IKN

Win us with honest trifles

New Gold (NGD) and skin in the game: IKN has questions

After checking out New Gold’s (NGD) 1q22 numbers today, your humble scribe’s thoughts turned to other company documents and, while perusing the 2022 Management Information Circular published in March, a single repeated question began to show: “WHY?” Time to explain, with the help of screenshots from the biographies of each NGD director:

CEO Renaud Adams:

No questions. While its still a drop in the bucket compared to the 448.5m shares out at NGD, at least Renaud Adams owns a significant number and duly gets a pass. However…

Chair of the Board, Ian Pearce:

Question: WHY? You’re the company chair and only own 27k shares? Padding that out with awarded DSUs isn’t the level of skin you’d expect in the game of the Chair, so what gives Ian?

Next up, director Geoff Chater:

Question: WHY? Why does NGD allow a director with zero share purchases and under 55k of free shares a full two years to get straight with the rules? Is it to give the company enough time to dole out some RSUs or PSUs as well and get him up to speed for free? Why has this director never even bothered to buy on the open market?

Next, Director Nicholas Chirekos:

Question: WHY? Is this a joke? This man is head of the Corporate Governance committee! How does this meet corporate guidelines on director participation? Are you seriously suggesting DSUs qualifies as skin in this game?

Next, Director Gillian Davidson:

Question: WHY? She’s been on the board for four years, she chairs the Sustainability Committee, but can’t sustain the thought of buying a single share with her own money! How does this freebie bonanza meet NGD requirements for share ownership?

Next, Director James Gowans:

Question: WHY? He joined NGD just after his massive payola at Arizona Mining, but only has 30k shares using his own cash and once again, qualifies for the NGD ownership guidelines via freebie DSUs. Why is this considered acceptable by a company of this size?

Next, Director Thomas McCulley:

Question: WHY? Why on earth are these people allowed to stay in default, remain utterly devoid of personal financial risk while at the same time responsible for the direction and strategy of NGD? Presumably the head of Anglo’s Quellaveco project isn’t short of a penny or two.

Next, Director Margaret Mulligan:

Queston: WHY? Peggy Mulligan has been a director for four years, chairs the Compensation Committee, and owns zero shares! Not only does she set the rules, but she makes sure she uses them to her maximum advantage.

And finally, Director Marilyn Schonberner:

Question: WHY? Once again, zero personal financial pressure or responsbility, aside from freebie DSUs collected over the years. Under other circumstances you’d be blown away by the fact that Schonberner heads NGD’s Audit Committee, but by now you’ve probably spotted a pattern.

Is this truly the way to ensure corporate accountability at directorate level? These guidelines are so lax, they may as well not exist.

15 Comments

    And the sad thing is that none of us are surprised 🙁

    Reply

    Nice catch. Shameful corporate behavior.

    Reply

    Has also always amazed me when Directors sit on multiple Boards. Are they spending sufficient time on my company? Are they spending time and effort looking for yet another Board to join?

    Reply

    100% agree with you. BOD and insider ownership with shares actually bought alongside other investors (i.e. not penny / share private placements) is ridiculously low.

    I know you hate Mako but at least management and Wexford have skin in the game, used rights issues and participated on the same terms as other investors on private placements.

    The bad actors (almost all gold promoters) should be admonished and the good actors (Mako/Wexford) should be applauded.

    Reply

      Why on Earth do you think Wexford is a good actor?

      Reply

        From what I have seen they have acted fairly towards the minority shareholders in all the names they have significant influence on like MKO, FISH and BTR.

        They financed the projects on the same terms as the minority, they provided debt funding at market prices to avoid unnecessary dilution, they have dividends and buybacks in place where it makes sense (FISH and now MKO) and they created Diamond Back Energy.

        Why don’t you think they are good actors?

        Reply

            Helpful thanks. I wish you would back up your claims with things I could see or hear.

            At least I got you to read something worth your while, instead of the pablum you obviously fill your head with on any normal day. You want to obsesss on Wexford stocks? Try commenting on a post about Wexford stocks. This post is about NGD, now run along.

    Andy Etnyre Pleasant Hill, Iowa 03/05/22 6:22 am

    Wow – now even happier I bailed out of this stock last year – never gets going

    Reply

    Love your newsletter and cynical attitude – so much so I may be inspired to plunk down $50 USD a month to subscribe at some point.

    Reply
    Moe Great White North 04/05/22 4:12 pm

    I bought back in at the previous low but learning of the absence in management participation, sold today. Had a good run, time to move on.

    Reply

      Shoot me if you feel like it, Moe, but I think NGD may be a buy here. That directorate is what it is, but so are the numbers and Q1 really wasn’t that bad.

      Reply
        Moe Great White North 05/05/22 5:37 am

        It could well represent a buy at this point but I prefer management with skin in the game.

        Reply

Leave a Reply

Your email address will not be published.

Hello, you are not in a chatroom, you are in my living room. Opposing views and criticisms welcome, insults or urinating on furniture unwelcome. Please refrain from swearing if possible, it is not needed.