NamSys Terminates Employee Long Term Bonus Plan
NamSys reports that in the early part of the 2010 decade, NamSys Inc. began migrating its legacy software products, sold as a traditional software license, to software-as-a-service (SaaS) based offerings. The Company leveraged the capabilities of public cloud providers like Amazon Web Services and we expanded our site of SaaS products. This transition required knowledgeable capable software engineers and support staff to ensure our Saas offerings were secure, efficient and reliable as well as competitive.
The employee team we put together in the previous decade met these requirements. As the transition to “SaaS” products grew in the mid-2010 decade, the Board of Directors, recognizing the importance of these people to our continued success, created a “bonus” plan which we put together with the NamSys software team.
An important issue in developing the Employee Long Term Bonus Plan (the “Bonus Plan”) were employees’ concerns that if the Company was sold or amalgamated, they would not likely be financially recognized for their significant contributions in creating the successful products they put in place and manage for NamSys. At that time, we believed the Bonus Plan was the answer.
As time has gone by with NamSys still serving as an independent successful company, a number of terms in the Bonus Plan have become problematic. The principal term is that the Bonus Plan has no limits. Participants in the Bonus Plan in the aggregate are entitled to fifteen percent (15%) of the value of the Company. As the stock price increases, the amount due to the Bonus Plan participants goes up accordingly.
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Secondly, changes made to the Bonus Plan in the past few years resulted in the need for the Company to amortize the take-out amount through the end of fiscal 2021. This amortization has the effect of skewing the quarterly results by increasing the employment costs, particularly with the price of the stock in the market increasing. Accordingly, Management and the Board of Directors of NamSys took steps to terminate the Bonus Plan on October 30th, 2020.
The payout agreed to on termination was three-quarters cash and one quarter shares of NamSys priced at the 20-trade day weighed average of the stock price prior to October 30th (0.85/share). The cash amount has now been paid net of employment tax on the total value of the payout. The NamSys common share part of the payment has not yet been completed and the method of doing so has not been determined. However, if the Company decides to do so by issuing shares from treasury, the matter will be put to shareholders for approval at our Annual Meeting.
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