Member Info for Straycat

‘Jaap is not a financial guy. Yes, they screwed up the communication. (Even though I doubt Jaap wrote that communication himself.) They were poorly advised. Not for the first time. And now they’re completely gun shy about buybacks and holding stock in treasury or an EBT to offset the requirement for new issuance to meet options. Shame.’

It clearly wasn’t miscommunication though, was it?
Otherwise, why didn’t the Board reserve the necessary shares to cover VCP and LTIP option commitments when they eventually cancelled (ca. 8m at the time)?
Why instead did they bin 19m of the shares they bought having initially explained the need to purchase them on the grounds of ‘satisfying the vesting staff share option plans.‘?
And even IF you’re right and he wasn’t equipped to handle the sensitive first buyback announcement, then as Chairman, he should go.
He’s breached the trust of his shareholders. In a fundamental way imo.
We rely on the information provided via public Company statements to be an accurate reflection of Board intent.
If he wasn’t competent to deal with the buyback proposition then why did he put his name to it?
In fact he led the charge with his Chairman’s letter of 23/5/2019!!
At the very least, as an ‘Oil Man’ through and through he should recognise his limitations and ‘put up’ (couldn’t resist it) the white flag.
Look at the damage he did to the P&L and the sp as a consequence of his ‘miscommunication’.
Your argument about distributions back to shareholders not being relevant to the Board after they’ve happened ignores the fact that responsible Directors ALWAYS have an eye on the way their actions will be perceived in the markets and therefore by their shareholders.
Would you keep him on?
A simple no or an incredibly confusing and complicated yes will do.

‘Dividends and buybacks distribute value, they don’t create it.’

Well someone had better tell Jaap and the GKP Board that.
Because their RNS of 10/12/2019 (entitled Share Buyback Programme’) explains that:-
‘The Buyback Programme is aligned with the Company’s policy on capital allocation and will be an accretive use of funds whilst not impacting the Company’s ability to continue the execution of its existing investment programme.’
This paragraph was then repeated verbatim in their next buyback update RNS on 21/1/2020.

And there’s the issue.

Shareholder confidence in the Board of any Company is pivotal to any investment decision.
If there are any doubts as to whether the BoD are acting in the shareholder’s best interests, then why would any new investor get involved?
Given that buybacks might well be on GKP’s agenda in the coming months, shareholder confidence in the Board is now a very current issue.
And the only history shareholders have of buyback activity within GKP has left a bad taste.
Why?
Because the original approval request was based on the need ‘to satisfy the vesting of staff share option plans’.
No other reason was given and shareholders voted (99%) in favour of this proposition, allowing the BoD/Jaap the latitude to repurchase up to 10% of GKP’s own Common Shares to sort the issue out.
On the basis it seemed there was a need to buy some 20m shares to protect employee option share interests.
And there wasn’t. Clearly. Because GKP cancelled 19m of the shares repurchased just over a year later.
Only later on 10/12/2019 were we introduced to the proposition of ‘capital allocation’ and ‘an accretive use of funds’.
That’s why there is so much distrust in the principle of future share buybacks in the case of GKP.
And the only remaining senior executive who will be involved in that next decision is Jaap Huijskes.
No wonder the doubt and apprehension…the suspicion is that Jaap Huijskes may have applied for the authority to buyback GKP shares under a false flag.
Moreover, that his real ambition was not to enhance shareholder value; rather to enhance future and additional employee financial interests, not just those that already existed and might vest in the future.
I cannot say this is absolutely the case because it may not be; I don't know; no one does. But that suspicion is definitely out there and it will have to be dealt with if there is to be another buyback.
And the only way to get past that is to make the buyback shares immediately cancellable apart from any needed for existing outstanding employee option plans.
The other benefit is that such action reduces the common share capital irrevocably (apart from new share issues) and makes GKP a more exclusive proposition for both existing and potential new investors on the back of further dividends/buybacks and Field development.

All IMO, DYOR.

Well I'm all for reward related performance too.
And my concern was genuine, just for the record.
SC.

Aye, you're a wee angry man!!
But here's the thing.
Jon Ferrier and Sami Zouari risked their careers to join a BoD who were out of cash and out of ideas.
And that comes at a cost.
For my own part I reckon at the time having a stable management in place that was going to stick around was massively important pre Restructure.
GKP couldn't even service its debts anymore.
So it seems to me having a team that would stay the course and the pain of the Restructure without bottling it was crucial.
I never rated JF and SZ certainly wasn't sure about the direction the Company was taking.
In fact he resigned shortly after Jaap Huijskes announced his share buyback programme. Go figure that; the CFO resigning on the back of the biggest news GKP had ever announced to the markets!!
I'm with you on what that has cost the Company, but that's a judgment call and you had to be in that toxic arena at that time to appreciate the significance of what JF and SZ did in signing up to the pain of capital restructure.
I know you're so massively distressed by your experience but I'm hoping recent developments have eased your financial pain.

