directors are shareholders too!

Welcome to a new week of ESG speculation!

I have been thinking about this over the weekend and based on some very simple numbers, there is no way, NO WAY, that the Directors are folding.

Based on the current Director Shareholding number on the ESG website, DC has 0.9% of the company. Lets make a couple of assumptions and roundings. So he has 1% of 1 billion shares, which comes to 10 Million shares.

At $0.90 he stands to get $9 million of Santos shares. If the value of ESG gets to $3 per share, this number jumps to $30 million.

From looking at the Santos Annual Remuneration Report from 2010, DK received $4.5 million.

In a takeover situation, I doubt DC replaces DK as MD/CEO, so his pay packet will be considerably less than $4.5 million. I would suggest he would get less than the CFO at $2.4 million.

So lets assume he gets $2 million a year as remuneration once he is at Santos. He has to work for 10.5 years to recover the $21 million he forgoes by taking the low ball offer. Never mind the fact that if he gets the $30 million in an alternative takeover, he still has the ability to command a big paycheck under the new owners.

So, whilst I will vote no for the 90 cent offer, I strongly believe the directors have a lot to lose from the current offer and am willing to back their strategy.