2016 AGM MIC

[Stavros]

Hession gets YUUUUGE Termination compensation if the BOD is presented with a Change of Control offer prior to 10 July 2016 ... even if it is rejected.

Hession gets only half of the YUUUUGE compensation if the offer is after 10 July 2016.

SO .... if something happens before 10 July .... just sayin'

[jft310]

Perspective time
Oil fell from $110 to $27
LNG is priced off Oil
Fact is if oil price drops LNG price drops
Interoil is in the LNG business
Many oil and gas companies are going belly up.
Interoil can print shares any time it needs money .
The exact size of our asset is computed off a 3 year old report .
Causes confusion etc
Not to say the pay is not out of whack to some degree.
The environment is tough is a fair statement

[Daveontb]

2126 is sounding awfully corporate these days.

From my perspective, 2126 seems to be rational.

The focus on MH's pay seems emotional/childlike.

[Stavros]

It's not child's play when a CEO and the BOD attempt to lower the PPS to obtain more RSU's for themselves.

[Putncalls]

I think the use of "corporate" as an adjective isn't fair to the many well behaved professionals in all our industries.

[ArtM72]

Perspective time Oil fell from $110 to $27 LNG is priced off Oil Fact is if oil price drops LNG price drops Interoil is in the LNG business Many oil and gas companies are going belly up. Interoil can print shares any time it needs money . The exact size of our asset is computed off a 3 year old report . Causes confusion etc Not to say the pay is not out of whack to some degree. The environment is tough is a fair statement

Seems to me  JFT you have often but not recently pointed out to us the certification price we were to be paid was independent of the oil price.  That, and at no time has Total utterred any suggestion that they are backing off on their new and major entrance to the Asian market via Papua LNG. They just spent over a billion for Saft, a battery company. For some inexplicable reason however they evidently hold the only Certification trigger necessary to pay IOC and have felt no reason to pull it.  What a great contract MH negotiated, right again?

Your view of printing shares is immediately analgous to a young kid who thinks money simply comes out of an ATM card. Dilution isn't the solution to pollution here, either.

[ArtM72]

I think the use of "corporate" as an adjective isn't fair to the many well behaved professionals in all our industries.

An apology is due and given to those that I painted with too broad a brush.  I were one once too.  Seriously, I meant corporate as in out of an office overseeing some mode of shareholder communications.  There's something a little too pure coming from 2126.  We don't reach quite so far for our bullet points.

Sunshine is the best policy.

[Palm]

Hession gets YUUUUGE Termination compensation if the BOD is presented with a Change of Control offer prior to 10 July 2016 ... even if it is rejected. Hession gets only half of the YUUUUGE compensation if the offer is after 10 July 2016. SO .... if something happens before 10 July .... just sayin'

Part of this is right, but a very important part is incorrect. If a Change of Control offer is presented to the Board, "and which the Directors of InterOil recommend to shareholders" then it would qualify. You would at least hope that the Board would only "recommend" an offer which the majority of SHs feel is worthwhile. 

[Indoreservoir]

Busy day so just a few comments on the mistakes, and incomplete reporting in 2126's post, inserted into his text for ease of review.

I cannot believe people are thanking him for reading documents - maybe the documents were read, but only cherry-picked parts are reported.

That Hession's contract did not (and does not) include a milestone payment for certification payment indicates, as Thy has noted, that when he was hired, that issue was not considered relevant or possible by the then BOD. INDO: his compensation package has been 'restated' (MIC pg 43), so he gets Milestone payments plus ridiculous bonuses - couldn't his milestone payment criteria have been amended? Answer - of course. But MH does not want that - he wants his original milestones, and the new executive remuneration framework and STI plan.  Why would the Board keep his original milestones and give him the new remuneration framework and STI plan? Incredible.

The milestones that are in his contract are standard project milestones (Completion of SPA, Basis of Design, FEED, FID, First cargo). INDO: no they are not, at least not in my experience.  These are called "Objectives' in most CEO annual goals and ARE PART OF the CEO"S JOB, not justification for further unearned bonuses.

That his contract terms regarding compensation have been amended since hiring and yet resource certification has not been added as a milestone should indicate that the current BOD is not actively trying to feather Hession's nest    INDO: I laughed out loud when I read this - recert payment in a certain period should be his ONLY accomplishment worthy of a bonus

, but rather holding the line on a contract that was negotiated by a prior BOD. INDO: 'holding the line?' You must be joking - heres some more goodies under the new compensation plan and you can keep all your old goodies too!

