what we do know about fge directors

There have been much discussion here about the events surrounding FGE's suspension this month. I feel more scrutiny should be focused on the board changes in recent years leading up to this month's announcements.

Many posts have rightly pointed out that the company has an exemplary track record on execution and that the recently identified problem contracts in the power division came as something of a shock. This analysis applies to the previous board.

As a long term holder of FGE and MND, I have found it interesting over the years how FGE have modelled their evolution on MND. There has been a continual referral by FGE directors about their vision of becoming a tier one contractor - to the extent I recall of FGE highlighting the exponential growth that MND experienced in a short amount of time.

Warning bells rang for me when the directors starting announcing succession plans for the board a couple of years ago. It all appeared a smooth and planned natural progression as FGE began expanding, but it did raise eyebrows for me. Why were the directors who were building such a formidable company about to leave (Hutchison and Ellison). Then in 2012 we saw that the former directors had sold out entirely of their large holdings.

Now we see a very new board, a board I think it is fair to say lacking the skill and judgement of the previous members of the FGE board. The US acquisition made me nervous, and the fact that the entire board owns a meagre 11,000 FGE shares made me very, very nervous. I began to sell some of my holding.

While we need to see the board's plan for a capital re-structure, at this moment I wouldn't put my confidence in the board to resurrect the situation and will be looking elsewhere. The 'icing on the cake' for me is that David Simpson (CEO) received a $750k sign on fee in addition to his $1m annual salary, and then he received a $500k cash bonus from the board in FY13. The real killer though is that the board granted him a $300k ex-gratia cash bonus on top of all of the above for 'overperformance in 2013 Financial Year'. For me this is hardest to swallow in light of this month's events.

Neoteric