OI Corporation

[OracleofCarolina]

I find it interesting when researching OICO,(John Linnartz of Mustang Capital is Co-Chairman) that they recently introduced a new compensation agreement for their CEO.

Do you folks like this one better than Sardar's proposed agreement?

 

Mr. Lancaster. For 2010 and subsequent years while he is actively employed by the

Company and in addition to his Base Salary as defined in his employment agreement, Mr.

Lancaster will be eligible to earn a cash bonus equal to 10% of Free Cash Flow in excess

of $3,000,000 annually, as adjusted by a charge of 15% on any Incremental Investment

Capital (defined below). The charge for investment capital shall be applied annually

year-over-year but shall be pro-rated based upon the month in which the invested capital

is contributed by the Company. “Free Cash Flow” refers to the Company’s earnings

before interest, taxes, depreciation, and amortization (“EBITDA”), less capital

expenditures. “Incremental Investment Capital” refers to capital invested subsequent to

January 1, 2010 pursuant to approval of the Company’s Investment Committee for

strategic initiatives, such as the acquisition of a business or product line. The Committee

has the discretion to exclude certain one time events such as the sale of assets from Cash

Flows and to provide a discretionary bonus in addition to the Free Cash Flow based

incentive.

[Parsad]

I'm not sure why it gets so complicated.  I'll tell you actually which one I like right now.  Goodwood Funds management fee for running the investments of Westaim.  They get 0.1667% plus 15% above a 10% hurdle!  So on $350M in equity, they would get about $580K plus 15% above a 10% hurdle.  Simple, high hurdle and lower incentive fee...their MER is very low.  They own 19% of the company too!  Sardar should have done something very similar...he could have gone for 0.25% plus 15% above a 10% hurdle.  I think most shareholders would have agreed to that.  Cheers!