RGO

Software company 2ergo (RGO:AIM) has promised not to dilute existing investors with a novel share option scheme, whereby the company’s founders will hand over part of their own holdings instead of creating new shares.

Under the arrangement Neale Graham and Barry Sharples have effectively given senior management the option to buy around half of their stakes (equal to about 15% of the entire share capital) at 225p next to today’s 200p.

Roger Lawson, communications director at the UK Shareholders’ Association (UKSA), which represents the interests of private investors, welcomed the move: ‘Some IT companies can run pretty dilutive option schemes.’ Lawson himself is an investor in 2ergo

Graham and Sharples have each given away 2.2 million shares, which have been divided up among senior management who will have the option to keep the stock (by buying it at 225p) if they meet certain, undisclosed, performance criteria.

The scheme is to incentivise management as it pursues a three-year global strategy, which includes plans to become one of a select number of global short message service (SMS) centre providers.

Any company issuing new shares equal to 15% of the share base would more than likely break anti-dilution guidelines set up to protect existing investors. The Pre-Emption Group says no more than 7.5% of the share base should be issued over a three-year period, although Lawson says IT companies often issue up to 10% of the share base for options.