REG - Cavendish Financial - Launch of SIP and Co-investment Plan

CavendishAnnouncement

19/02/2024 07:00

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RNS Number : 5170D  Cavendish Financial PLC  19 February 2024

 

19 February 2024

Cavendish Financial PLC

("Cavendish", the "Company" or the "Group")

Aligning our employees and shareholders

Launch of SIP and Co-investment Plan

 

Cavendish announces, today, the establishment of a company-wide Share
Incentive Plan and a discretionary Co-investment Plan as part of a structured
plan to ensure that its people are aligned with shareholders and incentivised
to create shareholder value over the medium-term through the consistent
delivery of our strategy.

A summary of the principal features of each plan is set out below for
information purposes only.

Company-wide Share Incentive Plan

Under an HMRC tax-advantaged Share Incentive Plan ("SIP"), all employees of
Cavendish (including its executive directors) have been offered the
opportunity to acquire up to £1,800 worth of new ordinary shares in the
capital of the Company (known as "Partnership Shares"), and be awarded up to
£3,600 worth of free ordinary shares in the capital of the Company on a buy 1
get 2 free basis (known as "Matching Shares").  The initial acquisition will
be funded through a one-off bonus of £1,800 to each eligible employee which
will not be paid unless the employee elects to participate in the SIP. Formal
invitations under the SIP were made to employees on 19(th) February.  The SIP
is expected to close on or around 19 March 2024.  Based on the closing price
of Cavendish ordinary share on 16 February 2024 of 10.75p per share, the
maximum shares that could be issued under the SIP is c.9.3m representing
c.2.6% of the current issued share capital.

The Partnership and Matching Shares will rank for voting rights and dividends
alongside other ordinary shares and shares held in the SIP for more than 5
years will receive beneficial tax treatment in accordance with the HMRC rules
governing SIPs.

The SIP is operated through a special purpose trust which is administered by
an independent trustee.   Participants are being offered the opportunity to
acquire their shares on a one-off, lump sum basis.  They will immediately
become beneficial owners of both the Partnership and the Matching Shares they
acquire, but the Matching Shares must be held for 3 years and will be
forfeited if the participant sells their Partnership Shares and/or ceases to
be an employee of Cavendish or another member of the Group in those 3 years,
except in certain good leaver circumstances.

Co-investment Plan

Alongside the company-wide SIP, the Group has launched a discretionary
Co-investment Plan (the "CiP") to all employees at director level and above or
equivalent in the operations leadership team.

Under the CiP, eligible employees (including executive directors) have been
offered the opportunity to acquire, out of their own post-tax funds, ordinary
shares in Cavendish at the prevailing market price, either through a one-off,
lump sum subscription or monthly payroll deductions for 12 months (the "CiP
Shares").

The CiP Shares will be held by the trustee of the Company's employee benefit
trust, as nominee for the participants, subject to a 3-year lock up, but will
rank for dividends and voting rights alongside other ordinary shares during
this time.

In order to create a retention tool and align the senior team with our
investors, as long as a participant remains an employee of the Group at the
end of the 3-year lock up period (except in certain good leaver
circumstances), additional shares ("Additional Shares") will be awarded to the
participants based on the number of CiP Shares they acquired and the
satisfaction of the following  share price targets. The Target Base Price was
10.5p per share being the closing share price on 9 February 2024, the business
day immediately before formal offers to participate were issued to employees:

 

 Premium to Target Base Price  Corresponding target share price  Additional Shares awarded for each CiP Share acquired
 <75%                          Less than 18.4p                   0.5
 >=75%                         18.4p                             2
 >=125%                        23.6p                             3
 >=175%                        28.9p                             4

 

The target share prices include dividends paid over the duration of the CiP
and will be assessed on a 20-day VWAP basis, in the 20 dealing days prior to
the end of the 3-year lock up period.

Shares will also be awarded if any of the above hurdles are met on a 90-day
VWAP basis at any time during the 3-year lock up period, but will only be
received by employees at the end of that period and subject, inter alia, to
continued employment (other than in certain good leaver circumstances). Where
both the 20-day VWAP and 90-day VWAP targets are met, participants will
receive the highest number of shares payable of the two.  Only one grant of
additional shares can be awarded.

Non-binding indications of interest to invest were received from eligible
employees representing c.£1.5m in aggregate which have been scaled back to
£1.3m.  In the event that formal applications to invest are received at the
same level when the formal invitation period closes, and based on the closing
share price of 10.75p on 16 February 2024, this would result in the issue of
up to c.12.4m new ordinary shares (representing c.3.4% of Cavendish's issued
share capital) and the maximum additional shares that could be issued if the
highest share price hurdle is achieved would be c.49.5m new ordinary shares
(representing c.13.7% of Cavendish's issued share capital).

It is expected that a similar plan (with targets adjusted based on the share
price at the time) will be made under the CiP to new joiners and employees
newly promoted to Director following the issue of the full year results to 31
March 2024, subject to an overall cap on issuance for initial, upfront
investment of 5% of Cavendish's issued share capital including the CiP Shares
expected to be issued under the current plan.

Cavendish intends to manage the overall shareholder dilution of the CiP
through funding its EBT to make market purchases over time with the intention
of limiting the ultimate overall dilution from share option and employee
incentive plans to less than c.15% of the total issued share capital.

 

 

Julian Morse and John Farrugia, co-CEOs of Cavendish said:

"In September we completed our merger creating Cavendish, a leading strategic
financial adviser for the mid-market, with over 200 retained corporate clients
and wide product expertise across ECM, public and private M&A, debt
advisory and private capital.

Since that day our people - our key asset - have focused on delivering high
quality advice, service and execution to our clients and on retaining and
growing our client base and transaction pipeline.

We are delighted by the response from our teams to the plans we have announced
today, which will help us retain our talent and ensure our entire team is
incentivised to grow Cavendish over the medium-term, building shareholder
value and aligning them with our shareholders."

CONTACTS

Cavendish (Management)
                Tel: +44 (0) 20 7220 0500

Julian Morse, Co-Chief Executive
Officer
investor.relations@cavendish (mailto:investor.relations@cavendish) .com

John Farrugia, Co-Chief Executive
Officer

Ben Procter, Chief Financial Officer

 

Grant Thornton (Nominated Adviser)
         Tel: +44 (0) 20 7383 5100

Philip Secrett/Samantha Harrison/Ciara Donnelly

 

END

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