InspireMD (NSPR) – 2015, September 9 AGM

Home » InspireMD (NSPR) – 2015, September 9 AGM

Disclaimer: These are excerpts from student assignments conducted as part of a Corporate Finance class. The opinions represented do not necessarily agree with mine. I do not vouch for the quality of the recommendations or the accuracy of the numbers. Follow the recommendations on your own risk.

FInal 2 #AGMs for @LSEPKUSummerSch #CorpFin #students voting recommendations on September 9: #InspireMD $NSPR and #Torchlight $TRCH

#Students sceptical about #reversestocksplit at #InspireMD $NSPR: research shows -7% stock price drop at announcements of reverse stock splits @LSEPKUSummerSch #CorpFin

#Students: major reason for #delisting likely continuous losses rather than low stock price, urge management to focus on bottom line #InspireMD $NSPR

#Students: #Delaware #franchisetax savings after #reversestocksplit likely small compared to transaction costs #InspireMD $NSPR

#Students on #InspireMD $NSPR #reversestocksplit: shareholders may end with odd lots hard to sell, smaller stock price likely more liquid due to lot sizes

Proposal Excerpt of Student Recommendations
For Against
Authorization of the board of directors to amend the Amended and Restated Certificate of Incorporation of the Company to (i) effect a reverse stock split of our common stock at a ratio of one-for-ten and (ii) reduce the number of authorized shares of our common stock from 125,000,000 to 50,000,000.
  • “reverse stock split… will raise the company’s stock price to comply with NYSE MKT’s listing requirements.”
  • “Higher-priced stocks may also be more attractive to investors and result in higher liquidity potentially”, as “there is a perception that lower-priced securities are less promising investments and less liquid when the investors wants to sell its shares”
  • “…will lead to a more concentrated share structure with the board of directors ending up in majority. This promises more efficient decision-making”
  • “reduction of the number of authorized capital stock will decrease the annual franchise tax paid to the State of Delaware”
  • “This artificial change of stock price… will have very limited impact in attracting institutional investors … when the company is incapable of generating positive returns, in its fifth consecutive years. On the contrary it may incur additional transaction costs”
  • “In history, reverse stock-splits have been shown to be followed by more losses and price declining more often than gains. Woolridge and Chambers (1983) report that around reverse split announcements abnormal returns are about -7%. … abnormal buy-and-hold returns, which was -10.76% in one year and -33.90% (Piotroski and So, 2012) in three years on average, respectively”
  • “This effort to prevent the company from suspension of trading has highly uncertain outcome as other NYSE … requirements may not be met”. “the most important criteria of delisting is the company’s performance and profitability, or how long the company has suffered from continuous losses, which is extremely unfavourable to InspireMD.”
  • Tax savings are trivial compared to transaction costs (current tax of $6,650 according to student estimates)
  • “will lead some stockholders holding “odd lots” of less than 100 shares, which may be difficult to sell. According to NYSE MKT regulations, the number of odd-lot shares will be adjusted to the nearest round lot and the price will be reduced.”

Click here for proxy statement and voting outcomes: http://www.inspiremd.com/en/investors/sec-filings/

(1) Election of three Class 1 directors to serve on the Board for a term of three years or until their successors are elected and qualified:
Director For Withheld Broker Non-Votes
Alan Milinazzo 16,960,265 435,935 37,443,315
Sol J. Barer, Ph.D. 16,251,338 1,144,862 37,443,315
Paul Stuka 16,770,689 625,511 37,443,315

(2) The Plan Amendment:
For Against Abstain Broker Non-Votes
13,629,752 3,552,189 214,259 37,443,315

(3) Authorization of the Board to amend the Amended and Restated Certificate of Incorporation of the Company to (i) effect a reverse stock
split of the Company’s common stock at a ratio of one-for-ten and (ii) reduce the number of authorized shares of the Company’s common
stock from 125,000,000 to 50,000,000:
For Against Abstain Broker Non-Votes
48,036,337 6,797,405 5,773 0

(4) An advisory vote on executive compensation as disclosed in the 2015 Proxy:
For Against Abstain Broker Non-Votes
14,060,905 2,661,035 674,260 37,443,315

(5) Ratification of the appointment of Kesselman & Kesselman, Certified Public Accountants, as our independent registered public accounting firm for the year ending December 31, 2015:
For Against Abstain Broker Non-Votes
53,399,382 1,360,829 79,304 0