In summary, I am supportive of all six tranches to Peter Oliver due to our existing company policy to pay non executive directors via performance rights on the basis they don't leave us (see page 26 of our annual report from earlier this year) us as well as the effectiveness of the performance hurdles which include Peter Oliver helping us get to $800m market cap and above.
I am also supportive of tranches 2-4 for Chris Gale on the basis that tonnage of 20MT and up is in the interest of all shareholders and appropriately focuses CG towards achieving this.
However, I have two open questions regarding tranche 1 for CG and also the expiry date for all four of CG's performance rights, specifically:
- Why is the performance hurdles for tranche one only be proposed now at a point when most reasonable people have already concluded our JORC is greater than 10MT and also does this mean that the company will not report the JORC until the vote at the General Meeting takes place?; and
- Are there any expiry dates placed on the performance hurdles so that CG is incentivised to achieve these tonnages and the DFS within a certain timeframe?
My more detailed thoughts below:In relation to the proposal to grant Peter Oliver six tranches of performance rights. The first two being based on remaining in employment for the next two years and the next four based on particular market capitalization hurdles:
- Page 26 of our most recent annual report from earlier this year shows that we have an existing policy to remunerate our non executive directors based on a performance hurdle to remain in employment.
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First two tranches Peter Oliver is one of the most well known, established and well rounded Lithium executives in the world. He doesn't come for free and I think the 2.5m shares per year are a reasonable price to pay ($287k based on current share price of 11.5 cents).
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Tranches four through six These are well crafted and closely align Peter's performance with our interests as shareholders. A market cap from $800m up to $1.5bn personally would mean I'd be close to retiring before the age of 40.
In relation to the proposal to grant Chris Gale four tranches of performance rights. Each of the tranches has been nicely aligned with shareholder interests (performance hurdles for each tranche is based on achieving a particular JORC tonnage (10,20,30 and 40MT)
- The last time performance rights were granted to CG (prior to this current proposale) was at the AGM earlier this year. See Schedule 2 on page 32 of our Notice of AGM announcement from earlier this year.
- These most recent rights had performance hurdles based on Total Shareholder Return (essentially change in share price over the measurement period which was 1 January 2022 to 1 July 2022. Obviously over that period it would have suited CG if they vested at the SP peak in March/April as a greater number of rights would have vested as opposed to 1 July.
- So it seems they placed a short time frame on CGs most recent performance hurdles which likely worked in shareholders favour as he was incentivised to get a good short term result.
- As for the issue of timing of these performance rights. It's very unclear why these performance targets are being set after 8 months of drilling and at a time when most reasonable people have already worked out a reasonable estimate of the likely tonnage we are going to report.
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I'm uncertain as to what this first tranche of 1.5m shares for 10MT JORC means for the timeframe of our JORC ANN. Is it possible for us to release the JORC and then vote on the award of performance rights afterwards?
Or do we have to vote on this performance rights issuance before the JORC can be released? Very unclear.
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As for tranches 2-4, I fully support these as tonnages from 20MT and upwards mean that all of will be getting a lot more wealthy and it incentivises CG to achieve this.
- I also have an open question about timing on these performance hurdles. Is there an expiry date or can the tonnages be achieved 10 years from now and still apply?
(20min delay)