skip to content
  1. Home
  2. >
  3. Questions
  4. >
  5. HPS.A: I wonder if HPS' compensation policy includes SBC annually. [Hammond Power Solutions Inc. Class A Subordinate Voting Shares]
You can view 2 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I wonder if HPS' compensation policy includes SBC annually. If that's the case and we look at the stock's performance over the past 3 years, the stock was $12. in 2022. If the options are vested after 3 years as is often the case or worse if vested 5 years is'nt there a danger of putting a lid on the stock price until the options are totally vested and cashed? I'm worried that the money invested in the past year will be dead money no matter what PE shows. Right or wrong?
Asked by Yves on July 24, 2024
5i Research Answer:

We have a response here that talks to some of the specifics behind its SBC expenses year-over-year, and what factors can influence it. 

Much of these expenses are reported on the financial statements each quarter at fair value, and so although they might have a vesting period of three to five years, the fair value expense of these are recorded. When the DSUs vest, there should not be a material change to the income statement since the options were already accounted for using their fair value over the previous financial statements. 

Even though the stock price has risen dramatically over the years, this increase has been accounted for on the financial statements already. A decrease in share price quarter-to-quarter can actually benefit the financials as the fair value of these expenses can decline.