The Amaysim Australia Ltd (ASX: AYS) share price has been amongst the best performers on the ASX on Tuesday.
The telco company’s shares are up a sizeable 16% to 39.5 cents at the time of writing.
Why is the Amaysim share price rocketing higher today?
The Amaysim share price has taken off today after investors responded positively to changes to its non-director Key Management Personnel (KMP) remuneration structure.
According to the release, each of the company’s KMP has agreed to forgo cash bonuses under the Short Term Incentive Plan for FY 2020 and FY 2021. This is potentially up to 75% of an individual’s annual base salary each year.
In exchange for this, the KMP will receive a base salary increase from $450,000 to $550,000 and a grant of 4,250,000 performance rights under the Long Term Incentive Plan.
Management believes these changes more directly align remuneration for the KMP with shareholder interests over the longer term.
What are the details?
The new performance rights will be subject to future performance targets.
This includes a cumulative multi-year underlying EBITDA target. This was chosen as underlying EBITDA continues to be a core metric that it feels accurately reflects the company’s financial performance.
Their performance will also be judged on mobile subscriber numbers. The release advises of a target increase in the number of recurring mobile subscribers tested in respect of FY 2020, FY 2021, FY 2022 and FY 2023. This was chosen as growing the mobile business is a strategic priority for the company.
A final target is a strategic objective to unlock additional value from the mobile business through its wholesale arrangements.
The company’s chief executive officer, Peter O’Connell, will not be subject to these changes. This is because he already is a significant shareholder in the business. Therefore, the board is of the view that his existing remuneration structure remains appropriate.
Given its poor showing and surprising decline in mobile subscribers in FY 2019, I think this is a positive move. However, it doesn’t mean the company will achieve these targets. In light of this, I think it is a little soon to get excited.
I still see more value in Telstra Corporation Ltd (ASX: TLS) and TPG Telecom Ltd (ASX: TPM) at this point. As a result, I would buy them ahead of Amaysim until its performance improves greatly.