By Tom Winnifrith | Thursday 22 December 2016
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
In the most recent statement from LGO Energy (LGO) much was made about how the board was showing restraint at the corporate trough. Shareholders may have seen the shares collapse from 6p+ to just 0.11p but "we are all in it together". Nope! This is a smokescreen.
These supposed deferred directors fees are a fiction created by paying themselves far more in the first place. In 2014 the total outlay on Directors fees was £330,000. By the end of 2015 directors fees had ballooned by 114% to £707,000.
In 2014 Comrade Ritson's fees were £187,000 - they jumped 28% to £240,000 in 2015.
In 2014 Thadchanamoorthy's fees were £63,000 - they jumped 138% to £150,000 in 2015.
Non exec directors all saw fee increases of well over 100%. Horton went from £27,000 to £80,000. Patrick went from £17,000 to £37,000. Douglas went from £17,000 to £50,000
All the data is HERE
Note that in that report LGO appeared to have trimmed its costs in that Directors remuneration in total goes down from £1,364,000 in 2014 to £879,000 in 2015.
However, all of this reduction is down to the fact that none of them wanted shares in 2015 so £776,000 was 'saved' in not printing shares for the directors as they preferred to more than double their cash salaries. The other 'saving' was that they didn't pay comrade Lenigas (the only person ever to be at LGO who merits a good wage by way of talent) £160,000 in consultancy fees that year. All other costs rose susbtantially.
None of this seems commensurate with genuinely saving money and leaves plenty of room for directors to defer only the very generous increases under the circumstances.
Of the £397,000 we are told is owed in fees in the most recent wearing of the hair shirt, £377,000 can be attributed to pay rises they awarded themselves from 2015 onwards. In reality they have only really deferred £20,000 between them. They have only deferred these fees, no-one said that they were going to take a pay cut from their salaries as stated in the 2015 annual report.
As LGO shareholders look forward to the next AGM and staring up at their board I remind you of the words of George Orwell from Animal Farm
“No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be? ... All animals are equal, but some animals are more equal than others.”
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