I don't agree mate, the terms of the performance shares are not weighted heavily enough to encourage actual performance. Most of them are give away shares, especially those that relate to the total shareholder return. Average performance should be rewarded with a salary - and near 300K is a very decent salary for the position held given that the company is still an exploration company. If the company makes it to production, then potentially this would warrant an increase in salary, I say potentially because production is a whole other ball game. It is simply not just about being able to mine spod and turn it into concentrate - this has to be done with the concentrate being a good grade and the whole extraction/production process needs to be done with low costs and good profitability. CXO has many advantages that should allow it to produce profitably, but a look around the field at the moment at those that are producing highlights that most are not doing it profitably. So, if we make it to production and we can do it profitably, I would definitely support and decent hike in salary and some performance shares, but until then, I will not be voting in favour of the proposals. It is not just shareholders that should shoulder the pain of an underperforming S/P - the directors have to take some responsibility for this as well, and whilst it doesn't need to be in salary (I wouldn't want them losing a house or anything), but definitely in what they take from the company in terms of performance shares. I would much rather they regulate themselves than having us do it via a vote.....this is what builds confidence in a management team.
As for the 6c options - I really dislike the message that this sends. I see pricing the options at this price as highlighting 1 of 3 possibilities: 1. The directors don't think the company is going anywhere and therefore have given themselves until 2023 to get the price to high single figures - they could see that 6c is a decent mark up on todays price and therefore a good incentive. 2. They think the price is going to go through the roof and are setting themselves up for a massive payday - if this is the case the shares may as well be free, or 3. They figure a take over might be coming in high single or low double digits and therefore want these to vest to get some money out of it (they would know they would have Buckleys of getting options at the current price approved so they upped them a bit).
All of the above scenarios do not display any confidence. I would have much preferred to see an options package of say 2 million @ 6c expiring Mar 2020, 2 million @ 12c expiring Dec 2020, and 2 million @ 20c expiring Dec 2022. This sends a completely different message about seeing confidence in the project, and to be honest I actually don't care if they believe it - fake it until you make it, but the market would take notice of the subliminal message.
I have not been a fan of the generally poor communication (we didn't have an announcement or update from basically July until October), the missed deadlines, the lack of update on what has happened with Ruifu, and the languishing share price. I am still here because I believe in the project and can really identify with the fundamentals, but by geez they had better get something happening soon.
CXO Price at posting:
3.9¢ Sentiment: Hold Disclosure: Held
