director performance rights - sham, page-8

Wayword,

I'm sure I won't get many Thumbs Up for this, but hey ho.

You stated:

"I'm sure the shareholders would agree any "performance Rights" need to be pegged to something like increased sustained Shareprice and shareholder value"

You CANNOT DO THIS for any pay that is made to non-executive directors. This is not on the say-so of DR, it is an ASX listing rule as stated in my post quoted by Grotburger.

ASX listing rule 10.17.2 states:

"If a non-executive director is paid, he or she must be paid a fixed sum."

Shares (or rights to shares) are allowed to be granted because these are considered to be of a fixed value at the time of issue. A vesting schedule is also allowed as this provides for stability and NED retention. Awards that only vest on the attainment of a given shareprice after issue are NOT allowed because these are considered a bonus i.e. something that comes on top of a fixed sum. In my post that Grotburger quoted, this is what "incentivised pay" means - that you cannot pay bonuses to NEDs.

The issue of rights to shares to NEDS will certainly "motivate and reward their performance" because they will want to see the shareprice climb. In no way does the documentation suggest that they will only get the rights if a certain share performance is achieved because, as explained above, that is not allowed.

Furthermore, to read "Performance Rights" as suggesting that
the rights are only awarded when a certain stock performance is achieved misunderstands the definition of performance. The Oxford Dictionaries website define performance as:

"the action or process of performing a task or function"

Maybe a better, and less emotive, label for these awards would be "Rights to shares for performing a task".

That is really what the resolutions relating to Mr Ismail and Mr Brown are getting at. They are saying "Shall we pay these guys mostly in shares?". Be sure that they will be paid one way or the other, and rightly so. I expect very few of us work for free after all. The question is will they get paid in cash from our not especially strong balance sheet, or will they align with our risk and take shares? Personally I prefer the latter.

I think it's also worth pointing out that expressing anger towards them for past disappointing stock performance is really pretty unjustified.

Faldi Ismail joined the board on 25/9/13, less than 6 months ago, when the share price was 1.2c. Stuart Brown joined the board on 6/12/13, only just 3 months ago, when the share price was 1.0c. How can you blame them for the fall from 5c? It was nothing to do with them.

I get the frustration (I've ridden it down from 5c too, and averaged down a bit on the way) but to direct anger at these guys, just when the "big talk" of 24 months ago is turning into "big action" I think is unhelpful in the longer term. If we're to have any hope of a strong performance going forward we need to be able to attract and maintain skilled executives and directors. If I were such a person and was considering a NED role at WHL right now, I'd be looking at all this vitriol and would probably not consider it worth the hassle.

As I've said before, these NED payment rules do not apply to DR. I too think it's appropriate that some of his share payments come with hurdles attached, and I've said this to him personally in the past. Sure, he had a role in the past when things weren't going so well for us, but he's been the one actually been in the driving seat for the last 9 months or so when, bit by bit, the puzzle is falling into place. I'm happy to give him credit for that, and look forward to us all being rewarded handsomely if there is oil in the Seychelles. In my opinion getting Ophir on board from a standing start last November is worth something, because that's what gives us the chance to find out.