increasing Shareholder value in the Company and provides the opportunity for invited key employees to receive shares in the company via Performance Rights.
  2. The Board, at their discretion, will invite key employees to participate in the LTI Plan. Awards will be at the sole discretion of the Board.
  3. The participant's position within the Company will dictate the quantum of the award which will be based on the size of the business that they are managing and their strategic importance to the business as well to retain scarce skillsets or business contacts.
  4. The price used to determine a participant's initial allocation of Performance Rights is normally the weighted average price of Shares during the 20 trading days following the date of announcement of the final full year results immediately preceding issue date.
  5. Participation in the LTI Plan will be optional and no discrimination will accrue to invited executives/employees who choose not to participate in the plan.
  6. Performance Rights under the LTI Plan will be issued free of charge, and will vest upon the Company meeting certain Earnings per Share Measure (EPS), Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA), Total Shareholder Return (TSR) and Return on Capital Employed (ROCE) performance hurdles and will run over a 3 year performance period.
  7. The Performance Rights will only vest and become exercisable where the relevant performance hurdles and employment service conditions have been met. The performance hurdles are as follows:

Proportion of Performance

Performance

Hurdle requirement

Rights that may be

Hurdle

exercised if the Performance

Hurdle is met

Earnings per

Compound annual diluted EPS growth less than 10%

Nil

Share Measure

Compound annual diluted EPS growth 10% or higher

25% of total grant

Earnings before

Less than average EBITDA margin of comparator peer

Nil

Interest, Taxes,

companies

Depreciation and

Amortization

More than average EBITDA margin of comparator peer

25% of total grant

companies

Total Shareholder

Below the TSR for ASX Small Ordinaries over the

Nil

Return

Performance Period

Above the TSR for ASX Small Ordinaries over the

25% of total grant

Performance Period

Return on Capital

ROCE of less than weighted average cost of capital

Nil

Employed

(WACC) + 2%

ROCE of between WACC + 2% and +7%

Straight line vesting of

between 0% and 25% of total

grant

ROCE exceeds WACC + 7%

25% of total grant

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  1. The employment service conditions are as follows:
    1. should the participant leave or be terminated from the Company during the three year period of the LTI Plan, all unvested Performance Rights will be forfeited;
    2. subject to (c) directly below, the participant must be employed on the vesting date (subject to EPS, EBITDA, TSR and ROCE performance criteria being met) to be eligible to exercise their Performance Rights and receive shares under the LTI Plan;
    3. (b) above will not apply where termination is due to death or bona fide age or disability retirement, in which case the participant may access their Performance Rights as follows:
      1. if terminated within the first year of the LTI - forfeit all Performance Rights;
      2. if terminated within second year of the LTI - forfeit two thirds of Performance Rights, with the remaining one third available but dependent upon the calculation at (4) below;
      3. if terminated within third year of the LTI - forfeit one third of Performance Rights, with the remaining two thirds available but dependent upon the calculation at (4) below; and
      4. the quantity of the remaining proportion that will vest will be calculated based on the average of the previous three years vested plans. Alternatively, eligible participants may choose to wait for the actual scheduled vesting to occur.
    5. further exceptions to the above are at the absolute discretion of the Board.
  3. At the end of year, participants will be provided with an interim report by 30 September detailing the Company's performance against each hurdle.
  4. At the end of the full three-year vesting period, the EPS, EBITDA, TSR and ROCE hurdles will be tested to ascertain whether full or partial vesting has occurred.
  5. Participants will be advised of the Company's performance against the hurdles and the number of Performance Rights that will vest accordingly.
  6. The vesting date will be 30 September 2024, being three months after the close of the 2023- 2024 financial year to allow for testing to occur. To exercise vested Performance Rights participants will need to complete and submit a notice of exercise.
  7. Once Performance Rights have been exercised, participants will be allocated Shares by the Company.
  8. Participants will be able to sell their vested and exercised shares in accordance with the Company's Securities Trading Policy.
  9. Participants will not be entitled to any shareholder benefits such as dividends and voting rights until they have been allocated Shares. Once the Shares have been allocated, the participant will then be entitled to receive dividends and exercise voting rights on the Shares, irrespective of any disposal restrictions.
  10. In the event that a bona fide takeover bid for the Company is declared unconditional and the bidder has acquired a relevant interest of at least 50% in the Company's securities, then 50% of all unvested shares in years 1, 2 and 3 of the LTI Plan shall vest automatically.

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Appendix 2 - Summary of Executive Option Plan

1.1 Definitions

Change in Control Transaction means:

  1. the Company entering into a scheme of arrangement with its creditors or members or any class there of pursuant to section 411 of the Corporations Act; or
  2. any person, who at the Issue Date does not hold more than 50% of the shares in the Company, acquiring more than fifty (50%) percent of the shares in the Company pursuant to a takeover bid conducted in accordance with Chapter 6 of the Corporations Act; or
  3. if at any time after the date of grant of the Options, any person, who at the Issue Date does not hold more than 50% of the shares in the Company, acquires fifty (50%) percent or more of the Company's shares;

First Tranche Options means 4,000,000 options for the CEO, and 2,000,000 options for the CFO to subscribe for Shares.

Issue Date means 3 December 2021.

Life means, in relation to an Option, the period between grant of the option and its Vesting Date.

Listing Rules means the Listing Rules of the ASX.

Market Price has the meaning given to that term in chapter 19 of the Listing Rules.

Options means the:

  1. First tranche Options;
  2. Second Tranche Options; and
  3. Third Tranche Options.

Option Exercise Price means twelve cents ($0.12) per Option;

Option Expiry Date means 5 years after the Issue Date.

Option Period means the period between the Issue Date and the Option Expiry Date.

Shares means ordinary shares in the capital of the Company.

Second Tranche Options means 3,000,000 options for the CEO, and 1,500,000 options for the CFO to subscribe for Shares.

Trading Day has the meaning given to that term in the Listing Rules.

Third Tranche Options means 3,000,000 options for the CEO, and 1,500,000 options for the CFO to subscribe for Shares.

Threshold Price means $0.21.

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HRL Holdings Ltd. published this content on 03 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 December 2021 05:31:01 UTC.