Mo' Money

A quick 'n dirty comparison of the companies Stonegate Securities recently used in their equity

research note of mid-November, using salary, bonus, stock and option compensation, and other compensation from recent filings for principal officers:

Compensation in 2009 was below average. 2010 compensation is higher than average. Some folks believe management's compensation is high. I do not have much if any issue or concern with their compensation. I come at this from several directions:

• In the grand scheme of things, and with the benefit of hindsight (in the future, not now), I expect to monetize my ownership in the company at several multiples (>10x) from where the stock is now (on a fully diluted basis, accounting for the potential likelihood of future dilutive acts). If that indeed happens, the price paid to management through cash and stock compensation would have been more than worth it;
• Provectus, for all intensive purposes, is a private company that just happens to be public. Management's ownership is much smaller than what I would have expected. So, increases in stock ownership (part of compensation) through option issuances does not bother me. Happy management should result, eventually, in happy shareholders, assuming management is ethical. I believe, without a doubt, that they are ethical; and,
• Management has been very efficient with the use of capital raised to get this far.

As a result, in my view, the dilution shareholders have incurred through fund raising, some of which obviously goes to pay management, is no where near what it has been at other companies. The leverage profile upon acquisition of Provectus makes an investment of a dollar in the company a better ROI or IRR than an equivalent dollar in, say, Dendreon, at the same point in time.

Obviously, all of this is relevant and appropriate if we end up in a successful outcome, which I believe it will.