resolutions, page-15

You have asked me to make comment about the, options resolutions, to be voted on at the AGM.

I need to put my comments in to the appropriate context.

There is no doubt that the majority of shareholders (as opposed to the majority of shares voted) wanted to remove Mr Askin, Mr Dunmore and Mr Whittle at the general meetings.

That message was delivered loud and clear.

Shareholder distain for the old board was palpable and clearly changes needed to be made.

That desire to remove the gentlemen was clearly due to the fact that the company had no confirmed direction, no demonstrated sense of urgency, the old board was more focused on seismic than on making the company self-supporting.

The creaks emanating from the zimmer frames could be heard all over Australia

They had been there too long and the board need revitalising.

The wisdom of that has proven to be correct, now that Richard Cottee, Gasteen and Herington are there.

The company was running out of money and no clear statement from management on how that would be rectified.

It was similar to a company that invents the light bulb and can immediately make money from that item, but decides to polish the inside of the light bulb instead of starting to ramp up production and selling it until after that polishing process has been finalised.

It was a question of priorities.

Or rather a difference of opinion on those priorities.

In the opinion of a lot of shareholders the board had become dysfunctional and had acted in a manner that was defensive and designed to save the board seats of the three gents.

What was demonstrated was an attitude reminiscent of Charlton Heston at the NRA holding a Winchester rifle above his head and shouting the words "from my cold dead hands".

I was appalled at the various public statements made to shareholders in the shareholders statement setting out the alleged reasons why Mr Heugh needed to be removed.

I personally do not accept for one moment the statements made inter alia about the inappropriate use of company funds.

I have asked the question before.

Why were Mr Whittle and Mr Escholz appointed to the 2 board vacancies with such indecent haste at a time when the board was well aware that there was a s249D notice in play seeking to remove the balance of the board?

The answer is axiomatic. It was a blocking tactic.

Even if Mr Askin and Dunmore (Faull’s retired) were not removed, the 2 vacancies could have been filled by 2 rebel directors and that was not what was wanted by the old guard.

The indecent haste in the 2 appointments left a very nasty taste in a lot of people’s mouths and a feculent smell that still permeates today.

I look at the date of appointment of Mr Whittle and the circumstances of the appointment of him and Mr Escholz (a person who had the good manners to retire).

It was indeed a pity that Mr Askin, Dunmore and Whittle did not take that course of action.

And I ask myself.

Why should Mr Whittle be given some 4.5 mil options?

Why does he deserve such an amount after being in office for less than 9 months, and receiving a realistic director’s remuneration for that period of time?

Assuming the share price rises to say $1.00 per share, Mr Whittle will pocket approx. $4.5 mil for approx. 9 mnths work for which he has also received a directors fee.

Far too generous in my opinion far,far too generous.

If Mr Whittles talents were in such demand, why wasn't he brought onto the board some years before?

Why should shareholders give 4.5 million oppies?

In fact, in my opinion, the oppies that the company is seeking approval for should be denied to Mr Askin, Dunmore and Whittle and should be set aside to become part of any settlement proposal with JH.

Any settlement package that contains an additional 15 mil in oppies would be viewed very favourably by the shareholders and John Heugh I would think.

That would be a very just act in my opinion.

In my opinion oppies should be given to employees to give them incentive.

I have no difficulty with Mr Gasteen, Herrington, receiving the oppies.

They are staying and I want to give them the incentive to do well. (that’s the carrot)

We the shareholders hold their directorships in our hands (that’s the stick) it will give them incentive to perform.

BUT I do not agree that Mr Askin, Dunmore and Whittle should receive any oppies.

Particularly in the circumstances that it is becoming apparent that Mr Askin and Mr Whittle are retiring at the AGM. And Mr Dunmore is not wanted there by the majority of shareholders.

I say that with confidence, when it is understood that at this AGM, the constitution requires 1/3 of directors to stand for re-election.

1/3 of 6 are clearly 2 directors (This needs to be rounded up for the avoidance of doubt) so it is clear that only 4 directors are going to be there after the AGM.

4 directors less Richard Cottee (as he is excused from standing) leaves 3 directors.

Mr Dunmore is standing therefore you have the 1/3 compliance with the Constitution

So why should I or any other shareholder vote to give Mr Askin, Whittle oppies at a time when they are apparently going fishing.

Why would I vote to give Mr Dunmore oppies when he has been there for some 6 years and I and others wanted to remove him because of the lack of confidence in him and others.

I may be old, I may white, but I am definitely not green.

No for the above reasons I will be voting NO on Resolutions 1,2,3 and YES to 4 and 5 and No on 6 and YES on 7

What is a great pity is that Mr Dunmore appears to not realise that the majority of shareholders do not want him on the board.

No doubt shareholders will once again attempt to remove him at the AGM, that may succeed.

But I suspect that shareholders are so angry about the conduct of the old board that they want to see him gone, and will take the prudent path of also voting against the remuneration report.

Sadly that will then mean that all the board including Richard Cottee and Mr Gasteen, Herrington will all need to stand.

A board spill will cause disruption at a time when the healing process has begun and shareholder confidence is becoming stronger.

The last thing we need is to have a spill vote in early 2013.

Of course if Mr Dunmore decides that he is going to join Mr Askin, and Whittle on a fishing trip and that is conveyed to the shareholders very quickly, I suspect that people will not vote against the remuneration report in such a large quantity as to cause a spill.

I invite Mr Askin, Mr Whittle and Mr Dunmore to publicly state within the next 7 days that they will be retiring from office, so that the shareholders may vote in favour of the remuneration report and commence 2013 with a fresh and vital board of directors.

Such candor would sit well with the shareholders, and I am sure all would receive a

“thank you for what you taking that step for the
benefit of the company and we wish you well in
your retirement”

CB