FCU OverSight Canada Inc. (“OverSight”)
SEDAR Filing December 2nd, 2015
Disruption | Trust | Whose Interest | Fission 3.0
Compensation | Governance | Respect for All Shareholders
Our World Renowned Asset
ENTER THE DISRUPTORS
“Somebody Had To Do This”
The current Board has accused OverSight of causing “unnecessary disruption”. We are indeed disruptive. We believe disruption is necessary to shake up a company mired in a pattern of over-spending, questionable corporate governance practices and pursuing flawed strategies. We believe disruption is necessary to re-align the company’s priorities with those of its shareholders.
IN OUR COMPANY WE TRUST
“Confidence IS a Factor”
Lack of Judgment, or What?
The FCU - DML merger is behind us, yes. Thankfully you voted “NO” to the proposed transaction. October is not that long ago, so just a quick review:
Had the proposed merger between Denison and Fission succeeded, management would have received enormous bonuses. Mr. Randhawa and Mr. McElroy were to be paid a retention bonus in Denison shares equal to $1,227,600 each, and other Fission employees were to receive some $1,000,000 in a combination of Denison shares and or cash. No wonder they urged you to vote for the merger!
OverSight : This decision to do the deal is still a head-scratcher. It’s the kind of decision making - “a lack of judgment” - that we just can’t afford in the future.
FISSION 3.0 CORP : FUU
“The Spin Out”
One of the key reasons for Fission’s merger with Alpha Minerals was to create a pure play enabling the Company to focus solely on the PLS deposit. Management’s decision to make a substantial investment in Fission 3.0 with Company money - at above market price and with no warrants attached - seems at odds with shareholders’ desire for focus and value maximization.
The Company’s decision to invest $3 million in Fission 3.0, the spin-out company for which Messrs. Randhawa, McElroy, Marsh, Estergaard and Ross are also directors, is a cautionary example that begs questions about corporate governance practices, independence, and what is in the best interests of shareholders.
The question seems compounded when the Management and Board decided to drill multiple targets during 2014 on conductor PLG-105 approximately 17 km away from the main Triple R discovery and just 330 metres north of Fission 3.0’s Clearwater West property. Who is likely to benefit the most from any results – Fission or Fission 3.0?
Fission Uranium To Acquire 12% Interest in Fission 3.0
OverSight : Quite a “Spin” on this.
THE “C” WORD : COMPENSATION
Excessive Compensation? You Decide.
Over the past three fiscal years, the current board and management have collectively received compensation packages in excess of $12,000,000. Mr. Randhawa, the Chairman & CEO, and Mr. McElroy, the COO received salaries of $460,000 and $461,769 respectively during the last fiscal year, in addition to other forms of compensation, totalling more than $1,000,000 for each.
These eye-popping numbers pale in comparison to the prior fiscal year’s compensation, whereby Mr. Randhawa and Mr. McElroy received some $2,600,000 and some $2,500,000 in total compensation respectively. Perhaps Messrs. Randhawa and McElroy realized that their compensation was “just a bit high” in light of Fission’s imploding share price; from $1.68 (March 31, 2014) to $0.97 (June 29, 2015). The share price has now sunk further to $0.56 (December 1st, 2015).
We think not so normal is that Fission’s executive directors are paid director fees in addition to their management salaries.
So What’s Fair?
Executive compensation at Fission is significantly higher than that of peers like Denison and Nexgen. While Nexgen’s share price has increased, Fission shareholders have seen a sharply declining share price. FCU executives have been paid increasing amounts to preside over a declining share price. Denison’s total 2014 executive compensation (including options and bonuses) was under $2 million, whereas Fission’s total 2014 executive compensation was over $7 million!
So what’s fair? It’s your company. It’s your investment. You decide.
Executive Cash Compensation Comparison - 2014/2015 Fiscal
OverSight : We call for immediate and meaningful reduction in compensation for the CEO and COO, and for directors’ fees to be reduced and paid only to independent directors.
THE “G” WORD : GOVERNANCE
So What Is It Anyway?
