Dark Arts: Of Prenups & Pay Packages
Decoding ZoomInfo's Ransom Note
Never, ever, think about something else when you should be thinking about the power of incentives…
I think I’ve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes but I get some surprise that pushes my limit a little farther.
—Charlie Munger
Early in our careers, we treated corporate governance the way we treat Apple’s software terms and conditions—37 pages of legal boilerplate to scroll past while hunting for the ‘Accept’ button so we could get down to real work. Most investors still operate this way.
Fast forward a few market cycles, and we’ve come to realize that this approach is akin to evaluating a marriage’s prospects based on wedding vows and Instagram photos while ignoring the prenup and private diaries of the betrothed. The social media feed is carefully curated for public consumption. The vows reflect genuine hopes. But the prenup and diaries reveal what the couple actually expects and believes—and their likely behavior patterns. The prenup because it’s legally binding; the diaries because they’re written assuming no one will read them.
Governance operates on the same principles. In proxy statements, compensation agreements, and governance filings, companies temporarily stop selling stories to investors and bind themselves—legally, explicitly, in writing—because their lawyers force them to.
As we wrote in the Paper Bitcoin Razor:
Dark Arts 101
Compensation structures are inadvertent confessionals of the corporate soul.
In governance, the mechanics are the message.
Twitter/X: @bewaterltd | Mojo Website: bewaterltd.com
Not investment advice. For educational/informational purposes only. See Disclaimer.
ZoomInfo’s Moonshot Pay Package
Understanding governance requires a skill set—and mindset—most investors don’t cultivate. Clarity emerges from connections between filings and from the choice of one metric over another. Not in explicit statements, but in strategic omissions and selective emphasis.
Headlines and Tweets reduce complex situations that require holistic understanding to isolated sentences and decontextualized fragments. Most investors assume that if something important is occurring, the relevant details will be explicitly stated in a filing. It won’t be. As we explored in Let’s Break A Deal, the work demands that you become your own detective—assembling puzzles from scattered pieces—all while recognizing that pattern recognition alone can mislead.
ZoomInfo’s (Nasdaq: GTM) recent compensation filing is one of the most extreme structures we’ve seen outside of Elon Musk’s infamous $1 trillion Tesla pay package—though on a different scale entirely.
What follows is divided into two parts. First, we examine what ZoomInfo’s compensation structure reveals about the board’s strategy. Second, we offer a hypothetical reconstruction of how such an extreme package might come to exist—a piece of speculative fiction meant to illustrate what might have taken place behind closed doors.
It’s worth noting that ZoomInfo is emphatically not a Confluent-type situation—recall that Confluent involved a market participant apparently betting on an imminent acquisition through a unique options structure. ZoomInfo involves an irregular governance structure that reveals a company at a strategic crossroads—the company might execute, might get sold, or might fail. Whether the compensation package is a hopeful signal—or a desperate one—depends entirely on your assessment of whether the company’s franchise is stabilizing or eroding.
Dark Arts: When The Board Shows Its Hand
On November 26, 2025, ZoomInfo’s board granted CEO Henry Schuck a one-time, premium-priced, performance-based option award. The board has encoded such an oddly specific playbook—almost play by play—that its mechanics likely reveal what they believe is the company’s only viable path forward.
If the company’s strategic plan actually works—not in part, but in full—Schuck will join the ranks of the wealthiest executives in “small-cap” software. He received options on roughly 9.7 million shares with a strike price set at $13.54—a massive ~40% premium to the grant-date fair market value.
If the stock reaches $100—roughly 10x today’s price—Schuck’s in-the-money value will exceed $400 million pre-tax, and the upside beyond that is unlimited. ZoomInfo would vault from a $3 billion small-cap into large-cap territory. That would likely trigger the type of self-reinforcing cascade we’ve described in The Sorcerer’s Apprentice: index inclusion forces institutional buying, which drives the stock higher, which attracts more buyers, which transforms the shareholder base entirely. Success becomes its own reflexive stock price accelerant.
