SSN performance, FY16

Working through the June 2015 annual report to see if there was anything that helped me out with my strategy post from yesterday. My opinions only based on the last few reports. Commentary below is an assessment on strategy and not on other specific performance indicators.

I found a POO and exchange rate scenario I called out as required in yesterdays post (http://hotcopper.com.au/threads/a-call-for-a-clearer-ssn-strategy.2596013/#post-16002834)- tick. It's on page 75 and 76. My opinion is that scenarios should be provided more often and impact to the company explained in more details for the average shareholder (I'm not sure I understand what the table actually means for SSN).

Onto strategic objectives measurements.

The report provided guidance on the FY15 performance targets, but very light on the FY16 performance targets. It's important to understand this because it helps shareholders
1.vote appropriately
2. understand bonus payments - "link reward with strategic goals and performance of the Company" (page 13) and good news, there are no bonus payments for the period ending 31 Dec 2015
3. understand how the operation advisories throughout the year impact against company targets

Let's look at some snippets around performance, goals and strategy in the report.

Performance. No FY16 metrics (BOPD, other) I could find - did anyone else find any for this financial year?

A few interesting notes:
Page 24: No formal review process around performance. I'd expect the board to formalise this - it's a governance gap and the board is responsible for good governance. Something for our chairman to note.
"Although the process has not been formalised, the Board of Directors regularly reviews its performance, the performance  of  senior  executives  and the entity’s performance against goals periodically set"

Targets, thresholds and stretch targets laid out for calendar year ending Dec 2014 on page 14. Tick. Always good to lay it out when it's bonus related. Performance to Dec 2015 looks like it's options only (ref: Remuneration Incentives on page 14). Tick. Although as a shareholder, I'd love management to be earning big bonuses against performance targets - it means we're achieving the things we set out to do. The earnings per share table on page 18 may provide insight as to why this is not happening currently.

Another observation - look at the way bonuses are weighted against performance. Production (30%), reserves (30%) and discretionary (40%).

Proving reserves is not even listed as a strategic objective listed below - should it be? Is it a practice for other O&G players?

Does anyone know what SSN's target is for proving reserves, or if one actually exists?

Produce existing drilled and completed inventory of North Stockyard and Rainbow wells.
Flow the Bluff well to determine whether an oil leg exists to the nitrogen accumulation.
Evaluate conventional targets in the DJ Basin
Complete the commercial arrangements for a new project area located in the Paradox Basin Utah, that is economically attractive at $50 per bbl.
Decrease overhead costs.
- Head count decreased by 30%.
- Directors and Staff accepted a 15% salary cut

One of the intents of sound strategy is to link strategic objectives to measurable performance. With good performance comes shareholder value and rewards for company employees (such as through the bonus scheme).

Where are the targets, thresholds and stretch targets against the strategic objectives for FY16? Only the last objective is measurable (30% head count reduction, 15% salary cut), although target dates would have added value to shareholders.

Does anyone know where the missing information sits? I'm happy to put in the time and help make better sense for those interested. Seems to be a disconnected in the report as to how objectives get measured, how performance is assessed, how that impacts remuneration and allows shareholders to vote appropriately on related matters. Good strategy allows a clear understanding about the business which helps future investment consideration.