In May of 2017, RH’s CEO Gary Friedman was quietly awarded a staggering nine figure incentive package if he can somehow engineer the share price to 0 or higher.Precisely how he achieves this goal is entirely irrelevant.The share price has already nearly doubled since those purchases.
Each time, these separate announcements have driven the share price sharply higher.
This is how we have gotten from the $40s to the $90s in just 8 weeks. In the past, RH has made very visible use of such events to make announcements which then sent the stock sharply higher.
And now suddenly these conversion prices are quite squarely within range.
But…you also know that in 20, RH had already purchased complete “bond hedges” from underwriter Bof A-ML to fully once those convertibles convert at prices over $116 and $118.
What I will describe below is how Friedman is now using a combination of positive cash flow and new debt to further reduce the share count.