The award runs for ten years. The structure suggests the company doesn’t intend to grant other equity awards during this period. This appears to be a single, all-or-nothing structure with unlimited upside that bets on transformational change.
But make no mistake: this is not really a ten-year deal or a bet on a ten-year opportunity—the CEO is on notice, and he is not Elon Musk. The reality is that the runway is likely much shorter: six to eight quarters, perhaps as few as four if the activists become more vocal or the business deteriorates more rapidly than expected.
The Metrics: Reverse-Engineering the Strategy
Compensation plans that appear as if someone reverse-engineered leveraged buyout math and bolted it onto a public company pique our interest. They force us to ask: what external force made incrementalism unacceptable?
The CEO’s options vest here only if two conditions are met.
Cash Flows: the company must hit a series of adjusted free cash flow per share targets, from $2.50 to $5.00.
Stock Price: the stock must trade at increasingly high absolute price levels — from $40 up to $100 — measured as a 20-day average.
There is one more gate: ZoomInfo’s total shareholder return (TSR) must beat the bottom quartile of the Russell 3000.
This reads to us like an LBO playbook translated into public-company compensation structure. We’ve privately advocated for variants of this framework with proven operators over the years, but this level of explicitness and extremity is rarely seen in public filings.
ZoomInfo’s pay plan does not reward steady execution across a range of outcomes. It rewards only a very narrow set of extraordinary results. Boards don’t design structures this extreme—this binary, this convex—without a specific event path or catalyst in mind.
Boards only resort to terms like these when they believe that incrementalism will not fix the problem—or when someone with influence has made clear that incrementalism will no longer be tolerated. While this filing alone cannot tell us exactly what happened in the boardroom, its unique structure tells us something of critical importance took place.
What Occurred In The Boardroom?
So what made incrementalism unacceptable in the case of ZoomInfo?
One possibility is that activists or shareholder influencers told the board that the current strategy is failing, and demanded either dramatic operational improvement or a sale process. Another possibility is that a private equity firm approached the company with a take-private proposal at say, $14-$20 per share.
The compensation structure suggests that the latter might have occurred, or at least informed management’s thinking. When PE firms circle a software company, they typically arrive with a specific value creation playbook already modeled out in Excel: stabilize revenue, optimize the cost structure, lever up modestly, and then buy back equity aggressively to manufacture per-share growth.
They know the leverage ratios they’ll apply, the operational improvements they’ll mandate, and the exit multiple they’re targeting. The CEO likely received such a proposal, took one look at the numbers and thought: “Why hand you a 15-25+% IRR when we are perfectly capable of running this playbook and keeping all of the upside for ourselves?”
In a sale, the CEO might not survive the transaction. The board certainly wouldn’t. If the company thought itself capable of executing the same plan internally, it could maintain control—alongside salaries for management and the board—and participate in the upside rather than passively watching someone else harvest it.
As we showed in the Paper Bitcoin Razor, a company’s choice of metrics inadvertently exposes management’s true priorities. ZoomInfo’s compensation plan encodes Private Equity LBO logic into its incentive structure, right down to the specific cash flow per share targets that would make a financial sponsor salivate.
Monkey Math
Adjusted free cash flow per share is as much a financial engineering metric as it is a growth metric. By tying executive compensation to it, management is effectively signaling that they are playing a game of financial optimization: they are less incentivized to make the pie bigger (growth) than they are to slice the pie into fewer pieces (financial engineering).
The fastest way to improve adjusted free cash flow isn’t to innovate—a risky endeavor with uncertain outcomes. Instead, it’s much safer and faster to manipulate the arithmetic itself—financial engineering—by reducing the number of partners splitting the profits. Crucially, heroic revenue growth is not required for this strategy to work, only that the business stop deteriorating—leaving simple arithmetic to do the rest.
