The final week before the General Meeting, page-30

Here’s a question I can’t quite answer for myself.

Why such an emotive response by the Board to the 249D? What’s fuelling that?

We‘re not talking just a basic clearheaded calm professional dismissal of the need for change: the response comes across as quite worked up.

What’s the motivation?

Let’s start with financial.

Lowe is already out and has no FFX stuck waiting anyway. Unlike others waiting on stock rights he’s also able to take cash for his bonus payout as part of the termination.

Hepburn has a decent chunk of FFX left ($300k) but has already done alright with LLL holdings (~$1.45m holdings depending if/when sold), sold nearly twice the FFX he’s bought ($1.9m sold to $1m bought), received $1m in discounted equity, and isn’t waiting on performance rights. Sure taxes along the way mean it’s not quite the sum in pocket it might read as, but still done pretty well.

Gordon has almost no FFX ($15k) and sure there’s some performance rights of around $130k after tax but you can never full count on those anyway.

Fraser has done more modestly than some (maybe has/had $270k of LLL if/when sold, around the same from consulting it seems) but also doesn’t have huge financial stakes still at play from what we know: roughly $110k of FFX and the same opportunity for $130k of perf rights after tax. And anyone of his caliber to charge $3k/day surely has other options.

Let’s assume the Board believes wholeheartedly that no one else could close the deal. They’ve also assured us that it’s “highly unlikely” we have any liabilities, so surely anyone else, even if they fail to get a deal, can just return the $ and escrowed shares and everyone including current Directors still get back pretty close to what they expected. Maybe even more by FFX avoiding spending on a transaction for a written off entity.

Let’s go a step further and assume for argument’s sake the Board are wrong and there is liability. And they think it all blows up if the Board changes and their performance rights and FFX holdings will be worth zero.

These aren’t nothing sums at play. But in the scheme of what they’ve been working with, the expected risk of things like performance rights, the general ups and downs of the Director class. Are they quite enough to be as worked up over the 249D as the response seems? Besides these are experienced professional directors: I can’t imagine they’re driven by that sort of base personal financial motive: that would be a conflict they wouldn’t let get in the way.

So I consider a moral motivation to make sure the mine is left in good hands. But I find it hard to reconcile the decision to walk away when we did if that was as strong a motivation as one that might motivate someone to respond to the 249D as they have.

So I consider reputation: it sounds like this isn’t the first 249D rodeo for some, and I’m not sure it supports anyone’s reputation at a Director level to have it appear that things can get you worked up. Especially when the story could have been spun as witch-hunting shareholders just wanting someone to blame for some other plausible explanation for whatever has happened here and bow out gracefully. Besides, the risk of reputation damage from hanging around must be starting to rise. Does it really make sense to get worked up over that?

Surely some must be thinking it’s not worth it, I’ve done as well as I’m going to here, time to move on, cut the stress, focus on another Director or consulting spot somewhere else.

But we have the response we have to the 249D and calls to replace the Board. So what possible really strong personal motivations could remain to make a Director so worked up over the attempt to replace them, so determined to deal with all of the stress of engaging some of the world’s best international lawyers to sort through an entity on the other side of the world that we’ve been advised we’ve lost control of, written off, and poses no liability, and so driven in the face of shareholder criticism, with limited to no obvious financial or reputational upside, to see the successful sale and disposal of that already written-off entity come hell or high water.

Bit of a puzzler really