I think it's reasonable and appropriate to question management on whether remuneration is proportionate to their endeavours, company success and the degree to which they've contributed to that success. Of course the big fish get listened to but in terms of shareholding neither GR or NC are substantial holders technically and thus are a long way from stakes that are so big that they can do as they please. If actions of any employee become so egregious that enough shareholders are peeved then of course they're under threat. This becomes more likely if directors fail self imposed milestones, fail to address areas they've taken responsibility for or through their actions harm the company overall. That the remuneration was set according to specifics that have now all fallen over (ASX300, company milestones, SP performance etc) means they have to be adjusted per their own analysis/logic. It also irks that the large holdings are increased due to overly generous remuneration on the one hand it is good that directors keep buying, but the company paying its own directors to own more of the company becomes somewhat circular and isn't a justification to pander to them even more.
Really this whole issue has only come about because if serious underperformance wrt to targets that GR and NC set and reiterated up to the 11th hour and beyond. We can't pay management today for promises of jam tomorrow - proportionate remuneration should be after the fact. The relative costs of our executive require scrutiny and although I acknowledge speculative companies are somewhat if a law unto themselves in this area - we're supposed to be moving beyond that stage. Long term value investors large and small will drive the SP over the next phase and by their nature will run the rule of every scrap of income and expenditure (rightly). Getting this right is as important as chasing profitable growth of sales.
My personal position is that the company have stated where they expected to be, accepted that they fell short and seem to accept that board structure and remuneration need addressing - I fear the level of change required is larger than they will agree to but think that it is entirely reasonable to give them a courtesy we weren't afforded and wait and see what changes transpire rather than bay for blood now. That said it can only help to highlight that their moves are being scrutinised in more detail than before and that many holders (probably a significant proportion of the register) won't just accept a good news story any more that the reality of the business has to deliver as does every board member and every dollar spent has to be to the end of AJX business growth/improvement.
AJX Price at posting:
56.5¢ Sentiment: Hold Disclosure: Held
