Many of you will know that in the interests of company resilience and sustainability through conserving funds, I have raised this issue previously …and I dropped it for the benefit of reducing division within Axiom shareholders while the appeal decision approached.
Thanks for the support for my recent post …however this question isn’t about whether I’m personally correct –it’s about what is appropriate, justifiable and defensible and the wider shareholder / investment community view.
Someone mentioned that if we had won (and therefore the SP would be 60c plus), we would be saying what a great guy he is. That may be so …but we didn’t win conclusively, and the CEO must be judged on results. I have no doubt that we will prosper over the next 6-24 months …but we dropped 50% today (in case it went unnoticed).
Whether we like it or otherwise, shareholders have suffered as a result of management failure over this appeal result:
Management failed to recognise the risk that our asset (in the form of leases and agreements over Isabel) would be rescinded and nullified.
Either, management failed to obtain adequate legal advice that this could be a possibility.
Or, management failed to act on that advice.
It is one issue to be surprised by the appeal decision, but it’s another to not recognise that it could be with-in the bounds of possibility.
This failure led us to being blindsided and the share price ambushed because we effectively had to seek emergency funding.
If we follow the bouncing ball (as Tez is want to say) …who benefited from this need for emergency funding? …not me or the other loyal shareholders who have believed the story being pedaled hook line and sinker and didn’t sell a single share! No the beneficiaries are those close to the CEO who had funds spare …or our CEO who (correct me if I am wrong) did not hold a single share while the decision was brought down (why did I allow myself to ignore investing 101 –make sure the company boss has skin in the game?).
…those who benefited are the management who failed to ameliorate the risk (conflict?) and other investors who either didn’t buy the full story or even worse …had no shares whatsoever. In any case …we are talking people with big dollars in their back pocket …who are already sitting on a profit after a few hours trading on last Friday afternoon. My loyalty has cost me tens of thousands of dollars personally and my belief in the accuracy of company information and announcements has been severely shaken, if not irreparably damaged. Pity the poor mums and dads who had stop losses hit.
If the CoA was successful, the select few would have been able to convert their options …if the company is unsuccessful, the select few get to participate in bargain basement prices, with options galore. As we know, the latter occurred and these guys will be sitting pretty.
Who cares about me and my family who have had our investment decimated? Not Ryan Mount or management apparently. Heads we win, Tails you lose.
So what caused the panic selling?
10 Million of funding gone with no backup plan.
The loss of Isabel.
The new funding at the abysmal price of 18c with bountiful options.
My question is: at what point in time did we know that funding availability would be withdrawn without a CoA victory? If we had prior knowledge of this (as has been suggested), then it was either an act of gross miss-management that we did not hedge against this possibility prior to the result or it was a very shrewd calculation to cynically throw loyal shareholders into the fire for the benefit of management and the “in” crowd.
If we had suitable backup funding in place …the company value destruction would not have occurred.
It is not appropriate for management to now increase their holdings at bargain prices (or in the case of RM to buy ANY shares) as a result of the company value being decimated BECAUSE OF THE MISMANAGEMENT BY THAT SAME MANAGEMENT! (Now we have added cold water (ice) to the hot bath …let’s stick our toes in –no risk here!).
Management should not benefit directly as a result of their own ineptitude. I’m sorry …but this stinks of pure greed!
In the recent past we could have raised funds at 30 perhaps even 32c with all shareholders given the opportunity, but now we have FIVE Million Dollars worth of dilution at 18c / share (with FOUR included options priced all over the shop and an expiry date sometime between now and kingdom come) decimating our share price …because management didn’t have the foresight to hedge our risk.
I didn’t sell a single share though this debacle (more fool me) …and believe me …my current “remuneration” has drastically reduced in my neck of the woods …even the dog growled at me this afternoon.
The fair way to raise funds is via a reasonable SPP available to all shareholders pro-rata –not this piecemeal contrived "emergency" approach that benefits the well connected.
I’d love to get four options open until sometime just prior to forever. We previously had the costs of two EGM’s primarily to extend the options of related parities (literally as I understand it), and I think enough is enough. Let’s not forget the “shipping by December” comment at the Brisbane EGM (clearly not possible and I personally questioned RM over this –who admitted that time was tight –but failed to mention that it was ultimately impossible). Some believe this comment was designed to gain support for extending the options (with suggestions of nepotism).
I'm not suggesting nepotism, but the company should be above reproach. If you can see what I’m getting at here …every funding decision has a history of benefiting a select group of investors (Yes, I could sense the "them and us" among shareholders at the EGM.)
I propose:
That management be not allowed to participate in the 18c funding
That those participating in funding not be allowed to vote in respect of management options.
That a non-renounceable SPP be announced to raise $20 million from all shareholders at a 30% reduction of VWAP during trading over the next two weeks.
That the funding at 18c with four attached options be temporarily halted, subject to the SSP funding.
If there is reasonable support for this I will communicate it to AVQ office -but perhaps there is a stronger mechanism that someone may be aware of (100 shareholders?)?
B) RM’s remuneration
The comment was made that we should forget this whole issue because RM won’t accept anything less and we had better get used to it …well I’m sorry , but that comment just started to make me hot under the collar because it implies “ultimatum” to me …no-one is indispensable.
If we are held to ransom because no one else in the world can perform the job of CEO of Axiom, then we are in big trouble IMO.
…the appropriate attitude for a CEO of a company who has overseen this shareholder value destruction should be contrition. If I had been getting RM’s remuneration for years, I would work for free for 12 months to show my sincerity after this.
Question 1. What level of support is there for RM to come back to earth and receive a realistic remuneration from with-in Axiom shareholders?
The previous TU to this question indicates that there is a high level of support, but in addition I can advise that there are a number of central favourite posters who have supported this.
As I’ve said before, yes Axiom needs RM …but RM also needs Axiom, and a reasonable reduction in salary …partially offset by bonus shares would show respect to shareholders for the current state of affairs …and importantly: more closely align RM’s interests with those of Axiom shareholders.
Question 2. What is an appropriate level of remuneration for a CEO of a company of this size and with these recent results?
There is some objective information available in relation to this and many of you will have examples. I have included a variety of articles on the subject, however it appears to me that around the $350,000 mark plus 30% in bonus shares and a generous sprinkling of options is about appropriate.
Reasonable comments and suggestions welcome,
regards,
SJB
Variety of references attached below:
AVQ Price at posting:
19.0¢ Sentiment: Buy Disclosure: Held
