2023 AGM VOTING, page-3

My 2023 AGM Resolution Voting (detailed version, with commentary):

RESOLUTION 1. ELECTION OF DIRECTOR - MR PETER HAROLD: AGAINST
RESOLUTION 2. RE-ELECTION OF DIRECTOR - MR WARREN HALLAM: AGAINST
Comments:

• The thinking behind the voting for Res. 1 & Res. 2 was the same: Since I’m now in favour of a Board spill (see below) it wouldn’t much make sense to vote any other way for these first two resolutions.

RESOLUTION 3. RATIFICATION OF PRIOR ISSUE (297.5M PLACEMENT SHARES): FOR
Comments:

• No-brainer. We needed the money, the shares were issued.

RESOLUTION 4. ISSUE OF SHARES TO MR DEREK LA FERLA (DEC 2022 PLACEMENT): FOR
RESOLUTION 5. ISSUE OF SHARES TO MR PETER HAROLD (DEC 2022 PLACEMENT): FOR
RESOLUTION 6. ISSUE OF SHARES TO MR DEAN HILDEBRAND (DEC 2022 PLACEMENT): FOR
RESOLUTION 7. ISSUE OF SHARES TO MR PETER MUCCILLI (DEC 2022 PLACEMENT): FOR
RESOLUTION 8. ISSUE OF SHARES TO MR WARREN HALLAM (DEC 2022 PLACEMENT): FOR
RESOLUTION 9. ISSUE OF SHARES TO MR DEREK LA FERLA (AUG 2023 PLACEMENT): FOR
RESOLUTION 10. ISSUE OF SHARES TO MR PETER HAROLD (AUG 2023 PLACEMENT): FOR
RESOLUTION 11. ISSUE OF SHARES TO MR DEAN HILDEBRAND (AUG 2023 PLACEMENT): FOR
RESOLUTION 12. ISSUE OF SHARES TO MR PETER MUCCILLI (AUG 2023 PLACEMENT): FOR
RESOLUTION 13. ISSUE OF SHARES TO MR WARREN HALLAM (AUG 2023 PLACEMENT): FOR
Comments:

• No-brainer. Res. 4 to Res. 13 all relate to obtaining formal SH approval for each director participating (i.e. all of them) in the Dec, 2022 Placement @3.5c and also the recent Aug, 2023 Placement @2c.

• Think of their participation in these two Placements as being conditional purchase contracts with long-dated settlement dates because they are subject to SH approval.

• By participating in these two previous Placement the directors have all committed to fund their purchases using their own money. In order to do this the company requires SH approval. Rather than the company wasting money calling an EGM to vote on these items alone, these approval resolutions were held-over to be dealt with at the next available AGM (i.e. now).

• Once SH approval is obtained, the directors will settle their respective share purchases using their own money and they will receive the Placement shares.
• It’s also worth pointing out that until today both tranches of contracted director Placement share commitments were underwater. The directors are seeking approval to honour their Placement commitments to purchase their shares at higher prices than currently* prevail. (*At today’s Close the Aug, 2023 Placement is threatening to be in-the-money (oh, good Lord!), but we’re still a fair way off last year’s 3.5c Placement price. Either way, it’s a no-brainer ‘FOR’ for all of these resolutions.)

• Did I mention they will be purchasing using their own money? (Yes, the dollar amounts are pretty trivial. However, that’s for a separate discussion which is beyond the scope of this resolution.)

RESOLUTION 14. APPROVAL OF MANAGING DIRECTOR PERFORMANCE RIGHTS (2021 LTI): FOR
Comments:

• Before we start on this one, read this: “If Resolution 14 is not passed, the Company will not be able to proceed with the issue of the Performance Rights, and will instead pay the benefit to Mr Harold in cash pursuant to the terms of Mr Harold’s Employment Agreement and under the terms of the incentive program.” (20/10/23 announcement titled 'Notice of General Meeting' - s7.4, p.21.)
• I’d hazard a guess that some SHs might have mistakenly thought we were being asked to approve the awarding of some 2021 LTI PRs to PH. Not so. The Board has already decided to award the associated LTI benefit. The only question is whether it’s paid in shares or cash. The company is proposing to pay in shares (i.e. PRs). I agree. It’s a no-brainer ‘FOR’ (to preserve cash), regardless of what one might think about the broader current LTI framework.

RESOLUTION 15. ADDITIONAL 10% PLACEMENT CAPACITY: FOR
Comments:

• I took the path of least resistance with this one. Far bigger issues to deal with. Next.

RESOLUTION 16. ADOPTION OF REMUNERATION REPORT: AGAINST
RESOLUTION 17. SPILL MEETING MOTION (conditional resolution): FOR
Comments:

• Where to begin... Firstly, I’ve grouped Res. 16 and Res.17 together for hopefully obvious reasons. However, let’s break it down for the benefit of less experienced holders.

