Form 4: DIRTT Environmental Solutions Director Aron English Granted Over 62,000 Deferred Share Units

Aron R. English, a Director and 10% owner of DIRTT Environmental Solutions Ltd., was granted 62,543 Deferred Share Units (DSUs) as part of the company's long-term incentive plan.

Summary

• Aron R. English, a Director and 10% owner of DIRTT Environmental Solutions Ltd. (DRTTF), was granted 62,543 Deferred Share Units (DSUs).
• The transaction date for this grant was June 30, 2025.
• Each DSU is economically equivalent to one common share of DIRTT Environmental Solutions Ltd.
• The DSUs were granted under the company's Third Amended and Restated Long Term Incentive Plan.
• The price used to calculate the number of DSUs was C$0.82, based on the closing price of the Issuer's Common Shares on the Toronto Stock Exchange on June 27, 2025.
• This Canadian dollar price was converted to US$0.6 using the Bank of Canada exchange rate of C$1.3676 = US$1.00 on June 27, 2025.
• Following this transaction, Aron R. English beneficially owns 755,391 derivative securities (DSUs).
• DSUs settle upon cessation of service and employment with the Issuer, with US Directors' DSUs settling no later than 40 days following the termination date.
• Settlement can be in common shares or the cash equivalent based on the closing price of common shares on the day prior to the 30th day following separation from service for US Directors.

Sentiment

Score: 7

Explanation: The grant of DSUs to a director and significant owner is a positive sign of alignment between management and shareholder interests, reflecting a standard compensation practice. It does not indicate any negative operational or financial news.

Positives

• The grant of Deferred Share Units (DSUs) to a Director and 10% owner aligns management's interests with those of shareholders, as DSUs are tied to the company's share performance.
• The transaction is part of the company's Third Amended and Restated Long Term Incentive Plan, indicating a structured approach to executive and director compensation.

Negatives

• No explicit negatives are detailed in this Form 4 filing, which primarily reports a compensation-related grant.

Risks

• No specific risks are mentioned in this Form 4 filing.

Future Outlook

The DSUs will settle following the cessation of service and employment with the Issuer, with US Directors' DSUs settling no later than forty days following the Termination Date.

Industry Context

The grant of Deferred Share Units is a common practice in corporate governance and executive compensation across various industries, aiming to align the interests of directors and executives with long-term shareholder value. This specific grant is consistent with standard long-term incentive plans.

Comparison to Industry Standards

• The use of Deferred Share Units (DSUs) as a component of director compensation is a widely accepted practice in North American public companies, including those in the construction and environmental solutions sectors like DIRTT.
• The structure, where DSUs settle upon cessation of service, is typical for non-employee director compensation, promoting long-term commitment rather than short-term trading.
• The valuation method, using the closing price on a major exchange (Toronto Stock Exchange) and a standard exchange rate, aligns with common industry practices for valuing equity-based compensation.
• While specific comparable companies or projects are not detailed in this filing, the general approach to DSU grants is consistent with compensation strategies observed at companies such as Steelcase Inc. (SCS), Herman Miller (MLHR), or Knoll, Inc. (KNL) within the broader office furniture and interior solutions industry, which often utilize similar long-term equity incentives for their board members.

Corporate Governance

Related Party Transactions

• The DSU grant to Aron R. English, a Director and 10% owner, constitutes a related party transaction as it involves compensation to an insider.

Stakeholder Impact

• Shareholders: The DSU grant aligns the interests of a significant director and owner with shareholders, potentially encouraging long-term value creation. The future settlement in shares could lead to minor dilution, but this is a standard aspect of equity compensation.
• Management/Directors: Aron R. English receives additional long-term incentive compensation, which vests upon cessation of service, providing a deferred benefit tied to company performance.

Next Steps

• 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.

Key Dates

Recommendation

Keywords

DIRTT Environmental Solutions, DRTTF, SEC Form 4, Deferred Share Units, DSU, Executive Compensation, Insider Ownership, Long Term Incentive Plan, Aron English, Director, 10% Owner