Hey all, for those who have not seen Dan's questions and...

Hey all, for those who have not seen Dan's questions and Brookside responses on the Investor Hub see below.

danpech

12:29PM 27/04/2024

Hi guys.



I have a few questions regarding the AGM resolutions and explanatory notes and would like some clarification please.



1) The incentive payments to David and Shane. I appreciate David’s base salary is quite a bit lower than peer companies and hasn’t materially increased since 2020, when BRK effectively had no revenue and wasn’t profitable. Is this incentive a catch-up, or realignment?… the notes mention he can take 25% of his base salary are shares.



2) The 238 incentive shares that can be issued… is this a maximum amount that can be issued over a fixed period of time?

Will these the subject to any KPI’s. Are these for directors and employees, or just for directors?



3) The notes mention that any loans made available can be forgiven by the board if there is a change of control event, ( takeover or merger I assume). I cannot understand why would a COC event give rise to the board forgiving the loans? …. Does this apply only to loans associated with the new 238 million incentive scheme, or does this apply to the existing directors loans as well?



4) In terms of the existing directors loans, the amount outstanding of ~ $ 1.26 million does not equate to the ~ 156 million shares issued at 1.1 c ( ~ $1.7 million)…. Is this because the “value” of the options at the time of issue is taken into consideration and subtracted off the exercise price?



Thanks in advance



Cheers



Dan


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Brookside Energy

ASX:BRK
08:11AM 29/04/2024

Hi Dan, thank you for the question regarding the Notice of Meeting and Explanatory Notes and specifically the information regarding the approval of a new Securities Incentive Plan (SIP) and the issue of Share Rights.



Before addressing the specifics of your questions it is worthwhile providing background on the SIP and the process the Board followed to arrive at the various metrics.



Firstly, it is important to note that the SIP is only a framework that the Board can use when considering the issue of incentive securities to Employees. The framework was designed following an extensive review of the Company’s peer groups in the US and Australia and in consultation with an independent remuneration consultant. We require this so that the Board can create appropriate compensation plans for our current and future employees to enable Brookside Energy to hire and retain talent in what is a very competitive market both here and in the US.



Incentive securities issued in the future to Employees will be in the form of Short Term (STI) and Long Term (LTI) Incentives, each with performance metrics in the form of KPIs. STI’s will align short-term business objectives and business drivers with strategic company objectives. STI targets will be linked to short-term (12-month or annual) financial objectives; and are efficiency based i.e. actual versus budget on CAPEX and LOE. LTI’s will focus on long-term creation of value per share. LTI targets will be linked to financial goals; Return on invested capital, Total Shareholder Returns and Return on capital employed.



The Board compensation committee is currently working on the incentive plans for employees.

A couple of other important things to note; the description of the maximum number of securities to be issued under the plan (238,227,281) is a requirement of the regulator is an up to figure and is the maximum number that could theoretically be issued during the term of the new SIP; no incentive securities can be issued to Directors (including the CEO) under the SIP without further shareholder approval; the language around Loans to Employees in the SIP is for new loans that may be provided in the future in the event that incentive securities issued to Employees create a financial burden that removes the benefit to the Employees.



On your specific questions, please see below.



1. Yes, the Board resolved to issue the 15,000,000 of Share Rights to the Managing Director to realign his base remuneration with that of his peers over the last two years. The Board conducted benchmarking with ASX listed and US oil and gas peers and deemed this as appropriate. The reference to 25% is the contractual allowance but the Board has discretion above this level to achieve the realignment, with Shareholder Approval.

2. See above. Note the issue of any incentive securities under the SIP to the Managing Director or any Director, will require further shareholder approval.

3. Language around loan forgiveness applies only to loans issued under the New SIP and is standard language to protect Employees if this is required in a COC event. This forgiveness does not apply to the existing director loans.

4. The loans are revalued in the annual audited accounts. In terms of the reconciliation to the exercise price you need to also consider that that some of the Director’s elected to fund (in part) the exercise price and use the loan facility for the balance.



Team Brookside


Keep well cheers Paul