Evening again ...
The AGM 'as she happened' ... with the interesting bits in bold type.
You've all seen it: Your footy team is losing and no one comes, but string some success together and suddenly it's standing room only. FAR's AGM was in the large meeting room of their lawyers in the Melbourne CBD. Not large enough, as it happened, with more than 100 shareholders crammed in and Cath ordering her staff not to sit until all the shareholders were seated. (In that little cameo, one perhaps gets a sense of the 'niceness' of the FAR people. I certainly saw it from Nic and Cath on down.)
We started with 'the business', the nine resolutions. Each attracted around a billion votes and eight of the nine attracted 90%-plus proxies in favour. The exception was 86.5% in favour of the Admiral's options. It was, agreed the Chairman, "a bit unusual" to award options to a non-executive director. "We are entering a period of great challenge and rapid growth," he said. "We need people who have been there and done that and Reg has done that with Beach Energy, which he took from a small company through to an ASX top hundred. He brings us great credibility. You can't pay non-executive directors a lot of money, so we thought it important to align him with the company's best interests." Nods all around; blue cards of support waving.
Resolution four looked mundane enough - ratifying previous share placements - but a left-field question produced the day's first topic of interest. Given the three billion-plus shares on offer, and the brake this appeared to be applying to the share price, was there any thought of restructuring the register? Yes, said the Chairman unequivocally, it was in fact inevitable and only a question of the timing. FAR, he explained, has at the moment an unusual register dominated by 11,000 mum and dad shareholders and few institutions. "We are not sure we would have their support at the moment." Mr Limb explained how a more orderly register would be important to attracting capital, particularly from the US. "Consolidation is inevitable," he said, but not without canvassing shareholders. The Chairman noted how the large number of shares attracted 'fast money' that came and went. "Yes, the fast money is annoying, but it does provide liquidity."
Mr Limb was asked about plans for the 40-odd million options not yet allocated. Options would, he said, be allocated to all FAR staff - there are only about a dozen; Cath named them all - depending on seniority. Again, this met with nods of approval.
Turning to resolutions six to nine, the Chairman said it was important that FAR fell into line with best practice around short and long-term incentives. If this were not done properly, it would lead to concerns from proxy advisers that would make it difficult for institutions to buy FAR stock. "We are moving into a phase of extra growth and hard work and we want to align the interests of staff with shareholders."
Discussion moved to the strike price and date, where Mr Limb provided further clarity. The options would be made on or just after 1 July, he said, in part because the Federal Government planned from that date to address the messy tax regime for such options. Taking a question about the "potentially commercial" wording, the Chairman wielded the heavy willow. "They won't receive the rights until the joint venture declares the finds commercial." Why insert "potentially" then? "We debated it and chose our words carefully. We didn't want to give the joint venture the chance to squeeze us." The FAR Board, he said, would have the final say and "won't approve the options until commerciality is clear".
Pursuing the theme, Cath said the earliest commerciality would be declared would be mid-2016. The Chairman said the JV would be "the ones to declare commerciality".
The Chairman assumed ownership of resolution nine, renewal of the proportional takeover provision. "That was my request. I wanted to protect shareholders against the possibility of someone making a less-than-total-takeover offer and effectively gaining control of the company. It allows us (the Board) to say a bid is not in your best interests and then the shareholders get the chance to vote. It's probably a one-in-a-thousand chance, so why am I worried about it? Because these are very large discoveries and we are being noticed internationally. I am happy to accept takeover bids and evaluate those, but not relinquishing control on the basis of a partial takeover."
To be continued ... (after I go and get a beer!)
OOO
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