DIRECTORS of Bowleven have received 2.3 million shares under an incentive programme which has just paid out in full despite a dramatic drop in the company's share price this year.
The Edinburgh-based oil and gas company has revealed that five directors were allotted shares after awards made under a Long Term Incentive Programme vested.
These were worth £1.5 million in total at yesterday's closing price, 63.75p. The awards led to a big increase in the directors' holdings in the firm, which is hunting for oil and gas off Cameroon.
The biggest beneficiary was Bowleven's chief executive Kevin Hart, who received 775,000 shares.
Chief Tabetando, a Cameroonian political figure who joined the board in 2001, got 477,000 shares.
News of the vesting of the awards may stoke controversy at a time when the issue of executive pay is high on the agendas of investors and ministers.
Shareholders in Aim-listed Bowleven have endured a roller- coaster ride over the years as the company has enjoyed mixed fortunes with the drill bit and grappled with difficult market conditions.
Once described by an analyst as dead in the water, Bowleven enjoyed a big increase in popularity in the City last year after making discoveries with the Sapele well.
However, with Cairn yet to prove the commerciality of the finds the company's share price has plunged from 386p in January, to 63.75p yesterday. Against that backdrop Bowleven's decision to confirm the awards may surprise some people. The awards were made in December 2008 and were conditional on a number of performance conditions being satisfied over a three-year period.
Bowleven said the company's remuneration committee resolved on December 12 that the relevant conditions had been satisfied.
The committee is composed of the chairman Ronnie Hannah and non-executive directors Caroline Cook, an experienced analyst, and industry veteran Tim Sullivan. Phil Tracy, the former Cairn engineering head who joined Bowleven recently, is also on the committee. He is interim chief operating officer.
"Bowleven's total shareholder return (TSR), calculated in accordance with the LTIP, was in the upper quartile in the comparator list and as a result, 100% of the 2008 LTIP awards vested," the company said.
The TSR is calculated by a consultancy.
A share price of 33p was used when the conditional awards were made to directors in December 2008.
Since December 2008 Bowleven has raised £220m from investors at prices ranging from 67p per share to 327p.
However, the company has a market capitalisation of around £190m.
Asked whether it was appropriate that the awards should be allowed to vest against that backdrop, the company declined to comment.
At yesterday's general meeting 99.2% of votes cast favoured approval of the annual report.
In line with commmon practice at Aim-listed companies, shareholders did not get a vote on Bowleven's remuneration policy.
PIRC, the corporate governance activist, believes all companies should provide shareholders with a vote on directors' remuneration reports.
Bowleven's finance director John Brown received 327,273 shares. Exploration director Ed Willett got 424,242 while general counsel Peter Wilson received 327,273 shares.
The directors, excluding Chief Tabetando, sold some shares to settle the tax that became payable on the vesting.
Mr Hart was left with 2,562,364 shares in total, worth £1.6m. Chief Tabetando has 1,557,701, Mr Brown has 266,775, Mr Willett has 338,113 while Mr Wilson has 410,000 shares.
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