Good post BCD and good idea as it was clear some folks were definitely confused on the options end of things.

I would like to add a few more clarifying remarks as a supplement to help people make a more informed decision at the AGM with respect to voting on the stock option plan.

To start, one important correction I would like to make to BCD's post is that nearly all of the available pool of stock options permitted under the 2013 plan have already been awarded and are currently outstanding (some have not vested but they have been granted). The maximum size of the option pool as of now is 26,475,000 options per the 2013 stock option plan ... the company is not allowed to issue more stock options than this maximum number. As of March 31, 2014, the company had 23,557,750 options issued and outstanding (per the May 2014 financials). Since the end of March, the company issued 200,000 options in April to Daniel DeSimone and just recently in July, 2,000,000 options to Ajit Manocha. The addition of these newer options has subsequently reduced the total number of options remaining available for allocation to only 792,250 (this factor's in Dr. Taylor's small exercise of options in June). It was recently theorized that the "insider sell" flagged on TMX last week was Mark Benadiba exercising some of his options. If that was indeed Mark, then those options would be gone and you would thus add that amount to the remaining total ... so in that case, say roughly 1,550,000 options remaining for allocation.

Without the approval of the 2014 stock option plan, the amount of options allowable will not increase and thus the company can, at the most, issue 792,250 new stock options (or roughly 1,550,000 if you believe it was Mark B exercising some options last week ... I think it's certainly plausible personally).

Keep in mind that POET has plans to expand its business to drive revenue, licensing and further research. This expansion is supported by I suspect all of the posters here. In order to expand, new talent must be brought on board. The thing with starup companies like POET is that they are competing for talent with other companies in a similar technology space that are already established, stable, revenue generating, etc. Think Intel, Samsung, AMD, Qualcomm, etc. For someone looking for work, these companies offer stability and probably higher wages, good benefits, etc., and there is little to no chance they go under. For startup companies like POET to compete for talent, they need to issue stock options to stay competitive ... this is how they attract talent because the potential payoff of joining an emerging company that subsequently hits it big (like many people believe POET will do) is huge, when you have stock options ... this benefit ostensibly offsets the higher risk of joining an emerging company versus an established one. The most attractive feature of the job, financially speaking, will likely be the stock options. So it is important for a startup company like POET, looking to expand, to have sufficient stock options available for issue to attract and retain new talent in a move to expand. I leave it up to everyone to make up their own minds, on whether they feel the remaining pool of 792,250 options (or about 1,550,000 options if you think it was Mark B last week exercising options) is enough to work with, with respect to attracting and retaining new talent to grow the company.

Now, Mark Benadiba recently ceased to be a board member and executive, and as such, all of his options will disappear, one way or another, between now and the next roughly 180 days. Similarly, Leon Pierhal will cease to board member and executive as of the AGM in August. Therefore, much like Mr. Benadiba, Mr. Pierhal's options will cease to exist one way or another (either by exercise or expiry) 180 days following the AGM. As shown in the Management Information Circular, Mr. Benadiba had 3,300,000 options and Mr. Pierhal had 3,175,000 options. Once these options are gone (either exercised or expired), this opens up room for new options. This would therefore bring the new total available options, under the current stock options plan, to 7,267,250. If the new 2014 stock option plan is approved, this would further increase the available pool of options by 5,450,000 to 12,717,250.

Some may look at the future total that would be available (7,267,250) and say that is more than enough. Why do they need to increase the pool to 12,717,250? One more thing to consider before you decide that you might not have thought about: keep in mind, that Mr. Benadiba and Mr. Pierhal have half a year (180 days) to exercise their options, and there is no way of knowing with any certainty when they will opt to exercise options that are vested and in the money; theoretically they could wait to the very last minute to exercise. When hiring new employees for an expansion of POET, the new hires will likely expect to receive options up front, and/or have it written into their contract. It would likely be difficult or IMO probably impossible to assign options before new space is opened up in the option pool. Thus, depending on when MB and LP exercise their options, the company may not be in a position to grant options other than what is currently in the available pool (only 792,250 options that we for sure know about for now), if the new stock option plan is not approved, which could result in the loss of talent that the company intended to recruit in the next 6 months for expansion initiatives. If it is approved, then the extra 5,450,000 option room would likely give the company more flexibility with respect to hiring / retaining new employees. It is up to each individual shareholder to decide what they are comfortable with ... I hope this information has helped frame the situation and the possibilities.

Andrea asked a question regarding what happens if the 2014 stock option plan is voted down. In that case, the amount of already issued options remains the same ... and the maximum possible amount cannot exceed the 2013 limit of 26,475,000. This represents 16.4% of the current oustanding share count. What would automatically happen is that insiders would then only be allowed to hold 10% of the float in options (see 33 of the Management Information Circular). With Mark B ceasing to become an insider and Leon P. ceasing to become an insider after the AGM, the amount of options currently in the hands of insiders would be 15,462,500 (you get this number by adding up options as disclosed in the info circular of both executives and BoD members and then subtracting the options held by LP and MB). This would represent 9.6% of the current float, leaving insiders with up to 657,400 options they could potentially allocate to themselves (to bring their holdings up to the 10% maximum). No alternative proposal would be necessary ... the maximum amount available to insiders would be set at 10% per the information circular pg. 33 ... and the existing stock options already issued would remain intact. If the new stock option plan is approved, then insiders would not be limited to 10% of the current oustanding shares. The maximum would be set at 20%, which is where it currently is (although that could never in practice happen because there will always be options in the hands of company employees that aren't insiders ... so insiders could never possibly own the full 20% of the current float). I hope that answers that question.

Respectfully,

Bumblebee