The financial engineering playbook is straightforward: shrink the denominator and harvest the numerator. Buy back stock so each remaining share claims a larger slice of the same pie. Avoid dilution. Keep debt flat and control costs tightly. Never buy another company unless it is immediately accretive on a per-share basis. Reshape the narrative around the business, generate operating leverage as revenue stabilizes. Watch the multiple expand as the per-share metrics improve.
Financial engineering is, fundamentally, about levers. LBO math is not magic—it amplifies whatever it’s applied to. If the franchise is strengthening, per-share math may reflect value creation. If the franchise is weakening, per-share math may mask it.
The Board’s Riposte
The board’s decision to grant Schuck this extreme compensation package could effectively be their answer to private equity suitors: “We choose the founder-CEO over the financial sponsor. Give our guy a shot to run your playbook ourselves.”
The backup plan is likely simple: if this plan doesn’t bear fruit within a few years, they assume they will still be able to sell the company. The compensation structure gives them optionality while maintaining control.
So far, so plausible.
The stock price condition is where things get more interesting—and uncertain. Free cash flow per share can be financially engineered. The market’s willingness to capitalize those cash flows at $40, $60, or $100 a share is a different problem entirely. Companies can buy back shares aggressively and still watch the multiple compress if the market believes the business is slowly being commoditized, disintermediated, or hollowed out.
The compensation structure acknowledges this tension explicitly: by requiring both cash flow targets and sustained stock price appreciation, the board is forcing management to prove that their financial engineering can drive a stock re-rating. The 20-day average matters because it forces durability into the equation: the board doesn’t want vesting triggered by a random, temporary spike—they want evidence of a sustained re-rating.
The inevitable Elon Musk moonshot pay package comparison falls short here. Musk’s package was a bet on vision—industry transformation and an irreplaceable star CEO. Schuck’s package is merely a bet that the underlying business can stabilize—and perhaps even improve—just enough for the market to believe the cash flows are not simply being pulled forward to the present from the future.
The Financial Engineering & Leverage Trap
Here is where financial engineering becomes genuinely dangerous, and where many investors who focus exclusively on such engineered metrics get burned. Debt and financial engineering are at best an accelerant to the direction and rate of change of business fundamentals.
Management can control the arithmetic. They cannot control whether customers still value the product.
For a business like ZoomInfo, if you focus only on the financial engineering—the shrinking share count, the improving cash flow per share—without monitoring whether the topline is truly growing and whether that growth is flowing through to cash flows, you’re setting yourself up for disappointment.
If customers treat the product as a commodity rather than a strategic necessity, financial engineering becomes a treadmill—buying back shares while the business itself loses its moat. For data businesses, this is the existential question: are you embedded deeply enough that switching costs are prohibitive? Or have you become just another vendor that customers can price-shop and replace? Once you’re viewed as a replaceable utility rather than mission-critical infrastructure, no amount of financial engineering can prevent multiple compression.
Just because the company bought stock at $15 and it’s now $10 doesn’t necessarily mean they should buy more aggressively—if the business is deteriorating, this only serves to compound the original error by buying a melting ice cube at incrementally lower prices.
For ZoomInfo, additional ‘Melting Ice Cube’ risk stems from recent advances in AI that can scrape, verify, and synthesize B2B leads—potentially commoditizing their proprietary databases. Every dollar the company allocates to buybacks for short-term FCF targets is diverted from the R&D needed to evolve from data provider to AI platform, effectively betting that financial engineering can outpace technological disruption.
This is the nightmare scenario: revenue continues to stagnate or decline. Customers increasingly treat the product as a commodity. Management keeps buying back shares to hit per-share targets, but the multiple compresses faster than the denominator shrinks. Every quarter without revenue growth makes it more difficult to operate the business with leverage.
The longer the business is unable to demonstrate operating leverage improvement, the more investors fixate on the debt load rather than engineered metrics. PE firms who initially bid or expressed interest walk away entirely. Management has financially engineered their way into a trap—quarterly results become increasingly difficult to defend, and the downward spiral accelerates.
