Corporate leadership teams usually don't ask much of their shareholders beyond approving board slates and executive compensation packages. But the board of BigBear.ai (NYSE: BBAI) just made a big ask of its shareholders, who responded with a move that could come back to bite them.

Here's what happened and why it could be good (or bad) for the stock.

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Running on empty

BigBear.ai is a defense company that has created AI-powered systems for various government entities, including facial scanners used at ports of entry and secure battlefield operations networks. Unlike fellow AI defense and security company Palantir Technologies (NASDAQ: PLTR), BigBear has had limited success expanding beyond its niche into larger markets.

About the only thing BigBear has grown is its outstanding share count. The company has increased the number of shares outstanding by more than tenfold over the past five years, from 46 million in 2021 to over 477 million today. Those shares have been used for acquisitions, executive and board compensation, and debt retirement.

But BigBear was slowly running out of shares to issue. Its Certificate of Incorporation limited it to issuing only 500 million shares in total, with less than 23 million remaining. That's why the board made its big ask.

Double or nothing

At the most recent annual meeting, shareholders were asked to vote on an amendment to double the number of shares the company was authorized to issue from 500 million to 1 billion. The vote easily succeeded 89% to 10%.

On one hand, the company will likely need some of those shares soon. At BigBear's current share price of $3.53 per share, it had just $81 million in shares available on its old authorization. Even if you added the entire $100.7 million of cash on the company's balance sheet, that's just $181.7 million, not even enough to make another acquisition the size of its recent modest Ask Sage acquisition, which cost $250 million.

The increase in share authorization at least buys the company some time and gives management the flexibility to consider its options.

A rough ride

That said, any further share issuances will result in further share dilution... and the stock is already down more than 60% since it went public via a SPAC merger in 2021.