FDR: work like a man…… get paid like a man. Respectfully, Pete, don’t begrudge our management team a big payout. In their case, it’s more like “work like gods, get god-sized paycheques”. They took the risks, sweated the negotiation and the planning. Just because they made it look easy doesn’t mean it was any kind of joyride.
Sure, my model’s new, higher estimate for total share dilution now goes out the window. But with a target price in excess of 10x current levels, should a 4 or 5% haircut to the final buyout really change our mood? And note that the RSUs take at least a year to vest. We could be bought out before then. Easily. That would still be strict pay-for-performance.
In the heyday of hedge funds, managers used to charge a 2% flat fee on assets, plus 20% of any gains in a given year. And that was for anticipated, repeatable gains of maybe 20-50%. We are talking about a smaller profit share on returns an order of magnitude larger here at FDR.
An extreme example of this situation is Elon Musk. His $56 Billion payday was recently challenged in court by some jealous shareholder who reportedly held exactly nine (9!) shares of Tesla. Given how much wealth Musk created for Tesla shareholders, his record-breaking payday is hardly outrageous. To say nothing of his defence of the First Amendment… which we’ll miss if it disappears for good.
On a side note, the dissident’s lawyers supposedly took $6 billion for their share of the clawed-back value. Clearly *they* didn’t object to the principle of pay for performance.
Speaking of securities lawyers, any of them reading this comment may want to correct me if I err in my next statement. The “rolling 10% limit” rule for option and RSU issuance should protect FDR shareholders sufficiently.
And, in any case, as Buffett once said, you can’t write good business with bad people. With honest people, contracts are necessary only in the sense that good fences make good neighbors. With dishonest people, *no* contract can protect you. If any FDR shareholder thinks our current management dishonest, feel free to sell your shares at any time. We should have no shortage of buyers from now on.
So, in conclusion, if you expect people to do astounding, valuable things for you for low pay, I gently suggest you reconsider your view. TANSTAAFL, as Heinlein succinctly put it.
Now, let’s get back to absorbing and integrating our drill news. Is plain old visible gold in the core too boring for you? How about a visible gold *vein*? I’m no historian of the exploration sector, but I’m betting it’s been a long time since someone showed up at PDAC with a core sample showing a visible vein. If ever.