This will be a bit long winded so I apologise in advance.
I completely understand and share everyone's frustration around what came out of the AGM resolutions and explanatory notes.
When you read them you get the impression the whole thing is a money grab .. you think these guys are taking the p%$s and rewarding themselves way before long suffering shareholders. Even when you get into the detail , after reading the notes and annexures, you still need to get some further clarification from the company to get your head around it all.
1) At first glance, you see free shares for the MD and the new CFO... these is some base explanation as to what they are for, but essentially lacking detail as to why they are being issued , and how the numbers involved were arrived at ( which doesn't seem to add up based on the information).
2) you see 238 million shares ( 5 % of the SOI) to be issued in a new incentive scheme... the immediate reaction is WTF, they have just bought back 5 % of their issued capital, the ink hasn't dried on the final BB announcement and they are now issuing all those shares back to fill their pockets.
3) You don't see any mention of performance hurdles associated with the incentive scheme shares, and again you think WTF
4) You see language around forgiveness of directors loans at the discretion of the board, triggered by a change of control event and you think these guys are going to forgive those loans to themselves.
There are pages and pages of legalese ( to be fair that's typical of AGM resolutions and notes) but these provide very little clarity... lot's about procedures .
Your blood is boiling because you feel you are being taken for a ride.
But, is it really as blatant as all that?
The whole basis of the new incentive scheme is to provide a framework for incentives and employees going forward. A framework that up to now has been lacking to an extent.... hence the earlier ad-hock granting of no hurdle, free options and risk free loans to directors only.
But reading the notes you wouldn't know this to be the case. There has been a failure of effective communication with shareholders here.
Point's to note
1) The 5% issue limit for the scheme is just that, and enunciating that is a requirement under the corporations act. This is standard wording and you will find this in other companies AGM resolutions. BRK are not issuing 238,227,281 million shares on the passing of the resolutions,
they are asking that they will be able to issue a maximum of that amount over the life of the scheme. For this AGM , they are issuing 25 million, 15 to the MD and 10 to the new CFO.
The incentive shares are for employees and directors, not just for directors.
BRK are actually not required to seek approval for the 10 million incentive shares issued to the CFO because Shane is an employee, and for employee incentives, shareholder approval is not needed.
Any further issuances to directors under the scheme will need shareholder approval each time .
2) The incentives will be STI, (Short term Incentive) and LTI (Long Term Incentive) shares, where KPI's must be met before they can be issued. The problem here is non of this has been mentioned in the notes to the resolutions, so it is no surprise that everyone thinks the incentives are a free for all grab.
3) The communication around forgiveness of the loans mentioned in the resolutions was not clear enough. It again is no surprise that this created uproar where shareholders were under the impression the board had the discretion to forgive loans the previous loans to themselves in a change of control. After confirmation from the company, this is not the case , the current director loans will not be forgiven as this applies to any potential loans to employees/ directors under the new scheme.
In regards to the CEO 15 million share issue, people may disagree but I believe that the base salary of the MD is too low relative to the ASX peer group. Compared to the operational achievements of the peer group, (not the SP movement ) BRK has surpassed most of them. If you look at some of the salaries being paid the the CEO's of a lot of these operational underperformers, I am happy for a rebasing of the CEO salary and the catchup for the last 2 years.
This rebasing of the MD's salary is actually the only benefit any of the director receive from these resolutions this year, and it is based on executive/ employee salary, not director benefit. No other directors will be receiving incentive shares this year. If shareholders do not think the MD has earned a pay increase/ catchup, then you can vote against, and if enough holders agree with enough shares agree, then the resolution will not pass.
The next time any directors incentives might come up is for the 2025 AGM.... so it actually will be next year , where we will as you said "Let it be for another year and all of us can then see where we are". If at that time , we are presented resolutions granting them shares, and we think their incentives are not warranted, we can vote against then at the next AGM.
The biggest failure here is the lack of adequate explanation. We have had some clarification after the uproar caused by these documents, but the information in the clarifications should have been contained in the documents in the first place. This might not have satisfied everyone, but at least the much of the confusion and misunderstanding could have been averted. Having said that , despite the clarification , many people have made up their minds already and no amount of words will change their mind.
Cheers
Dan
PS I believe from @peto2180 post the webinar from Thursday is up .
Paul, can you please post the link.
BRK Price at posting:
1.4¢ Sentiment: Buy Disclosure: Held
(20min delay)