Comment in todays SMHThe former Santos chief executive John...

Comment in todays SMH

The former Santos chief executive John Ellice-Flint should not expect a rock star reception at his first public appearance since his return to the gas sector after a four-year absence.

Some shareholders in Blue Energy are not entirely happy about the proposed remuneration arrangements for Ellice-Flint, which could mean he earns more than $38 million in the next three years.
Ellice-Flint joined the Queensland coal seam gas explorer as an executive director last month.



The group's annual general meeting on April 5 looks set to be a rowdy one, with shareholders set to vote on the proposed issuing of a swag of shares and options to the former Santos chief on top of his $200,000-a-year salary.
Blue Energy plans to issue Ellice-Flint with 41.2 million shares (worth $3.3 million on the current share price), which will be in escrow until he completes one year at the company, which has a market value of only $58 million.

On top of this, it is proposed Ellice-Flint will be awarded three tranches of options - 82.47 million in all - that are exerciseable at 6.25¢ each (under the company's present 8¢ a share).

The options will vest according to the various hurdles, the last being Blue Energy achieving a $300 million market capitalisation within three years. But they will still vest if Blue Energy achieves a $150 million market value within three years and then a $300 million value within five years.

That means, if all goes well, Ellice-Flint (after a separate 6.25¢-a-share raising being undertaken by the company) could potentially end up with a 12.5 per cent stake.

And, if the market capitalisation does hit the targeted $300 million, the ex-Santos boss could end up with shares worth more than $37 million. Not bad for the man who received a $17 million golden handshake from Santos.

IN THE GROUND

Aside from the $300 million market cap target, Ellice-Flint's options will be in the money if Blue Energy has 3000 petajoules of proven gas reserves by the end of 2014. Interestingly, the company already set itself this target even before Ellice-Flint joined its board.

The many posts from shareholders recently venting their anger on the investor chatroom site Hotcopper included: ''The gas is either there or it isn't. I'm not sure we need an 'industry guru' to be taking our cream off the top when we are so close to the end game.'' Ellice-Flint's role will be to provide ''technical oversight'' over the company's exploration program.