That should be good news.

Additonally, the average compensation of the Non-executive directors of IOC was indeed around $311K and their average cash compensation was a bit less than $81K. However, in the report on NED (non-executive director) compensation that Indo referred to (http://www.guerdonassociates.com/article...ds-in-2015), it is also noted that 90% of BOD Chairmen either received pay increases last year or their pay remained the same (including 48% whose remuneration actually increased).   INDO: median pay increase was 2.9%.  Compare that to our Exec Directors whopping pay increases >10%!

It should also be noted that only 3% of the NED personnel received shares as a component of their compensation in 2015. All IOC NEDs received shares (RSUs) as a component of their compensation; in fact, the share component for IOC NEDs amounted to 74% of their total compensation. INDO: RSUs are NOT shares, they are cash or shares which is/are paid-out based on the share price at a point in the future (2 yrs in our case).  They are charged against company income when paid, and typically vest completely on takeoover.  So lets get that right - they are NOT shares unless the recipient elects shares at payment date.

To compare NEDs who receive 3/4 of their compensation in company shares with the vast majority of NEDs who do not seems a bit like an apples vs. oranges comparison. IOC did not have to pay out nearly as much cash for NED compensation as the 97% of ASX300 companies that paid out an average of $179,000.00     INDO: this is Aus$ so the comparison amount is about US 132,000. And RSUs are essentially cash which vest given certain criteria are met - it appears the minimum that will vest are 50% but could be mistaken.  And in a takeover they likely get 100% - MH sure does (MIC pg 52).

in NED compensation in cash (compared, again, with the IOC NED cash compensation average of $81,000.00). Again, that should be good news to IOC shareholders.   INDO: NED compensation of $311k/yr is ridiculous and is far outside the norms for O&G companies.

Finally, that Hession elected to receive all of his milestone/incentive payments in RSUs rather than the cash to which he was entitled seems to reflect his willingness to put his own money into IOC.   INDO: he is not putting his own money in the company, as stated above given the definition and vesting characteristics of RSUs.

If he had taken that compensation as cash and then not purchased shares in IOC, I would be concerned. That he chose to take non-vested RSUs indicates his confidence in IOC, in my opinion. He is acting under a contract that was negotiated and approved by the earlier BOD     INDO: incorrect.  para 2 on MIC  pg 43 makes it abundantly clear that the 2015 Board restated his employment contract.

and, by taking compensation as shares rather than cash, he is putting his own money in the game, no matter how you parse it. This also should be good news to IOC shareholders.

INDO: again incorrect. RSUs are cash or shares. His own money is not in the game at all. And look at some of the vesting dates - 1 Jul 2016 on some as per MIC page 42.

The use of RSUs by IOC to compensate both its directors and officers indicates that both (officers and directors) are highly confident in the appreciation of IOC shares.   INDO: no it doesn't, but it does suggest they expect a buyout at a higher price.  But almost whatever the share price does, they'll be entitled to some or all of the RSU paid in cash or shares

It also indicates an effort by the BOD to actually conserve cash rather than recklessly spend it, as some have felt is the case. INDO: the reckless spend is on possibly unneeded exploration wells.  The spend on compensation is minor relative to that

The high compensation to Hession (and I agree that it is high) has been paid predominantly in shares   INDO: Incorrect. RSUs are cash or shares (up to recipient) at a later date, and are far different from stock options in which you have real skin in the game. With stock options, you only make money if the share price increases above the option price, and you only make the difference in the price increase. With RSUs you make 100% of the share price, whatever it is at the time of vesting. Regardless of share price increase or decrease, you are given 100% of the share price - pure profit.  People need to understand that to properly evaluate the Board compensation.

rather than cash and, again, that should be seen as good news to IOC shareholders.

Good grief.

[Indoreservoir]

2126 is sounding awfully corporate these days.

From my perspective, 2126 seems to be rational.

The focus on MH's pay seems emotional/childlike.

Point 1: Suggest you read the MIC and other referenced documents to make that statement. Possibly some parts left out or mistakes in 2126's post? Naah, sounds rational so must be true.

Point 2: Guilty as charged.  

Now,  any useful discourse?  I suppose not. G'day.