• Res. 16 was ‘AGAINST’ (i.e. ‘strike two’) because I am NOT AT ALL satisfied with the (lack of) efforts/outcomes the Board as a whole has made during the last 12 months in dealing with the underlying circumstances which gave rise to last year’s ‘Strike One’. I’m primarily looking at DLF (previous Chairman of the Board and also Chair of the Remuneration Committee) and also PH (previous MD). DLF jumped ship in late-October so there’s not much to say there wrt to the current resolutions. PH, however, remains and has now been elevated to Chairman.

• I held off voting as long as I did because I wanted to give the benefit of waiting for the promised updated alignment-related remuneration policy/document/announcement (my paraphrasing) to inform my voting choices. This wasn’t simply wishful thinking on my part; it was an expectation based on comments made directly to me by our current Chair. To be clear, I’m not talking an expectation about the contents of the update (I won’t know that until it’s released and I read it). I’m talking about the timing of the release which was indicated to me as being due early-ish last week (i.e. the week commencing Monday 6 Nov). When nothing had been released as at COB last Friday (10 Nov) I decided enough was enough. I voted online the following day (Saturday 11 Nov). I waited until tonight (Wed 15 Nov) before posting here on HC to see if anything was released in the meantime. Nothing yet. So, two working days now remain (not including any overtime this weekend) until the AGM voting close-off and still nothing.

• The Board has had 12 months (repeat, 12 months!) to take last year’s Strike One seriously and constructively engage with shareholders on several areas of concern in order to avert a Strike Two. My limited personal engagement on the related issues commenced in mid-September this year when *I* proactively reached out to PH and put my concerns in writing to the Board. The initial reception/signalling was encouraging but it wasn’t too long before I encountered resistance and what came across as, er, let's call it soft-selling during the periodic interactions around avoiding a Second Strike. The idea that the best way to avoid a Second Strike was to constructively engage in actual reform instead of trying to lobby a significant SH (moi) towards the Board’s desired outcome without performing said reforms seems to have been lost on this current Board. That’s my perception, at least, based on several interactions over the past two months. Needless to say I’m very disappointed to be now turning to the nuclear option, but what can you do when the Board refuses to listen?

• I’ll add that none of this is personal. It’s all issues-based. That said, when one develops what one thinks is a decent working relationship between self and a company office-bearer, it goes against the grain to feel like one is being strung along, rather than constructive meaningful engagement. I mean no malice in that statement. However, I think the complete absence of re-alignment outcomes thus far (prior to this AGM) speaks for itself.

• Inflicting a second strike by itself means nothing. Well, there’s reputational damage, which is something but I’m talking about what the next practical step should be if the Board (as a whole) receives a second strike, which is how I have voted.

• Enter Res. 17, a conditional Spill Meeting Motion resolution that only goes ‘live’ if Res. 16 delivers a second strike. We are being asked to vote on Res. 17 now so as to avoid the cost and inefficiency of holding a EGM for a single resolution. With this Spill Meeting Motion we are being asked whether to spill the Board and hold fresh elections within 90 days. Remember, the results of the voting for the resolution only come into force if Res. 16 receives a second strike.

• So, for me, it’s ‘AGAINST’ for Res. 16 (i.e. to inflict the second strike) and a ‘FOR’ for Res. 17 (i.e. to approve that the Board be spilled and that a Spill Meeting be held within 90 days to elect a new Board from scratch). It’s an opportunity to hold the Board to account and to perform a refresh, where required.

• Note, in general terms, if we end up having a Spill Meeting there isn’t anything stopping a Vacating Director from re-offering themselves for election during the Spill Meeting. However, as you might imagine, they would very likely spend time (and conversations with stakeholders) considering whether they would likely be elected, given the broader context.

• What I have described above for Res. 16 and Res. 17 are the basic mechanics of how they interact. In the real world the Board will (rightly) have visibility on the voting as it comes in (i.e. via Automic during the online voting period). There are any number of different permutations around what may (or not) happen at Board level during the final days leading up to an AGM.

This concludes the detailed version of my 2023 AGM voting commentary.


Finally, regardless of how you vote, I encourage SHs who have not done so already to vote today! The more votes, the greater and more representative our collective voice is.

To entice you, be aware that an embedded voting uplift bonus awaits all who vote. Depending on the actual participation rate this year (last year was just over 24-25%) your voting could very likely end up carrying ~4x the amount of weight than it would if all shareholders bothered to vote. Because of the way vote counting works and through the wonder of math it means that the generally abysmal voter participation rate rewards those who bother to vote by effectively allowing them to punch well-above their actual shareholding weight. That’s precisely how last year’s Strike One was achieved – at a time and under sentiment conditions, one could argue, that were more favourable than they are today.

In short: NOW VOTE. RIGHT NOW (online at Automic).


NB: We (wife & I) cast our joint holding votes online at Automic last Saturday. Although I currently rate the chances as low-to-very low, I accept there is potential for things to evolve over the next few days. Accordingly, I reserve the right to alter any of my votes without notice until voting closes next Monday morning 30 November, 2023.
Nothing in this post should be construed as investment advice. As always, DYOR and take your own lumps.
Also, if you any reason you wish to change any previously-cast vote it’s easy to do so via your Automic login (Automic | Meetings | Proxy Voting).

Cheers,
Z