The next few quarters will be revealing for ZoomInfo. If revenue stabilizes and then inflects upward, if margins expand because of genuine efficiency rather than simply cutting investment, then the financial engineering becomes an accelerant of inflecting business fundamentals.
But if revenue growth continues to be anemic, if operating leverage remains elusive, if the only improving metrics are the per-share ones driven by buybacks, then we’ll know this is harvesting and cosmetics.
This raises a broader question that extends beyond ZoomInfo and applies to any company anchoring incentives to financially engineered metrics: Are buybacks supplementing value creation or substituting for it? Watch what the company is willing to sacrifice. If buybacks accelerate while investment into the business erodes, you are witnessing financial engineering or harvesting. If buybacks coexist with visible product strength, stable retention, and pricing power, it’s possible that the buybacks supplement true value creation.
Both paths can appear superficially positive in the short run. Only one is sustainable in the long run.
A note on insider buying: when a CEO buys stock because the numbers are genuinely inflecting—because the business is accelerating, not because it’s “cheap” or has declined in price—that’s an important signal.
But when insider buying coincides with aggressive financial engineering the signal is more complicated to decipher. The CEO is likely buying because he’s calculated that his downside is protected: either the buybacks work and the stock re-rates, or PE returns with a floor bid. That’s a different thesis entirely, and the distinction matters enormously for outside investors.
The Dark Side Of Moonshots
Compensation structures this convex have a dark side.
When the payoff resides almost entirely in extreme outcomes, management behavior shifts: they focus more on moonshot optionality than on incrementalism and sustainable value creation. Financial levers that are controllable—buybacks, cost cuts, margin expansion—begin to dominate strategic ones that are not.
A dollar spent on R&D or sales capacity might create value in the future, but it definitely reduces this year’s free cash flow per share. A dollar spent buying back stock definitely improves free cash flow per share, but may or may not create value. When your entire compensation—the difference between zero and $400 million payday—hinges on achieving very specific numerical gates, the choice becomes obvious, even if it sacrifices the future of the business.
Conclusion: The Middle Path Is Dead
Return to where we started: governance as binding commitment, whose mechanics are the message. The board has implicitly declared the middle path unacceptable. This plan pays out zero for incremental success. It pays out zero for simply surviving as a mid-cap database vendor. It rewards only one outcome: a radical re-rating of the stock driven primarily by financial engineering.
The board is telling us, in very clear legal language, how it thinks equity value will be created from here. The company is either on a path to a stock re-rating, a merger or take-out—or is potentially facing a situation desperate enough to require moonshot incentives.
This is effectively a temporary "Governance Poison Pill:" a defensive masterstroke to co-opt the activists and PE’s own playbook and encoded it into Schuck’s contract. If a predator arrives claiming they can run the business more efficiently, Schuck can simply point to the filing: "I’m already legally bound to do exactly what you’re proposing—and I’m doing it for $0 if I fail." It is a defensive masterstroke designed to keep the keys by proving he is willing to drive faster than anyone else on the road.
The board has placed its chips on the table and bound management to a very specific playbook. Now we watch to see if the business has enough structural integrity to support the playbook; whether they’re pulling levers attached to something real, or simply pulling levers because the levers are all they have left to pull.
DISCLAIMER: SPECULATIVE FICTION FOLLOWS
The dialogue below is entirely fictional. These conversations did not occur, and no participant has confirmed these characterizations. This hypothetical reconstruction illustrates how compensation structures might emerge. Treat this as a fictional business school case study—illustrative of concepts, not factual reporting.
The Prenup Negotiations: When Activists Circle
PROLOGUE: Six Months Earlier
[Private dinner, off-the-record]
CONSTRUCTIVE HOLDER: Henry, appreciate you making time. I wanted to give you a heads up before this gets complicated.
SCHUCK: What am I missing?