I find it inconceivable that the Board didn't know how many buyback shares were required for 'the vesting of staff share options'.
And let's not forget, that was the specified rationale for the buyback authority.
It was that specific. No mention of capital shareholder returns or accretive values at the time approval was sought.
Only in later RNSs did accretive value became the common parlance as an explanation for the buybacks.
And that's what troubles me.
If Huijskes had in mind to return capital to shareholders then why didn't he simply say so?
He would have had no problem with that explanation to us lot on the back of a record return to profits.
But he didn't.
Instead he specified his need to protect employee staff share option commitments.
Why?
I don't know.
But that lack of transparency leads to distrust and doubt in the minds of shareholders, many of whom are long suffering.
Particularly when the Board have displayed a continuing and worrying propensity to reward attendance over performance. I still don't get nil cost options for simply turning up. These are supposed to be highly paid, highly motivated senior executives...
It may be that he was going to recreate the VCP or some facsimile so as to keep his staff engaged in the GKP proposition.
Like I say, I don't know.
But the way that whole buyback was engineered is troublesome to me.

Quite apart from the nil cost option shares they enjoyed on joining the beleaguered GKP pre Restructure, JF and SZ benefited massively from the VCP which was created exclusively for their reward, although framed in more general terms.
Eventually it was capped at $20m when Jaap Hiujskes realised it might be getting out of control.
Then it was shut down.
By that time JF was up for ca. 4m shares and SZ ca.3.5m.
And all that was in 2019, BEFORE the buyback initiative that Jaap Huijskes initiated.
Were JF and SZ worth it?
A moot point.

But can someone tell me why Huijskes didn't make provision for that in his $50m/20m share buyback proposal?
And why, instead GKP cancelled 19m shares of the 20m shares they bought back (under massive pressure from angry and recalcitrant shareholders).
And only eighteen months later we're now making provision by block listings, some of which are to accommodate those very VCP commitments!!!
Thereby diluting our equity.
Something very wrong here...Huijskes clearly had plans for those bought back shares other than those offered in his explanations for the need 'to satisfy the vesting of staff share option plans' so vaunted in his Chairman's letter of 23/5/2019.
Otherwise GKP wouldn't have cancelled so many shares. Rather they would have reserved enough to satisfy the vesting of the VCP share options for Jon F and Sami Z; several million of them.

This wasn't some clumsy 'miscommunication' by the Board as has been suggested. And if it was, the Chairman should be put to the sword for his incompetence.

Why is Jaap Huijskes still in post? Anyone tell me??

Jon Ferrier and Sami Zouari are going to have to make big decisions about their investment strategies now they're out of the mix.
Because they have already made a great deal of money from the risk they took joining GKP.
And there may be more to come.

P,
The reason I ask is that SocGen is primarily a Retail bank whether it be in France or internationally.
Its investment arm (Lyxor) was disposed of to Amundi at the end of 2021 and the private banking aspects of the business were transferred to French Retail Banking as part of a consolidation process.
International equities accounted for 3.1bn euros in the year, yet GKP accounted for £18m, or 0.7% of that exposure (ignoring time lags).
That looks lopsided to me (too heavy) for an international portfolio which has clearly struggled to perform in the most recent uncertain climate.
So I simply wonder why...is their exposure historic and they're winding it down, or are they accelerating their position?
But we don't know whether they're building their position or not.
Under FCA rules we would be informed if they were acquiring shares in a hurry, but they don't have to declare anything below 3%, whether they're buying or selling.
So I'm no wiser...

Hey P,
Do we know if Societe Generale increased their shareholding in the quarter to 2.81%?
Or was it just a case of others selling down?
I don't have the detailed share register movements over time; just those provided on the GKP website which only covers the top ten. Do you?

This is getting ridiculous.
There are many PIs, including bb contributors here, who did not invest in GKP based on detailed/or even any DCF analysis.
Many investors don’t necessarily even know what a DCF is.
That doesn’t make them stupid.
That doesn’t make them idiots.
Like most investors, in their own particular circumstances they made their own value judgments for themselves.
Certainly DCF analysis was not my primary incentive for my original investment.
I was more interested in the fact that GKP was debt free (essentially) cash rich and had a summary investment plan to 110k bopd which could clearly be self-funding. And still is. IF you were prepared to accept the post Restructure management for what it was, the geopolitics for what they are, and take a risk.
And I took that risk.
I bet I’m no different from many others here who just looked at the basic information and then took the same risk. Whenever they invested. And at whatever level.
The Restructure was the turning point.
In fact, in my case, I thought there may be the possibility of take-over action as well! I changed my mind later when IW was appointed.
The point is that we all have our own reasons for investing in GKP. And they are particular to each investor.
What we don’t need are repeated and detailed dissertations on sophisticated modelling that may or may not impact on the investment decisions made by PIs anyway.
Usually at PI level, emotion plays a key part.
It did with me.
Am I on my own?
I made my investment decision In the knowledge that it might be a mistake, as always with AIM shares.
Doesn’t make me wrong, just makes me less risk averse.
The point is, patronising the bb with perpetual, condescending lectures about how to approach investment decisions based on technical analysis is eventually unhelpful, intimidating and divisive.
Valuable bb contributors should take note of that simple message.
Otherwise this bb becomes an academic facility for the street wise cleansed.

