DroneShield Seeks to Rebuild Investor Confidence with Governance Overhaul and Major Contract

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Following a significant erosion of trust last November, DroneShield Ltd is implementing stricter governance rules for its leadership. The move aims to better align the interests of executives and board members with those of shareholders. This strategic shift coincides with the company securing its largest European military contract since the controversial insider sales—a dual development that has reignited trading activity in its shares.

Providing fundamental support to the stock is a recent operational achievement. In mid-December, DroneShield announced a AUD 49.6 million order from a European military customer. This represents the company's most significant contract award since the insider selling incident that damaged investor relations.

A key detail for the market is the contract's timeline: delivery and payment are scheduled for the first quarter of 2026. This provides early visibility into a substantial portion of near-term revenue. To contextualize the order's size, DroneShield's revenue for the last twelve months stands at AUD 107.17 million, with a net profit of AUD 5.61 million. The new contract therefore constitutes a notable percentage of recent annual earnings, underpinning growth with concrete near-term cash flow.

Governance Reforms Triggered by Insider Sales

The current market reaction is primarily driven by comprehensive changes to the company's governance framework. These changes were prompted by substantial insider selling in November 2025, during which the CEO and Chairman sold approximately AUD 70 million worth of shares. That event triggered a sharp sell-off, with the share price plunging nearly 48% at its low point.

Based on an independent review of corporate practices, DroneShield has now instituted mandatory shareholding requirements for its leadership:

• Chief Executive Oleg Vornik is required to hold shares valued at 200% of his annual base salary. He must reach this threshold within 12 months.
• Non-executive directors have a three-year period to accumulate a holding equivalent to 100% of their annual board fees.

These rules are designed to create a more direct link between the personal wealth of decision-makers and the company's share price performance. DroneShield states the new policy aligns with common standards for companies in the S&P/ASX 200 index. Additionally, the board plans to appoint a new independent director with proven ASX 200 experience and to present a revised executive remuneration model by February 2026.

The market currently views these measures as a necessary step to visibly tie management's interests to those of shareholders.

Volatility Persists Amid Recovery

Despite a recent recovery, the equity remains highly volatile. The current share price of €1.80, while significantly above lows seen in recent months and approximately 17% above its 200-day moving average, remains well below the 52-week high of €3.65. The stock's 30-day annualized volatility exceeding 150% underscores its continued propensity for large swings.

Analysts at Bell Potter maintain a neutral "Hold" recommendation following the governance turbulence. This uncertainty is also reflected in a wide range of price targets, which span from AUD 2.50 to AUD 5.30. Market experts are primarily focused on two factors: the credibility of the new leadership rules and the execution of the major European order.

Outlook: Execution is Key

Recent developments mark a clear corrective course in corporate governance, bolstered by a substantial military contract. The path forward will likely be determined by three critical execution points: the consistent adherence by management and the board to the new shareholding mandates, the smooth fulfillment of the AUD 49.6 million order in Q1 2026, and the delivery of the promised revised remuneration model by February 2026. Together, these elements will demonstrate whether the current effort to rebuild trust can be sustained.