thoughts on csg and energy for the future, page-38

I've just seen the swag of performance shares that have been issued - 1.5m to make 35m altogether - at a disgraceful price of 62c. I fail to see how gifting PiF shares to management which is already drawing salaries that, for a unprofitable entity are very high, can be seen as appropriately aligning their interest with LT SH. DC et al should only be paid a basic salary (say 200,000) with the remainder locked up in long dated options valued using a standard black-scholes approach. I'd estimate that for eg. July 2016 Call Options at 1.50 would be worth about 10c (assuming volatility of around 35% - they could be as cheap as 2.5c with volatility around 20%).

DC is currently is paid 1m in cash/short term incentives and a number of others receive 500k this way. Instead they could receive 800k and 300k worth of $1.50 options @ 10c respectively. This would give then 8m and 3m options - enough to be have skin in the game to focus on (what is a fairly reasonable LT) getting the SP over $1.50 rather than being gifted the fully priced shares on top of what is high remuneration for a development company. Other (some larger) explorers manage to do this - KAR for eg.

Handsome reward of executives for stellar SP growth is fair, the same reward for solid SP gain is okay but the same reward for SP decline is not.