Diligent Board Member Services has cancelled some of the stock options given to two executives after caps on these awards were exceeded and says the company may have breached New Zealand regulation.
Diligent makes software allowing executives and directors to manage board documents online and serves more than 2500 publicand private companies, with more than 50,000 users across the globe.
In an announcement to the NZX this morning, Diligent said a special committee of independent directors it appointed had found two stock option awards in 2009 and 2011 to chief executive Alessandro Sodi exceeded the caps in the 2007 and 2010 share plans.
The award in 2009 exceeded the cap by 1.6 million shares and by 2.5m shares in 2011.
An award to another executive in 2011 also exceeded the 2010 share plan and would now be cancelled along with Sodi's awards, the New York-based company said.
"On the recommendation of the special committee, the option awards that exceeded the caps will be cancelled. The special committee is working to develop appropriate alternative compensation packages for the affected employees.
"These awards were determined to be reasonable compensation at the time, and were an important incentive component of the employees' compensation packages. The board believes that the financial performance of Diligent since the date of these grants is strong evidence that the management team has performed at and above expectations in creating shareholder value," the company's statement to the NZX said.
Diligent said this special committee also reviewed the company's compliance with US and New Zealand security regulations since the company had listed here in 2007.
The committee had identified "a number of instances where it appears that Diligent was not, or may have have been, in compliance with its New Zealand regulatory obligations".
"For example, a number of smaller option grants to employees in New Zealand were made in the absence of a prospectus, which would create issues under New Zealand law if a prospectus was required," the company said.
Any issues discovered would be reported fully to the NZX and the Financial Markets Authority, Diligent said.
Diligent share price is down 1.26 per cent today to $5.48.
