agm 07 11 08, page-20

A little bit more meat on the bones to my earlier post.

Directors are paid a fee for achieving the status quo one would hope.

Incentives such as options packages should reward company performance that outperforms the market AND that achieves superior performance out of the assets that we have already.

It's important not to forget that directors have already been granted substantial options packages already and already have leverage into the share price growth that has been obtained and that which lies ahead for work which has so far been undertaken.

Future options packages should recognise future superior performance: not ordinary or expected performance.

The question comes down to what is future superior performance.

Here, we know that the drilling out of JH, YH, etc, are all going to contribute to an increased SP. By doing this, the directors are merely doing what we pay them to do and what their directors' fees incorporate provision for. Almost any muppet could be paid to do this (almost, not any!). Muppets hard to find in WA ATM!

I would suggest that here, perhaps paradoxically, a number of steps should be preconditions to the granting of options packages: for example, the steps required to get the company into production (PFS, signing of access agreements, offtake agreements, BFS, etc.) or perhaps even a minimum share price as a trigger (eg, $4)).

As it stands, as soon as commodity prices increase, the mere mobilisation of drill rigs will ensure that directors benefit significantly when all that they will have done is that which their directors' fees should provide them to do.

Options packages should be structured so that there is a clear alignment and incentive for directors to act in the interests of all shareholders. Here, so long as they stick around for twelve months, some stand to receive half a million options. Not bad for a non-executive role, plus executive fees thrown in on top. There's also the option to retire at the end of that: or even earlier if a takeover goes through....

So, my point is that this option package, the way it is currently structured, does not reward superior performance. It rewards ordinary performance. All you have to do is stick around for twelve months and that's not an incentive in the interests of all shareholders.

BUSH