Hi Nobull,
Me, quoting you, quoting Buffet, in Hathaway’s 1999 Annual Report:-

‘I can’t help but feel that too often today’s repurchases are dictated by management’s desire to “show confidence” or be in fashion rather than by a desire to enhance per-share value.’

Applying that rationale (albeit twenty odd years later), what do you think Jaap Huijskes’ motives were when he initiated the 2019 buyback?
If it was an attempt to show confidence in the ongoing trajectory of the business then he wouldn’t have explained it away as the need to cover ‘the vesting of staff share option plans.’
As for being fashionable, well I personally think not, given his visog and language!!!
So what were his real intentions for those surplus 18m shares that were never needed but were approved for purchase by the major shareholders anyway at the 2019 AGM? A maximum 10% of ordinary shares were authorised for buyback. And he used all the $50m approved.
Whatever his real plans were, they were scuppered by shareholder concerns a year later and he eventually had to capitulate and cancel those 18m surplus shares.
Oh yes, and give up his CEO as a sacrificial lamb.
And I forgot; the balance sheet took a $48m hit too. Is that accretive value I wonder?
His motives, as Chairman of GKP, are an issue of real concern to me.
And it matters because he still holds some of the key levers of power within GKP…

I’m in favour of buybacks generally and with GKP too. As long as the shareholders understand AND BELIEVE what they are being told about the buyback rationale.
But in GKP’s case there’s no trust in the Board’s declared motives, as demonstrated by the 2020 shareholder revolt.
So buybacks for cancellation are the way forward until trust is restored imo.

The votes I was referring to were about the continuance in office of the Chairman and his CEO at the 2020 AGM. Also the Executive Directors’ remuneration proposals for the following year were being considered.
At that AGM held on 19/6/2020, shareholders were asked to approve the re-appointments of Jaap Huijskes (Resolution 2); and Jon Ferrier (Resolution 5) for a further twelve months. In addition, the shareholders were also asked to approve the Director’s Remuneration Report (Resolution 8) for the same period. This Board response is taken from the AGM results notice:-
‘The Board notes that Resolutions 2,5 and 8 were duly passed but did not attain the support of 80% of shareholders who voted. In accordance with provision 4 of the 2018 UK Corporate Governance Code, the Board will consult and engage with shareholders as appropriate.’
It is difficult to overstate the humiliation associated with that Board statement.

Huijskes and Ferrier had asked for another twelve month term in office via Resolutions 2 and 5 respectively. It should have been a rubber-stamping exercise. Both men should have sailed through with a landslide majority supporting re-appointment.
By way of contrast, three other Directors were seeking re-appointment. Martin Angle received 95% shareholder support; David Thomas received 96% support; and Kimberley Wood got 96%.
But such was the shareholder disquiet at their performance in post that Huijskes only achieved a 71% majority with 29% voting against him standing for another term. Similarly Ferrier failed the 80% ‘smell’ test with the same; 71% for, 29% against.
As for Resolution 8, that was asking for shareholder approval for the Executive Directors’ proposed remuneration for the next period. Once again, in different times it would have gone through without much trouble. However, once again the shareholders objected and the Resolution was passed, but with only 69% shareholder approval.
That represents a major shift in shareholder sentiment year on year.
As a consequence and following shareholder consultations, Lansdowne had their own non independent NED appointed to the Board to protect their interests and Jon Ferrier (was) ‘retired’.
Almost as a footnote to the published AGM results the following appeared:-
‘Gulf Keystone currently has 19,059,054 common shares held in treasury. The Company has resolved to cancel all treasury shares save for 1,000,000 which will be used to satisfy historical vested share options.’
Those shares had been sat there for a year, collecting dust, clearly unnecessary for the stated purpose as declared in the Chairman’s letter of 23/5/2019 which read as follows:-
‘The Company will only hold such Common Shares in treasury to satisfy the vesting of staff share option plans and if they are not required they will be cancelled.’
Why did GKP buy 20m if they only actually needed 2m? And why did it take them twelve months and a shareholder revolt cancel them?