“Corporate governance is the control of management in the best interests of the company, including accountability to shareholders who elect directors and auditors and vote on say on pay. How a company is governed influences rights and relationships among organizational stakeholders, and ultimately how an organization is managed, and whether it succeeds or fails. Companies do not fail: boards do.”
Dr. Richard Leblanc, Harvard University Summer 2015, MGMT S-5018 – Corporate Governance
A Look at Fission’s Corporate Governance
In addition to their roles with Fission,
Institutional Shareholder Services Inc.(“ISS”) defines “Overboarded” as:
Glass Lewis also a prominent proxy advisory service, has similar definitions.
Is it any wonder that Fission has lost its way, when the leaders’ time and loyalties are scattered across multiple companies?
OverSight : The Company must put in place controls to ensure that our CEO and Board are fully focused on what's best for Fission and its shareholders.
RESPECT FOR ALL SHAREHOLDERS
“We’re Fission Owners Too”
It would normally go without saying that the Chairman & CEO of a company should treat all investors (that’s us) with respect. Mr. Randhawa lost complete sight of respect for shareholders on October 6th: “I’m not here to give hugs” rings a bell.
Responding to questions from Fission shareholders at the October 6, 2015 Town Hall Meeting in Toronto regarding the proposed merger with Denison, a question was raised in regard to bonuses contemplated in the deal. In a response to questions regarding the retention bonuses Mr. Randhawa said:
“It’s why the 99% hate the 1%”
“That's the way it works, and if you don't like it, sell my stock.”
His Stock? Mr. Randhawa owns some 4,000,000 FCU shares – about 1% of the Company. The rest of us own the other 99%. Should we sell our stock, or send him a clear message that it is our Company, and all investors matter?
Who is “Nominal”?
We thought Mr. Randhawa might have learned something after the clear repudiation of the attempted merger with DML. But, it seems he has not. In response to the filing of the advance notice by Mr. Gifford, Mr. Randhawa belittled Mr. Gifford’s holdings of 126,000 shares as “Nominal”. Mr. Marsh, the Lead Director, despite being on the Board since September 2013, owns only 9,900 shares. Two of the other directors own no shares, and management’s most recent nominee, Raffi Babikian, owns none. Three Management nominees own none. So four of seven Management nominees have far LESS than those so-called “nominal” holdings.
Are all shareholders who hold less than 126,000 shares being thought of as “Nominal” by the Company? Aren’t all shareholders important?
OverSight : 2,000 or 20,000 or 200,000 or 2,000,000 shares, how about some respect for ALL shareholders.
The Uranium Asset Known Around the World
Patterson Lake South
The Patterson Lake South claims, including the Triple R deposit, comprise a world-renowned project, and accordingly, Fission needs world-class governance and technical competence. Fission needs a board and management group that has experience developing mineral discoveries and puts shareholders first.
OverSight : Everybody in the world that needs to know about PLS, already does. We don’t believe that the CEO, COO et al, flying around the world telling everybody about it over and over again is of any benefit to the Company, its shareholders, and the project. Rather, it is a waste of precious capital resources – and at a time when capital is especially hard to come by.
It’s time to put Fission Uranium Corp., and PLS on the proper path.
You have the option to WITHHOLD.
Your WITHHOLD Makes a Difference
Majority Voting is now mandatory for TSX Issuers, which means that each director must be elected by a majority of the votes cast at any shareholders’ meeting. Any FCU director must immediately tender his resignation if he is not elected by at least a majority of the votes cast.
Then vote on 2. (Auditors) and 3. (By-Law) as you choose.
Your CONTROL NUMBER is printed at the bottom of your blue proxy form.
If you have lost your proxy form, you may be able to get your control number by calling Computershare at 1-800-564-6253.
Voting by internet or phone will be easiest and fastest.
If you prefer, you can vote on the blue proxy form, with your signature and date, and mail to:
135 West Beaver Creek
PO Box 300
Richmond Hill, Ontario
Canada L4B 4R5
Please be sure to check your VIF or Proxy for specific delivery date, time and criteria.