While we are on the topic of
$AMC exec compensation, let's do a deeper dive into some of the common misconceptions I see from the non-DD emotional popcorn project gang. This is a bit complicated, feel free to ask questions. Source info is from the AMC Compensation Plan found in the 2023 Form 14A filing.
1) Claim: Adam Aron's salary was $23M in 2022. Incorrect. The facts? His salary is $1.5M. Do not confuse compensation package with the word salary. It just demonstrates lack of understanding the subject you are discussing.
2) Claim: Shareholders voted down the compensation plan. Where are these awards coming from?
The facts? The shareholder vote on compensation is an 'advisory vote' only. The board can still do as they wish.
3) Claim: Adam Aron made $23M in 2022. Incorrect. The facts? This is a long one, but bear with me. Part of the $23M was $1.5M salary and a $6M cash incentive plan bonus. The remainder $16M was stock awards. Here is the tricky part: When the compensation committee assigned RSU and PSU targets for 2022, the date was Feb 16, 2022 and the stock price was $19.67. As required by SEC rules in accordance with ASC 718 the stock awards total of $16M represents the value based on the probable outcome of performance conditions of the fair value of all RSUs and PSUs which have been granted AND vested. As discussed in a previous tweet RSU and PSU vest over a three year period. This means when publishing the SEC required numbers for the 2022 compensation it includes RSU/PSU from tranche 1 of 2022 PSU, tranche 2 of 2021 PSU and tranche 3 of 2020 PSUs. The fair value of ALL 3 YEARS tranches at the Feb 16, 2022 price was $16M.
WHAT DOES THIS MEAN? $16M was not a 2022 award, it was a sum of three different years of vesting.
IN CLOSING: A fair value statement is obviously not income. Income comes if sold. As we know, Adam has not sold any meaningful amount of shares since Feb 2022. The fair value of vested shares will change with the stock price, which is now at a post split equivalent of $0.46 from $19.67. You can do the math on his loss from holding.
SUMMARY: This is information to help you understand compensation and nuances of how it is reported vs the actual facts. Most people see a number and never dig into the details. Every year I read the compensation plan numerous times, and yes, it is complicated, but doing your own DD and reading for yourself is always better than listening to some emotional person or someone with an axe to grind on social media. If you find errors in any of my summary please feel free to point them out. We all learn by having adult conversation.
If the execs are holding they are down substantially on vested share value. They are incentivized to improve the company's health to eventually drive share price up. If the price eventually goes up again pay attention if they sell a large quantity. If the price doesn't change and they sell a large quantity also pay attention. There may be signals in either situation you don't want to miss. That's not financial advice, it's just how I look at it.
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