IDP Education chairman Peter Polson was also generous enough to lure O’Shannessy with a $250,000 sign-on bonus to make up for her forgone Adore Beauty incentives, no matter how worthless her issued options have become.
O’Shannessy was signed up at Adore with 868,502 shares, paid for with a $868,502 limited recourse loan to the company.
Repaying that loan (barring any further falls in the stock price if she liquidates her 1 per cent stake in the company) would net her roughly $300,000. But hey, 30¢ in the dollar still beats what remains of the investment made by an array of women with limited financial literacy who were gullible enough to buy Adore Beauty shares during its puffed-up IPO.
Board renewal
The 550,000 share options issued to O’Shannessy two years ago have an exercise price tied to the $6.75 IPO. By virtue of her departure from Ella, O’Shannessy clearly doubts the stock will return to those levels.
Not even management is confident enough to claim Adore Beauty as “Australia’s No.1 pure-play online beauty retailer” without adding a worrying fine print supplemental that this is “based on management estimates”.
That would be the same leadership that capitulated to a board renewal that saw the November departure of chairman justin ryanthe previous managing partner of Quadrant and its representative on the board (it retains a 32 per cent post-float stake).
Bizarrely, Ryan had continued as Adore chairman even after he left Quadrant in April 2021 to launch a competitor firm with Adore co-founder Kate Morris (who yanked $46 million out of the IPO).
Adore’s revenue is continuing to grow, but it is painfully unable to grow net profit (which fell 22 per cent in the most recent half).
Perhaps that’s because Adore is still on a marketing rampage, its $16 million in advertising spend outweighing the $11 million it pays its workers.
The cost of Adore’s $96 million worth of sales in the first half of last year worked out to 67 per cent. And on $113 million of revenue in the first half of this financial year? 67 per cent.
Who’s bright idea was it to float Adore before it had solidified its brand recognition? Or was it that the pre-IPO brand-building campaign aimed overwhelmingly at simply flogging its noxious stock?
For O’Shannessy, IDP Education is almost a return home, having been spun off by Seek, where she was previously an executive. She would be praying Polson (one of the most generous men, with other people’s money, corporate Australia has ever seen) does them out as many share options as were issued to previous IDP boss Andrew Barkla.
When Barkla joined IDP three months before its float, the board agreed to grant him 4.15 million share options with an exercise price of $1.44 (far short of the IPO pricing of $2.65 a share). When he exercised them in August 2018, the share price was $11, a lazy $40 million windfall.
For Adore Beauty, it now has to rely on Egon Zehnder to scour the market for a captain willing to go down with the ship.
Perhaps it would be easier just to Zehnder into administration.