And why is this so important?
Because it's starting to look like Jaap his spinning his seductive web around JH and IW, just like he did with JF and SZ.
And it's sexy if you've ever been seduced in that financial way. .
And it leads to bad decisions...
Nobody wants the next share buyback (and there will be one) to be dictated by anything other than wholly altruistic shareholder intent.
And I'm not talking about his employees here. I'm talking about us lot.

The treasury shares (19m of 20m purchased) were cancelled because without that action neither Jaap Huijskes nor Jon Ferrier could have commanded the required 80% shareholder approval threshold for re-election at the 2020 AGM.
Just look at the voting results for their re-election as expressed at that meeting. They failed spectacularly to get those approvals (and please don't make the attendance argument...it's a distraction).
While failing to get 80% shareholder approval to remain in post isn't a resignation issue in itself, it is a signal to future investors that the current shareholders are so unhappy with the existing key executives that they cannot endorse their continuance in post...
Not a great look.
As a consequence and shortly after post AGM discussions with shareholders, a non-independent Non Executive Director was appointed (Garret Soden/ Lansdowne) and JF announced his retirement from the fray.
Jaap survived.
Our disagreement is not concerning the intrinsic value of the buyback mechanism; it is about your naivety as to how it was used by the Chairman on this occasion and what his true motives were; not the declared ones in his Chairman's letter of 23/5/2019.

'Where's your game gone?'
Ha! Excellent! Thank you. Simply missed it.
Mystery solved. Those bases are clearly covered as you anticipated. Good for the employees; we wouldn't want the ones on nil-cost options to suffer unduly would we?

Unfortunately that doesn't address the larger point concerning the ongoing nepotism within the business which is still so prevalent in its awards to employees...
Nor the associated matter of the bungled buyback resulting a block listing and a share dilution so as to cover employee option commitments .
Jaap Huijskes is at the centre of both.

As far as I'm aware, neither the VCP nor the LTIP provide any protection against corporate actions, apart from sale.

But on the matter of employee rewards/incentives, you've got to pretty desperate right now to be awarding nil cost options for simply turning up regularly.
Immediately post Restructure, yes I get it. All hands to the deck and all of that.
But that was then. Now is now.
Unfortunately it's built into Jaap's DNA. It's his form of coercion.
JH and IW benefit as a consequence under the 2019 DBP.
Disappointed with that. They could have seen it for what it was and not have compromised their integrity. Jon Harris cannot need that sop and if it does it comes at too high a price imo.

However, Jaap still oversees the Remuneration Committee as Chairman of GKP, where he still sits as benevolent despot.

And what's wrong with a results based rewards system anyway?
Why can't we simply reward our employees based on a simple performance related basis that we can all understand? Like profits and cash generation say? Or any other performance related criteria that might be considered.
Rather than Nepotism.
Irritating...

On a more positive note, how many existing and new private investors are gonna come looking for GKP's dividend bonanza tomorrow?
And how's the sp going to respond?

You’ve got to ask yourself why we’re getting diluted when we had 20m shares in treasury following the bungled buyback in 2019 which ended in the cancellation of virtually all the shares purchased following a shareholder revolt at the 2020 AGM.
Obviously there are new issuances which couldn’t have been foreseen at the time, but are all the LTIP shares (1.4m) being devoted to ‘other eligible employees’ based on new post 2019 arrangements?
And even if they are, surely GKP could have reserved a bank of treasury shares to accommodate existing commitments AND future appointments/awards.
GKP has a track record of ‘welcoming’ its new Executive Directors and ‘key drivers’ (VCP vernacular) with nil cost options where the only employee requirement is to stick around a while. It’s been happening in GKP for a decade.

What a crock of sh*t that buyback was.
In the end GKP cancelled the surplus treasury shares (19m of them!!) with a P&L hit of $48m and now we’re diluting our share price to compensate for that mistake so as to cover staff incentives.
Thanks Jaap.

Don't tempt me Jens.
I still have the black leather skirt, black/red patent three inch heels, black fishnet top and matching stockings that I would love to reprise again in public.
True story; Children in need; wrong pub (definitely the wrong pub!), card tricks for money sort of thing. And a tempting, teasing chat line that was bound to get me into trouble.
Lucky to get out alive as it goes!!! Still got all the kit though. And the wig!!
But it's true to say that at one point I wondered what the f*ck I'd got myself into...
Made a lot of money for the cause.
So maybe we'll meet up at the AGM after all. Depends where it is really.
That'd be fun, names to faces and all that.
Why are people so bothered about actually meeting up with others they interrelate with so freely and sometimes so abusively on the internet?
We've all got the Company's best interests at heart haven't we?
I was one of the 'great unwashed'.
And so what?

Yes. Definitely. I'm in.