CONSTRUCTIVE HOLDER: You’ve got a wolf pack circling. Three funds are quietly accumulating shares—two of them short-term money that'll be gone in under a year. They are already measuring the drapes, planning out the whole sale process.
SCHUCK: And you?
CONSTRUCTIVE HOLDER: I’m long term because I have permanent capital. I think you’re overcapitalizing the business and the growth story stale, but I also think you’re capable. The question is whether you’ll run the right playbook or whether these guys force something worse on you publicly.
SCHUCK: What do they want?
CONSTRUCTIVE HOLDER: Sale process. They don’t care if the business works in three years.
SCHUCK: So you’re warning me out of the goodness of your heart?
CONSTRUCTIVE HOLDER: I’m warning you because I’d rather see you run the right playbook and keep control than watch you get backed into a corner, lose a proxy fight, and have some PE firm execute the same plan and extract all the value. But here’s the thing: if someone shows up offering to buy you higher, and you dig your heels in because you don’t want to lose your job, I’ll back them.
SCHUCK: What’s the alternative?
CONSTRUCTIVE HOLDER: You tell the board you’re willing to harvest the business aggressively. You won’t do a token buyback—you’ll implement a serious program with a compensation plan that proves you’re eating your own cooking. Something so aggressive that when the activists show up, there’s no oxygen left for their story.
SCHUCK: How aggressive?
CONSTRUCTIVE HOLDER: Enough that if I’m wrong about you, you’ll have worked for a decade for nothing. Otherwise, we’re just watching you protect your salary.
SCHUCK: How much time do I have?
CONSTRUCTIVE HOLDER: Three months. Maybe less. If you’re serious, use it.
ACT I: The Activists Arrive
[Conference room, 10 AM]
ACTIVIST: Henry, thanks for the time. We’re filing a 13D Monday. We have three other funds signaling public support—that brings us to a 15% stake collectively. Let me walk you through our position.
The market’s pricing ZoomInfo like a melting ice cube because they don’t believe the growth story. We don’t either.
What we do believe is that someone will pay for that cash flow. We’re forming a strategic alternatives committee. Independent financial advisor—Evercore and probably JP Morgan. Ninety-day process to solicit bids. We think you’ll get offers. If you don’t, we’re nominating a slate at the annual meeting.
SCHUCK: We’ve explored alternatives. The bids aren’t—
ACTIVIST: Respectfully, that was what, twelve to eighteen months ago? The landscape’s changed. Private equity can lever this and harvest. Strategic buyers want your data infrastructure and customer list. The bids are there. The question is whether you want to run a process cooperatively or whether we force it.
SCHUCK: And if we announce aggressive buybacks, show margin expansion—
ACTIVIST: We’re well past that. The time for self-help was six months ago when [names Constructive Holder] tried to work with you quietly. We’re not interested in watching you buy back stock while the business melts. We want maximum price, minimum timeframe.
SCHUCK: You’re saying there’s no scenario where I stay.
ACTIVIST: We’re saying there’s no scenario where the status quo continues. If you can demonstrate a legitimate path to $20+ per share through operational execution, the market will decide. But we don’t think that path exists, and we’re not willing to wait another two years to be proven right.
SCHUCK: When does the 13D go out?
ACTIVIST: Monday morning, at the latest Wednesday. You’ve got until then to decide if you’re working with us or against us.
ACT II: The Private Equity Courtship
[Different conference room, two days later]
PE PARTNER: Henry. Good to see you. Been a while.
SCHUCK: Since the Allocadia discussion. What was that, three years ago?
PE PARTNER: Four. And before that, the Influitive conversation. I think we’ve circled each other on five or six software deals over the years. You’ve always been thoughtful. Which is why it kills me to see you getting dragged through the mud by these guys. That’s why I wanted this meeting before things get messy.
SCHUCK: You want to take us private.
