Do Junior Mining CEOs Deserve First Class Treatment?

LGkozlowski Do Junior Mining CEOs Deserve First Class Treatment?

The Fat Cat - Dennis Kozlowski - by Michael Stewart

Some say Ron Paul is the only US Congressman to fly economy class… The man has integrity.

In my mind, his junior mining comparable is Nolan Watson, CEO of the Sandstorm Companies, and a personal friend of mine.

As of this morning, Sandstorm Gold had a market cap of $591 million, and is cash-flowing several million dollars per month. While Nolan routinely circles the planet marketing his companies, he’s always seated in the back of the plane, because he respects a dollar and he respects his shareholders.

Nolan once told me he can’t count how many times he’s walked past the CEO of some tiny exploration company sitting in business class as he heads to the back of the plane.

Most of these exploration companies are venture operations, with no revenues, and, frankly, little prospects of ever achieving any. Exploration companies are the stem cells of the mining world – it all starts with them – but many of these stem cells should and will die in the dish.

A friend of mine who was coming home from the PDAC in Toronto yesterday tipped me about a certain CEO riding in business class. I won’t name the guy, but he’s involved in a proxy contest with a dissident shareholder over misuse of corporate funds, no less.

My friend overheard someone ask the CEO whether it was his shareholders, or his personal account, paying for the ticket. (A business class ticket from Vancouver to Toronto is about $4,000 compared to about $800 for economy).

“The shareholders paid for this; I deserve to fly business class,” the CEO said, apparently.

I like flying first class too. But, in my opinion, the only CEO’s who have a right to First Class seats are those who are producing for shareholders AND if it’s a long-haul flight.

If none of these factors are at play, it should be back of the bus, buddy.

What do you think?

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6 Responses to Do Junior Mining CEOs Deserve First Class Treatment?

  1. Sue Glover says:

    Interesting. In my experience working with small cap mining companies not only are they traveling economy but they are booking hotels and rooms on discount sites like Hotwire. I have not experienced when booking rooms, flights or corporate events anything but true dilligence in the spending of the almighty dollar. Any small cap blowing the wad in this difficult climate is risking shareholder confidence, and going to steuggle to take their company through the current market conditions.

  2. The less we spend, the less we have to raise and dilute. As both a CFO and a shareholder of an exploration company, I ensure that every dollar stretches as far as possible.

    I’ll fly first class once our stock has hit $10…. and then only because I’m paying out of my own pocket!

  3. Brent Cook says:

    Two points.
    I am constantly flying all over the world. With that many miles I usually get some sort of upgrade from an economy ticket.
    Second, more often than not time is very tight on overseas/overnight trips and you are expected to land, shower and get to the first breakfast meeting followed by a long day and the obligatory dinner and drinks with officials etc.
    You need that night’s sleep on the plane. If that is the reason for a bus class ticket I think it is justified, if it’s a golf excursion then not!

  4. James Fraser says:

    I think no way Junior Mining company ceo’s should fly first class. The best management teams are out to create shareholder value through exploration and drilling expenditures. Some of the salaries of Junior mining companies executives are outrageous for what they accomplish.

    A great example of how a company should be run is NS Gold Corp. A Chairman with skin in the game and shareholders best interest at all times. Sadly this is a rare exception in the Junior Mining World. Check out the shareholder letter from Hans Van Hoof to NS Gold shareholders below.

    Well done Hans Van Hoof and NS Gold!

    ———————————————

    Welcome from the Chairman

    “A Company run by Shareholders for Shareholders”

    Dear Investors and future Investors

    Welcome to our Company. First, I would like to emphasize that NSGold is exactly as it says in the sentence above: Run by Shareholders for Shareholders.

    Allow me to explain: as you can read in our public filings, Van Hoof Industrial Holdings owns a substantial amount of shares of NSGold (more than 10 million at the latest count).

    As a professional (and often activist) investor, I want to set the right example: my annual salary from NSGold amounts to one dollar. Furthermore, I pledge that I will not take any share options in the Company. These options are better used to attract top-quality mining-industry professionals.

    This means that the Company is COMPLETELY focussed on delivering Shareholder Value.

    In my view, optimizing the share price of NSGold involves a high standard of ethics, whether dealing with counterparties for acquisitions, the environment or the communities on the properties we want to develop. I hope you recognize the benefits of this philosophy in some of our latest acquisitions and that your investment view fits ours.

    As you will see on this website, we try to be as transparent as possible. The Library will provide you with reports and historic publications about our properties. If you have any comments or information to add, please let us know.

    Kind regards,

    Hans van Hoof
    Chairman

  5. Traveling as cost effectively and putting money toward growing a company is the best for shareholders and management. As management if one has to keep raising money then that dilution makes it very hard to raise and sustain a shareprice. At Riverside we do not buy business class tickets although as Brent Cook points out sometimes there is luck in getting upgrades.

    Nolan and other CEO’s continue to deliver strong value for the shareholders and saving money with low cost plane tickets, sharing transport, using subways, and less expensive hotels where costs can be saved while time is not overly sacraficed makes a lot of sense.

    Thank you Tommy for bringing up this issue.

    John-Mark Staude, CEO Riverside Resources

  6. Dustin Perry says:

    As a young geologist I can say that it would be very frustrating to see a CEO wining, dining, and flying first class while field crews are in the bush for months at a time under sometimes miserable conditions. Luckily, every small company I have worked for, where I have known the CEO, has not had this policy and has actually been quite thrifty. On the other hand, some companies, by way of somewhat fraudulent mining analysts – will skyrocket their share price, throw $50-100K Christmas parties, only to plummet in value (no names). There is quite a bit of discrepancy within the industry but in a game of throwing darts one should focus on the darts!

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