Aurora Oil & Gas Limited | AUT | Meeting Date: 2013/05/29

Douglas Brooks was appointed as CEO of Aurora on October 18, 2012. He received a sign-on cash bonus of US$250,000 as compensation for incentives he would have to forfeit upon commencement of employment with Aurora (40% was paid in October 2012, with the remaining 60% paid in January 2013). Further, Mr. Brooks was also issued 300,000 performance rights and 750,000 options, which vest in three equal tranches on the first, second and third anniversaries of his commencement date. It is evident that these significant sign-on bonuses are not aligned with the Company’s performance (subject only to continued employment). Shareholders should question the nature of these awards, and whether they are the best use of the Company’s capital. While the Company needs to attract and retain a high calibre CEO, and that Mr. Brooks’ sign-on cash bonus is subject to certain clawback provisions in the event of his termination, ultimately the board should have discretion to adjust sign-on awards retroactively if the Company’s results during the initial years of the CEO’s tenure fall short of expectations over the longer term. This serves as a more effective mechanism to discourage excessive risk over the short-term.

Eurasian Natural Resources Corporation plc | ENRC | Meeting Date: 2013/06/05

Over recent months, ENRC has faced renewed questions over its governance and ownership structure, as well as charges of corruption in its dealings in Kazakhstan and Africa. Former chairman Mehmet Dalman, who was appointed to improve transparency, resigned in April after the company dismissed Dechert LLP, an independent investigative firm, just before it was due to report to the UK Serious Fraud Office. Dechert’s report raises concerns regarding related party transactions involving executives and the company’s founding trio of shareholders, as well as potential bribery in African acquisitions, and the SFO and UK Listing Authority are now conducting formal investigations. The company’s ownership remains tightly controlled and below the 25% minimum freefloat threshold that will apply from 2014, and in the face of investigations and a consistently depressed share price, the founders appear inclined to take the company private rather than reduce strategic ownership levels,. On May 17 the independent directors rejected a proposal valued at 260p per share comprising cash and shares in Kazakhmys plc, which also has a significant stake in ENRC. However, the founders, in conjunction with the government of Kazakhstan, are in a strong position to dicate the terms of any transaction, and it appears unlikely that a significantly higher offer will emerge.


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