PE PARTNER: We’re prepared to offer $14 per share—subject to due diligence—and we might have room to go higher. Cash. Call it a 40% premium to yesterday’s close. Your shareholders get certainty. You get to run the business without quarterly earnings pressure and activist noise.
SCHUCK: And I keep my job?
PE PARTNER: First year, absolutely. After that, depends on execution. But let me show you what we’re seeing—because you know we know this business well.
[slides deck across boardroom table]
Here’s what we’d do: If you can maintain even modest topline growth we get operating leverage. That incremental margin falls to the bottom line. More FCF. Create a John Malone-style tax shield through strategic use of debt.
Year two, we refinance and pay a special dividend. Year four we sell to another sponsor at a higher multiple because we’ve manufactured double-digit per-share FCF growth.
SCHUCK: While the actual business stagnates.
PE PARTNER: While the actual business stabilizes. Look, we both know the AI risk is real. We both know the market’s getting commoditized. But your Net Revenue Retention is still 105%. Customer concentration is manageable. You’re not dead yet—you’re just not growing 20% anymore. That’s harvestable.
SCHUCK: $14 feels low.
PE PARTNER: It’s a solid IRR for us. Much higher, the math gets tight and starts breaking. You’re welcome to test the market, but you’ve known me long enough to know I’m not lowballing you. This is what we can underwrite, and as I said, we might have room to improve our bid.
SCHUCK: What if we just ran your playbook ourselves?
PE PARTNER: [long pause] You could try. But you’d need board support. You’d need to convince public shareholders you’re serious. And you’d need compensation that proves you’re aligned—because right now, your incentives are to protect optionality for yourself.
The difference between us running this and you running it is that we have guaranteed financing and fewer distractions. We don’t have activists second-guessing every decision. And we don’t have quarterly marks making everyone nervous when the stock dips.
SCHUCK: What’s your diligence timeline?
PE PARTNER: We’ve been tracking you for years. We need thirty days to confirm nothing’s broken. After that, we can move fast. But I need a signal from you this week that it’s worth our time.
SCHUCK: I need to talk to the board.
PE PARTNER: Fair. But Henry? The activists aren’t bluffing. And if they force a process, you’ll get three or four bids and everyone will know you’re in play. Better to run this quietly if you’re going to sell.
ACT III: The Board Meeting
[Board room, emergency session]
LEAD DIRECTOR: Henry, the Board has a fiduciary duty to evaluate the $14 offer. We have three paths before us. One: engage the constructive holder’s framework—aggressive capital return, hope the market re-rates before the activists get louder. Two: run the sale process they’re demanding. Three: fight. Reject the demands, defend management, dare them to a proxy contest.
DIRECTOR A: Path Three is suicide. They’ve own 15%. ISS and Glass Lewis will back them. We’ll lose badly.
DIRECTOR B: Path Two is surrender. Running a process under duress means low-ball bids. Fifteen to eighteen from [PE Partner] proves it.
DIRECTOR C: Path One assumes the constructive holder can control the activists. He can’t. They’re traders. They want a sale.
LEAD DIRECTOR: Henry?
SCHUCK: All three paths end with harvesting or selling. The only question is timing and whether I’m still here as CEO. [pause] I want to stay. Which means Path One.
DIRECTOR A: They’ll still push for a sale.
SCHUCK: Maybe. But the story changes. Right now I’m a founder clinging to control. With the right comp package, I’m a CEO betting everything on execution. That’s different. It won’t stop them, but it slows them down.
LEAD DIRECTOR: [pulls out document] The constructive holder sent this. Called it “the only structure that matters.” Let me walk you through it.
ACT IV: The Compensation Trap
LEAD DIRECTOR: The proposal: no salary increases, no annual equity grants. One single option award—9.7 million shares struck at $13.54. Vests only if you hit specific cash flow targets and sustained stock price levels from $40 to $100.
[slides actual grant document across table]
SCHUCK: [reading] Six tranches. Stock price milestones from $40 to $100. FCF per share from $2.50 to $5.00. Service vesting over three to five years. [looks up] This is a ten-year bet.
