An investigation byThe Sydney Morning Herald,The AgeandThe Australian Financial Reviewhas revealed an apparent six-year gap in Nuix’s records that suggests the company may have failed to record Dr Castagna’s $3000 options package that he cashed out for $80 million when Nuix listed on the sharemarket last December. It also raises questions about whether the company backdated the options.
The $80 million payday capped off a remarkable reversal of fortune for a man who served a year of a four-year sentence for tax fraud and money laundering before being acquitted in 2019.
It was not until 2011 that internal Nuix documents sighted by the investigation first showed Ferodale,an offshore company (since renamed Blackall) controlled by Dr Castagna,had been issued 300,000 share options at 1c each. The entry noted Dr Castagna had been granted these options for $3000 in November 2005 when the company was in its infancy.
However,Nuix’s original investors’ agreement sighted by the investigation,dated December 2005 (a month after the company said Dr Castagna received the options) does not record any such arrangement. Nor is this parcel of options recorded in printouts of the options register,seen by the investigation,over the next six years.
As an incentive,executives or employees can be granted the option to acquire a certain number of shares at a designated price. The options mean they don’t actually get the shares right away. They are getting the option to buy a number of shares at a fixed price later on. In private companies,the directors have to agree who gets options and how many as the later conversion into shares will dilute the shareholding of others.
There are several indications that suggest Dr Castagna’s options may have been recorded only after Macquarie took a majority shareholding in Nuix at the end of May 2011.