Unlisted Employee Shares

For ASX-listed companies, an Appendix 3X or 3Y only shows a director’s current relevant interest in issued securities. A nil holding does not necessarily mean the executive has no economic exposure to the business. They may have unvested performance rights, options, restricted shares or deferred bonuses that do not yet appear as ordinary shares.

In the case of Collins Foods, Xavier Simonet’s ordinary shareholding may currently be nil, but the FY26 annual report shows that he participates in the company’s incentive framework. Collins Foods granted performance rights during FY26, subject to three-year performance hurdles, and its remuneration report separately discloses changes in equity held by senior executives. These rights carry no voting or dividend entitlement until they vest, but they still represent potential future equity exposure.

We would break management “skin in the game” into three categories:

1. Shares purchased with the executive’s own money

This is generally the strongest signal. An executive who has committed a meaningful proportion of their personal wealth at market prices is exposed alongside shareholders immediately and without performance conditions.

2. Vested shares received through remuneration

These still create alignment, particularly where management is required to retain the shares. However, the executive did not necessarily put personal capital at risk to acquire them.

3. Unvested performance rights and options

These can create strong incentives, but the quality depends on the hurdles. Rights linked to genuine earnings-per-share growth, return on invested capital and relative shareholder returns are more compelling than awards based mainly on continued employment or easily achieved targets.

We therefore would not conclude that an executive has no alignment simply because the latest director-interest notice says nil. However, we would generally prefer a managing director to build a meaningful direct shareholding over time, particularly once they have been in the role for several years.

Without access to a Bloomberg Terminal, the quickest places to check are:

• the latest Appendix 3X, 3Y or 3Z for direct and indirect director holdings;
• the remuneration report in the annual report;
• the table headed KMP equity holdings, share-based payments or long-term incentives;

The annual report is usually more useful than the employment contract. Employment agreements generally disclose salary, notice periods and termination rights, but the remuneration report provides a clearer picture of how much equity has been granted, what conditions apply and when it may vest.

In terms of control, a shareholder does not need to own more than 50% to exert effective control. In a fragmented register, a holding of 15–25% can provide substantial influence, particularly where other shareholders are passive or management-friendly.

At the end of the day, management ownership is valuable, but it should not be viewed in isolation. A large shareholding can align management with investors, but it can also entrench an underperforming founder or give one individual too much control. Conversely, a newly appointed professional chief executive may begin with no shares but have a well-designed incentive package that builds alignment over time.