Form 4: DIRTT Director Acquires 25,875 Deferred Share Units

DIRTT Environmental Solutions Director Adrian Zarate acquired 25,875 Deferred Share Units, equivalent to common shares, as part of the company's long-term incentive plan.

Summary

• Adrian Zarate, a Director of DIRTT Environmental Solutions Ltd., acquired 25,875 Deferred Share Units (DSUs).
• The DSUs were granted on October 7, 2025, under the company's Third Amended and Restated Long Term Incentive Plan.
• Each DSU is the economic equivalent of one common share of DIRTT Environmental Solutions Ltd.
• The price used to calculate the number of DSUs granted was C$0.80, based on the closing price of common shares on the Toronto Stock Exchange on September 26, 2025.
• This C$0.80 price converts to approximately US$0.57, using the Bank of Canada exchange rate of C$1.3941 = US$1.00 on September 26, 2025.
• DSUs will settle following the cessation of service and employment with the Issuer.
• For US Directors, DSUs will settle no later than forty days following the Termination Date.
• Settlement can be in common shares or the cash equivalent of such common shares.

Sentiment

Score: 7

Explanation: The acquisition of Deferred Share Units by a director is generally viewed positively as it aligns management's interests with long-term shareholder value, though it's a routine compensation disclosure rather than a significant operational or financial announcement.

Positives

• Director Adrian Zarate's acquisition of 25,875 Deferred Share Units (DSUs) indicates continued alignment of management interests with shareholder value.
• The grant is part of a long-term incentive plan, suggesting a commitment to retaining and incentivizing key personnel.

Risks

• The value of the Deferred Share Units (DSUs) is directly tied to the future performance and share price of DIRTT Environmental Solutions Ltd., exposing the holder to market volatility.
• Settlement of DSUs is contingent upon cessation of service, introducing a timing risk for the holder.

Future Outlook

The long-term incentive plan, under which these DSUs were granted, aims to align the interests of directors with the future performance and long-term value creation for shareholders. The settlement mechanism, tied to cessation of service, reinforces a focus on sustained contributions.

Industry Context

Equity-based compensation, such as Deferred Share Units (DSUs), is a standard practice across various industries to incentivize and retain key executives and directors, aligning their interests with long-term company performance. This filing reflects a common corporate governance and compensation strategy.

Comparison to Industry Standards

• The use of Deferred Share Units (DSUs) as a long-term incentive mechanism is a widely adopted practice in public companies, comparable to equity compensation structures seen in firms like Steelcase Inc. (SCS) or Herman Miller (MLHR) within the broader office furniture and environmental solutions sector.
• The structure, tying settlement to cessation of service, is a common retention strategy for directors and executives across various industries, ensuring continued commitment.

Corporate Governance

Related Party Transactions

• The grant of 25,875 Deferred Share Units to Adrian Zarate, a Director of DIRTT Environmental Solutions Ltd., constitutes a related party transaction as it involves compensation provided by the company to a member of its board.

Stakeholder Impact

• Shareholders: Potential positive signal due to director's increased equity alignment with the company's long-term performance; however, future settlement in shares could lead to minor dilution.
• Management/Directors: Adrian Zarate's compensation package is enhanced, aligning his financial interests more closely with the company's long-term success and retention.

Next Steps

• DSUs will settle following the cessation of Adrian Zarate's service and employment with DIRTT Environmental Solutions Ltd.
• For US Directors, DSUs will settle no later than forty days following the Termination Date.

Key Dates

Recommendation

This Form 4 filing details a routine grant of Deferred Share Units to a director as part of an existing long-term incentive plan. While it indicates continued alignment of management interests with shareholders, it does not present new operational or financial information that would warrant a change in investment recommendation. It is a standard disclosure of insider compensation.

Keywords

DIRTT, DRTTF, SEC Form 4, insider transaction, director compensation, deferred share units, long term incentive plan, equity compensation