LEAD DIRECTOR: Henry, this package is... it’s punitive. If you don't hit these price gates, you're essentially working for free for five years. We can't protect you anymore. We can't give you a "comfortable" middle ground. If you hit the top end, you clear $400 million pre-tax. If you don’t hit targets, you get…well (silence).
SCHUCK: But here’s what I don’t understand. We’re at $400 million in FCF today. To get to those cash flow targets, I need more.
LEAD DIRECTOR: Correct.
SCHUCK: That’s not possible with financial engineering alone. Even if I max out our share repurchases, I’d need the absolute FCF to grow substantially. Which means I need to grow revenue. LEAD DIRECTOR: Now you’re getting it. We aren’t paying you to survive, Henry. We’re paying you to win.
SCHUCK: We’re levered. I can’t de-lever and hit these targets. I have to stay levered and use every dollar of excess cash to buy back stock.
It’s a public LBO. Except I have to actually grow the business to make it work.
LEAD DIRECTOR: That’s exactly what the constructive holder is betting on. He thinks you can do it. The activists don’t.
SCHUCK: And if the business deteriorates faster than I can buy back stock? If AI pressure accelerates or customer concentration cracks?
LEAD DIRECTOR: Then you’ve worked a decade for nothing. But here’s the alternative: we can counter with $18, get maybe one or two years under PE ownership, then you’re out. No upside. Or we run a process, maybe find $20-22 if we’re lucky, but you lose control.
The constructive holder said something to me: “If Henry won’t take this package, the activists are right and we should sell now. But if he takes it, I’ll be the one explaining to ISS why shareholders should vote against the proxy contest.”
SCHUCK: He’s making me the credibility signal.
LEAD DIRECTOR: He’s making your willingness to eat your own cooking the test of whether this is theater or real. And honestly? It’s a good test.
SCHUCK: What if we do everything right and the multiple compresses anyway? What if the market decides we’re a commodity regardless of cash flow?
LEAD DIRECTOR: Then the compensation was always fiction and we should’ve taken $14. But I don’t think you believe that or you wouldn’t still be here.
SCHUCK: You’re saying the middle path is dead.
LEAD DIRECTOR: The middle path was never an option. The activists made sure of that. We either play ball or we admit it’s over and sell. There’s no version where we keep doing what we’ve been doing.
SCHUCK: When do you need an answer?
LEAD DIRECTOR: Filing goes out next week. If you’re in, we announce the comp structure and buyback simultaneously. If you’re out, we call [PE Partner] back.
SCHUCK: [staring at document] This plan….You’re giving me a gun with two bullets and telling me to go elephant hunting. If I miss, the debt kills me. If I hit, I’m the king of small-cap.
LEAD DIRECTOR: Yes. That’s why it’s credible. That’s why if you sign this, the constructive holder will back you and the activists will have to prove you can’t do it rather than just asserting you won’t try.
SCHUCK: [slides document back, unsigned] Give me the weekend.
LEAD DIRECTOR: Sunday at 6 PM. After that, the offer expires and we start calling bankers.
EPILOGUE: Monday Morning
[8-K Filing - Stock Option Grant Notice]
CEO Henry Schuck receives one-time option grant on 9.7 million shares struck at $13.54, vesting only upon achievement of operational milestones (FCF per share targets from $2.50 to $5.00) and sustained stock price appreciation to $40-$100 range over ten-year performance period. Service vesting over 3-5 years. Total Stock Return percentile rank requirement: must exceed 25th percentile of Russell 3000.
[Text message, Constructive Holder to Schuck, 7:43 AM - PRIVATE]
“Saw the filing. You bought yourself some time. Don’t waste it. -M”
[Text message, Lead Director to Schuck, 8:15 AM - PRIVATE]
“Good. Board call in two weeks. You know the timeline here.”
great insightful work. thanks for sharing
Very interesting read. Love your analysis.