APOLOGIES FOR LONG POST I read most of the memorandum re EGM.I...

APOLOGIES FOR LONG POST

I read most of the memorandum re EGM.
I want to go back and read it again.
But there are a number of DIFFERENT issues to be considered by s/h.
We need to quarantine these issues and vote accordingly, namely:
-Exploration, Appraisal & Development
-Funding of above
-The appropriate Board to execute the above
-Remuneration of the Board and Management.
We could feasibly vote in favour of the funding package, but yet determine that the current Board is not appropriate to lead the company.
Of course the EGM called for 23 Dec it not to consider positions on the Board - it merely focuses on Funding and remuneration - so any attempt to introduce new Baord members needs to wait for AGM (usually not till end May each year) or call another EGM.

Funding package: quick look at it looks really expensive, but on reflection probably is not so bad. ICN pays 11% flat upfront, plus must leave $1m on escrow(cannot be used by ICN). If they drawdown $20m immediately ICN only gets $16.8m to use, but has to repay $20m in 3yrs time at zero coupon. That works out at equivalent interest rate of about 6% (i think).
ICN also has to lodge security "deposit" of 7m ICN shares. I think Funder needs to be able to hedge Funder's position - will sell/lend/short sell perhaps those 7m shares to lock in their profit/loss. Who knows what that could do to ICN s/p.
There is possibilty that these shares might never be used by Funder.
Problem is security provided by RJ - i am still unsure on that issue. He charges 11% on a VWAP valuation of his shares. He then gets option to buy another 7m shares, but only to extent that his security shares are actually used by Funder.
C/N are issued at either 125% of VWAP price or 95% depending on election taken.
Importantly C/N are issued in tranches, so if ICN s/p goes up when they start proving up reserves, then less shares issued. BUT i will bet that we spend $20M in short term, but reserves certication takes much longer - ie time lag.

REMUNERATION ISSUE
This one STINKS.
I admit i need to look at again.
Is it correct that RJ et al, get:
- normal fixed pay (incl super and perks) PLUS
- discretionery bonus PLUS
- performance bonus ????

Have a look at reasons they give to justify 2008 bonus:
* drilling 3 wells
* succesful application for geothermal blocks
* appointment of new management.

I am sorry, but I thought those duties are a NORMAL part of being an M/D of an energy company !!!!
If they are NOT the normal duties, but are exceptional tasks, then what the heck is RJ and management doing for rest of year ???? What are they supposed to do to earn their very generous salaries???

THIS ALL PART OF BOARD/MGT PUTTING THEIR COLLECTIVE SNOUTS IN THE TROUGH AT THE EXPENSE OF THE SMALL S/H.

THERE NEEDS TO BE A REASONABLENESS TEST TO THESE THINGS !

(sorry, but i am on a role here!)
the issues i have with these bonuses are real:
- they ARE dilutionery
- they are unnecessary because they performance goals should be part of their normal duties
- they say that these performance targets have been set with Icon's "aspirational target" of ASX $300m market cap. Why on earth set goals based on $300m target cap when we are only on a market cap of $32m ??? (PAGE 15).
- why not set performance targets when we actually get to $300m - which RJ promised way, way back, and when he did not need these bonuses - they should have these cap targets as part of their job descriptions anyway!!
- who are the "independent advisors" and what instructions were they given , and what were their advice??
- MOST IMPORTANT - how reasonable is this policy- we need to compare with other small cap Coys.
I had a quick look at Pure Energy (PES). They are recently listed and already on Pilots. Their M/D earnt $241k package in 2008. We (or perhaps the Icon Board) need to properly explain to us that the proposed remuneration package is reasonable compared with their peer group.
- have a look at top page 16. General Legislative Requirements: the Non-interested non-Executive directors resolved that the remuneration is reasonable based on:
*Icon exceptional performance during year June 2008,
*the responsibilies of mgt,
*an "independent review" which took into account the quantum of STI (Short Term Incentive) payable, and the fact that some is in cash and some shares.
- who did this independent review? was it the Icon "Remuneration Committee?" itself???
- keep in mind that benficiaries of STI are 2 Board members. There are only total of 4 board members (two of which are benefiaries of STI). When we just got a new Board member surely that new board member would have been elected by remaining 3 board members (two of which are the beneficiaries? My point is - how"independent is the Board???

- i note that we seem to be proposing to issue fully paid shares to mgt - other coys seem to issue options (for free) but having an exercise price. To me that seems to put an much better incentive in front of mgt.

i'm done now