Agree with your point that all directors are accountable...and not sure I have heard any opinion suggesting otherwise. We all get to vote at the AGM, though if history is a guide, only a minority will. For me, the prelude to AGM for any LTH is a time for reflection (on where we are and why we are there), prior to vote casting. I will share some of my reflections on the 5 resolutions, here.
In this looming AGM, really it is only Resolutions 1 and 2 that should be up for any detailed reflection. IMO. The other 3 resolutions all pertain to either providing shareholder approval to the BoD to raise further capital (prior to the next AGM) or to ratify earlier capital raises (since the last AGM). For a non-producing, pre-discovery O&G explorer, capital raise through the issuance of equity is the sole means of raising funds. Funds through farm in activities are only possible if and when land assets have been acquired and validated (typically through seismic) as having potential for discovery. So, IMO, voting down Resolutions 3, 4 or 5 would be counter to shareholder interests as it handcuffs the BoD with both hands. I will be supporting these 3 resolutions.
Going backwards, that brings us to Resolution 2, which is the re-election of Stephen Staley. Staley is one of only 3 remaining directors after the sad demise of Brent Villemarette. We now have a non-exec Chairman (with a business/finance background in the industry); an MD (with a business/finance background in the industry) and a non-exec director with geological credentials and industry experience). If anything, I think we could do with more geo experience on the BoD not less. The role of non-exec directors is to provide oversight, guidance and support of executive decision making. Not to do the raw grunt work that feeds into the decision making process. We have, or should have the geo skills in house and reporting to the MD. Staley would be a critical source to evaluate the competency of those geo's...and like all such things would I'm sure reflect on this, in confidence, with the other directors. I would be loathe to vote out our only geo on the BoD without a proven alternative. And we are one Board level geo short right now. For me, Res 2 is easily supported.
So that leaves Resolution 1 - the adoption (or not) of the Remuneration Report. The vote on this resolution is not binding and will not result in any retrospective change to remuneration. Nor should it. It does however, provide guidance to the BoD as to shareholder sentiment on remuneration...and if 25% or more reject this resolution, it is 'strike 1' against the BoD. If there is a 'strike 2' with the next Remuneration Report at the next AGM it leads to a mandatory board spill....so likely any message will be 'heard' by the BoD.
The 'rem report' covers the BoD and the CFO. The BoD consists of one executive director (Wall) and 2 non execs (Evans and Staley). Actually also covers a 4th member or 3rd non-exec (Villemarette) for the period prior to his sad demise. For me, the issue boils down to the articulated 'philosophy' that underpins the remuneration structure. The company argues that it is still at the stage of development where remuneration should not reflect company performance but rather should reflect the role of the person. And that the base pay for each role should be bench marked, to ensure it is competitive in and of itself. Additional incentives, STI and LTI, over and above base pay, is also included. STI is a cash bonus based on how they performed in their job (again irrespective of company performance). LTI is equity based and again the determination of award of this appears independent of company performance, though obviously the payoff will be..
My concern about this is that while there is sizable upside if shareholders do well (as there should be), there is no 'pain' if shareholders do poorly. A structural empathy disconnect if you will. The risk/reward appears (to me) to be out of balance. Feels like benefits of the upper end of the public sector with no downside other than tenure...and upside similar to that of tech entrepreneurs. While shareholders (who are the only source of funds to date) are on a vastly different risk/reward equation. Hence the ramifications of an empathy disconnect.
IMO, we are where we are for geological reasons (out of the control of directors) and business decisions (within the control of directors). Now, while hindsight is an unfair and brutal judge, one would hope that this is reflected somewhat in the self awarded remuneration. It feels like the BoD believe that management decisions have been unquestionable and geology has dealt all the cards. I think that is naive, even if only evident through the rear vision mirror. For the reason that I believe time is well overdue for the 'philosophy' to be amended and for senior management remuneration to materially reflect company performance in terms of outcomes achieved. As such I will find it difficult to support Res 1.
(20min delay)