agm - remuneration report

At the upcoming AGM shareholders will be asked to vote on Resolution 3 being the adoption of the Remuneration Report outlined in pages 8-12 of the Annual Report.

Extracts from the report state:

"A new bonus arrangement was put in place for the period 1 January 2012 to 30 June 2012. Bonuses will be earned by meeting the thresholds set by the Board for each of the three performance criteria: share price growth, reserve growth and production growth. Each metric is treated individually. Additionally the Bonus Pool will include a discretionary component available for award by the Compensation Committee for performance by an individual outside of the performance criteria. To achieve the Bonus Pool in totality, the company has to meet the targeted thresholds for all three criteria. The current Bonus Plan also includes a set of “Stretch Targets”, which would reward the achievement of extraordinary results for Samson shareholders.
Although none of the thresholds were met a portion of the discretionary component of the bonus was awarded in recognition of the efforts by all employees throughout the period. $133,168 was accrued during the prior period. This amount was paid in the current period in relation to this accrual."

So even though none of the thresholds were met, the Directors still gave themselves a bonus of $133,168. Why?

Even worse, the Directors have changed the bonus plan this year to be as follows:

"Current bonus plan:
For the calendar year ended 31 December 2013, the payment of a bonus will be at the discretion of the Board of Directors. Payment of a bonus will only be payable if the Consolidated Entity’s operations are cash flow positive for the December quarter 2013. Cash flow has been defined by the Compensation Committee as all revenue including interest less all costs including interest. Costs will also exclude all exploration and development expenditure for the period after deduction of all administrative costs associated with these expenditures.
While the size of the bonus plan will be at the discretion of the Board, it may not be larger than 20% of the net cash balance after debt servicing as at 31 December 2013 and no greater than $1.2m. No bonus expense has been accrued as at 30 June 2013."

So if you can't get a bonus by reaching the thresholds previously set, then just change the methodology to ensure that you do.

If 25% of shareholders vote against this resolution then there must be a spill as per page 13 of the recently released Circular to Shareholders. In my view shareholders should give this matter very serious consideration. I do not think that the performance of the Company over the past 12 months in any way justifies a bonus payment to Directors. The sp sits at a 3 year low and there have been some incredulous decisions made by the Board which have had a detrimental effect on the finances of the Company.

At this stage I will be voting against the adoption of the Remuneration Report unless I can be convinced otherwise.