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On the back of the 2018 results yes; but it's still running on behalf of JF and SZ and if you run the numbers you'll see even though it was capped at 20m shares, it was never fit for purpose.
However it certainly it represented more of an incentive for them to stay if there was any takeover scenario...look at the takeover exit terms and what it means to them.
But in the end it kept them in place and that was important at the time.
The hurdle was a simple IRR of equity value growth. It's not hard to calculate and see that the threshold was met. Whether it was a useful tool for retaining or motivating management is a whole different question. Those who restructured the company clearly felt at the time that it was necessary. Personally I think the LTIP needs restructuring, but I don't deny its existence. In the same manner, I don't deny the fact that the VCP exists and its thresholds were met. There's still some time until the next test for the VCP but as of now I expect another grant comparable to the one that happened earlier this year. C'est la vie.
The fdsc doesn't address the fact that none of the 'hurdles' were/have ever been met.
Like I say, I think it was a useful management tool, but to pretend that it ever had any real prospect of truly energising JF and SZ as an incentive is a mistake.
Remember, Sami and Jon were embraced with golden handcuffs on arrival...the VCP simply kept them interested.
Which ones weren't?
Keeping real is recognising that there will be another issuance next year because they were. FD share count is 224.254 million. Best use that number when employee options are penny options.
The terms of the agreement were never met; not even now.
Yet the beneficiaries still benefit...no problem with that personally, but let's keep it real.
Highlander you really should give the company a call to discuss this. Having a chat with someone can help a lot. FYI an independent consultant was used to make determinations as management are cognisant of the sensitivity around the programme. Oh, and there'd be a few MUCH larger shareholders taking issue with awards if they felt the terms of the agreement they negotiated were not met.
Aha - could we have any recourse on our millionaire BoD members for taking their bonuses while failing to achieve the governing targets then ?
"The stock price appreciation has clearly happened"
Utter nonsense
The VCP FAILED in the first year and never met any of the targets required.
The lying BOD STOLE their bonuses
Hyperbole, P, simple hyperbole.
" He'll simply continue to turn the profits from producing @55k bopd and a favourable oil price into shareholder returns, prioritising them over the investment plans required to develop the field."
This is where I'd recommend you think a bit more. It's not the profits from 55k bopd and a favourable oil price that are being returned to shareholders. It's the CRP - historical capex and opex reclaimed. Once that is fully recovered cash flow normalises closer to cash "profits" (Profit Oil less corporate overhead etc). (Cost Oil at this point is current capex and opex. The two cash flows net out.) And once that happens they don't need a lot of funding to do the proposed capex as the bulk of it is not borne by them - again, understand the nature of the PSC. I will leave it at that...
PUTUP,
By his own volition he only has to be right once.
On the matter of JH's negotiating position;
'He isn't in a position to negotiate.
He's in a position to deliver what the MNR want'.
That is an entirely incoherent understanding of the new impetus behind GKP activity.
JH doesn't even need to negotiate right now; he's already shown his hand by returning 25% of the net worth of the Company to its shareholders in the first nine months of his tenure.
So when he sits across the table from the MNR they will know what he is capable of if they continue to stall the investments needed to take the field development to 75k bopd.
He'll simply continue to turn the profits from producing @55k bopd and a favourable oil price into shareholder returns, prioritising them over the investment plans required to develop the field.
And he's already flagged this intention unless there's a breakthrough.
I would have said he's in great shape.
"We don't have long to find out whether you are right or wrong!"
Wasn't it meant to be last December, then January and then February? I guess at some point he might eventually be right, or not.
Wow. BangGong actually putting forward some slightly cohesive arguments. I agree with some of the points made below.
At some point there MAY be a sale of the company; if only so key shareholders can monetise their profits. But to expect that imminently (and based on some of the arguments made to date) is a mistake IMO. The universe of potential suitors is low and none of them are going to be interested pre an approved FDP. Only if there is a massive breakdown in confidence between the company and the MNR would there be a sale soon - and such a sale would be an ugly forced sale with an ugly result for all of us.
As to some of the valuations that have been tossed out for such sale, they're often ludicrous and show no understanding of the PSC, something which any suitor management team and their advisors would have a very thorough understanding of prior to making any solicitation. (I put forward my valuation for $85 Brent (in perpetuity; a bold assumption) and 55k bopd. Even if I were to fully impute 110k bopd as if it were happening today, doesn't at all double the valuation - not even close.) The good news is we aren't dependent on such events to make good gains from the current price; if only people had the wherewithal to actually buy and make a difference. Steady as she goes.
Well Mr Paul....
We don't have long to find out whether you are right or wrong!
Why 'Tosh'?
Leverage C0ckeye, always negotiating leverage.
That's why I admire his 'front foot' stance.
JH has nothing to lose imo.
He can milk GKP cash balances for the next two years (and more if he plans his capex sensibly).
GKP have been on the back foot of the FDP rejections for years...I think he's saying 'enough's enough'.
Got it, thanks! And any suggestion as to why the KRG wouldn't want to advance the FDP?
You know I'm not advocating the VCP as a takeover defence, otherwise I would have stipulated.
Nor I am I decrying it as a mechanism to shore the management up post reconstruction. Otherwise I would have said so.
Good tactical management if you ask me.
But no one should be misled as to the primary function of the VCP, and its beneficiaries.
On the matter of financing field development, anyone who understands the numbers knows no private equity is required.
It's just a matter of management balls to work through the task at hand.
But for that you've got to have a man at the helm who can take his people with him.
If he believes.
You don't do you? Too much effort? Too much risk? Too old?
"The VCP was a construct originally conceived to reward Jon Ferrier, Sami Zouari and ‘other key drivers’ for their loyalty post reconstruction. "
There's nothing unusual about the VCP nor its terms. The stock price appreciation has clearly happened. The notion that it was a takeover defense is simply farcical as anyone with any knowledge of M&A would know.
Straycat, you can expect the company to keep on returning capital to shareholders even after the FDP is submitted at the end of the year. They simply don't need such equity capital to keep developing the field.
Always advocated that these bogus bonuses (like VCP ruse) should have been paid in shares…..
come to think of it - what was ever achieved to justify the bonuses in the first place !
Any word of where JF and Sami have gone to roost following their stellar careers at GKP ??
Hi C0ckeye,
Good to see you still alive and active!
It's my contention that JH is demonstrating a deliberate change of negotiating posture.
By returning $100m to shareholders in his first nine months in post (by way of dividends) he's flagging what a possible future looks like if the KRG continue to procrastinate.
In short he seems willing to bring things to a head during the forthcoming/ongoing FDP negotiations.
Either the KRG properly engage and acquiesce in the future field plan development to 75k bopd (at the very least), or they restrict his options as to how he best does his duty by his shareholders.
And that would mean further dividends/buybacks and other mechanisms to return value...
Screaming 'takeover' 50 times a day every day for 12 years isn't discussion, it's inane dogma. Robots would break down due to the monotonous repetition of it.
Hello Straycat, I hope you're well! I mean't to ask you this a couple of weeks ago, with what you meant by (sic) JH handing out more divi's with you confidently alluding to 'I wonder why that might be?'
Why do you think that might be? A strategy? A ruse to jolt the MMR into agreeing the FDP? Or a placation of SH's for not getting the FDP done? Something else?
Thanks in advance.
"So do they want a very slow development" = Its taken about 10 years to get to 55k BODP.....
Paul's back...