I'm not sure the problems are all solved.
I guess if you think that remuneration is all that counts taking away the large outlay on two executive directors might look ok. But there is more to good governance than that and the AGM votes are a chance to think about and give solid feedback on last year's performance
In the last financial year (to end of June 2017) we incurred a loss of just over $12million. and the remuneration value total paid out to the two executive directors was $1.6 million. Do the sum for yourself.
With total employee expenses of just over 5million that means that nearly one third of those payment went to just two executives. Does that make sense?
The auditor annotated the financials - see page 68
"The company incurred a net loss of $12,155,268 during the year ended 30 June 2017, and cash outflows from operating activities of $12,727,522. These events or conditions, along with other matters as set forth in note 2y, indicate that a material uncertainty exists that may cast doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter"
I would have thought that a responsible board would have listened to shareholder concerns far earlier than July and addressed the size of their pay packets straight after the AGM but they didn't. In fact Gavin went off and immediately took his shares. Had they done so they might have headed off the auditors comment. We might even have managed to be cash flow positive a whole lot earlier.
We've known for a long time that they managed only half of what they kept saying they would deliver by way of revenue in CY 2015 and it's very clear that it was at a crushing loss and now we are having to wind back deals to become profitable.
Right now I don't want to hear any reasoning about what has been done since 1 July. The vote on adopting the remuneration report is backward looking. We are judging what the Directors delivered to us last year. I also think we shouldn't avoid getting this on the table because we are worried about the share price. In the end the best way of taking care of the share price is to encourage Directors to do their job in a way that ensures the business thrives and give them solid feedback when we think that they haven't delivered. I'd say, judging from Gavin's actions and words a strike would be very solid feedback.
No matter how hard I think about it I can't come to any other conclusion than this has not been good business and the Board has allowed it to happen
So I don't care that they've wound back payments. (And they are still generous for a business only just turning cash positive with the market cap we have). We are also saddled with one years termination payment for Rezos (the other directors miss out - how did they key that through?)
A couple of other things influencing me:
The report, which is backward looking records Directors during the year
Gavin Rezos - non executive chairman (when we all know that until 30 June he was paid as an executive chairman...
Is that sloppy work or something else?)
Stephen Cheney is identified as an Independent Director. Is he? We leased an office from the American Security Project, where Stephen is the CEO and this is identified as a related party payment. (Page 58). He also has share-based payment options (Page 17). So not even scratching the surface of any other relationship or role he might describe with the military I think it's fair to ask whether he is an independent director. See the following:
http://aicd.companydirectors.com.au/~/media/cd2/resources/director-resources/director-tools/pdf/05446-1-11-mem-director-tools-bc-non-executive-directors_a4_web.ashx
So right now these are my own thoughts on voting at the AGM.
There's still a need to demonstrably hold the Board to account for what happened last year and dogged us until 30 June.
I can do that by voting against the remuneration report but I can also make doubly sure by voting against the re-election of Stephen Cheney and the appointment of Karen Thurman. That's a way of getting a head start on a board spill in my head.
"
