Form 4: DIRTT Director Granted 24,934 Deferred Share Units

DIRTT Environmental Solutions Director Shalima K. Pannikode was granted 24,934 deferred share units, increasing her beneficial ownership to 192,504 DSUs.

Summary

• Director Shalima K. Pannikode received a grant of 24,934 Deferred Share Units (DSUs) on March 31, 2025.
• The DSUs were granted under the DIRTT Environmental Solutions Ltd. 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 was C$1.04, based on the closing price on the Toronto Stock Exchange on March 28, 2025.
• Using the Bank of Canada exchange rate of C$1.4307 = US$1.00 on March 28, 2025, the equivalent US dollar price per DSU was approximately $0.7269.
• Following this transaction, Ms. Pannikode beneficially owns a total of 192,504 derivative securities (DSUs).
• DSUs settle following the cessation of service and employment with the Issuer, either in common shares or the cash equivalent.

Sentiment

Score: 7

Explanation: The grant of Deferred Share Units to a director is a positive event as it aligns management's interests with long-term shareholder value. It is a routine compensation mechanism and does not indicate any immediate operational or financial changes, hence a moderately positive sentiment.

Positives

• The grant of 24,934 Deferred Share Units (DSUs) to Director Shalima K. Pannikode aligns her interests with long-term shareholder value.
• The DSUs are part of the company's Amended and Restated Long Term Incentive Plan, indicating a structured approach to executive compensation and retention.

Future Outlook

Deferred Share Units (DSUs) granted to the director will settle following the cessation of service and employment with the Issuer. For US Directors, settlement will occur no later than forty days after the Termination Date, either in common shares or the cash equivalent based on the closing price prior to the 30th day following separation.

Industry Context

The grant of Deferred Share Units (DSUs) to a director is a common practice in corporate governance and executive compensation across various industries. It serves to align the interests of directors with long-term shareholder value by tying a portion of their compensation to the company's equity performance and requiring continued service for vesting. This type of equity-based compensation is a standard mechanism for attracting and retaining qualified board members.

Comparison to Industry Standards

• The grant of Deferred Share Units (DSUs) as part of a long-term incentive plan is a widely accepted practice for director compensation, aligning with corporate governance best practices observed in comparable companies within the building materials and environmental solutions sectors.
• The structure, where DSUs settle upon cessation of service, is a common retention mechanism, similar to those used by peers like Steelcase Inc. (SCS) or Knoll, Inc. (KNL) (before its acquisition), which also utilize equity-based awards to incentivize long-term commitment from their board members.

Corporate Governance

Related Party Transactions

• Grant of 24,934 Deferred Share Units (DSUs) to Shalima K. Pannikode, a director of DIRTT Environmental Solutions Ltd., as part of her compensation package under the company's long-term incentive plan.

Stakeholder Impact

• Shareholders: The grant of equity-based compensation to a director aligns their interests with long-term shareholder value, potentially leading to more focused decision-making aimed at increasing stock performance.
• Director (Shalima K. Pannikode): Receives additional compensation in the form of DSUs, which vest upon cessation of service, providing a deferred benefit tied to the company's share price.

Next Steps

• DSUs will settle following the cessation of service and employment with the Issuer.
• For US Directors, settlement will occur 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 their compensation. While it indicates continued alignment of management interests with shareholders, it does not present new information that would fundamentally alter the company's financial outlook or operational performance. Therefore, it does not warrant a change in investment stance, suggesting a 'hold' recommendation for existing investors.

Keywords

DIRTT, DRTTF, Deferred Share Units, DSU, Director Compensation, Equity Grant, Insider Transaction, Shalima Pannikode