Atlas wants to splash it aroundSCOTT ROCHFORT July 19, 2010 ....

Atlas wants to splash it around
SCOTT ROCHFORT
July 19, 2010
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Patrick Houlihan ... the sheepdog is not a recurring cost. Illustration: John Shakespeare
It is heartening to see the federal government's proposed resource rent tax has not crimped the ability of some mining companies to dish out generous pay rises and option packages to their directors.

One of the most outspoken mining companies to rail against the Labor government's tax, Atlas Iron, is asking its shareholders to approve the grant of 5.5 million options to its board.

Shareholders will also vote on a resolution to approve the grant of 2.5 million options to the Atlas managing director, David Flanagan.

They will also be asked to support the grant of 3 million options to Atlas's four non-executive directors. All of the options are priced at nil. The Atlas chairman, Geoffrey Clifford, will get 1 million of the options.

All of the options have an exercise price 30 per cent above the trading price on the day that shareholders approve the package, and will expire in mid-2015.

If Atlas shares regain the ground lost since hitting their April high of $3.05, the options could translate into a $16.8 million stake in the miner.

It is the first time since 2007 that Atlas shareholders have had the chance to vote on an option package. Atlas withdrew a proposal before its 2008 annual meeting to grant 500,000 options to Flanagan. In 2007 the shareholders approved the grant of 2.5 million options to Flanagan, with an exercise price of 72 each.

Atlas's share price closed at $1.98 on Friday.

BIGGER POOL

Atlas shareholders will also be asked to approve doubling the fee pool available to its non-executive directors to $1 million.

Apparently, the increase in the fee pool to those directors will not only offer Atlas the choice of appointing new directors but will ''ensure that the company's remuneration structure remains competitive''. The rise also ''reflects the increased complexity of the company''.

Atlas acknowledged in its notice of meeting that issuing of options to non-executive directors went against the recommendations set out in the ASX listing rules.

However, Atlas argued the guideline was ''inappropriate to the company's circumstances, where the preservation of the company's cash resources is paramount''. ''It is important to note that these guidelines are not prescriptions and do not require a 'one size fits all' approach to corporate governance,'' the company said.