Whaler,

This was posted on the SH site. I think it is very relevant for all ISM shareholders to consider in their due diligence of the company. It talks about Randys compensation package and Golden Parachute. Just so you know I am not bashing by posting the comments below, if I were to see LBE give anything remotely close to their soon to be announced CEO as Randy is getting, I will say here, I will dump my LBE investment immediately.

"This document is now available for the shareholders and public to obtain some information on the activities of those guiding the company. I might be getting soft, but if I'm not mistaken, it seems there is some more attention paid to disclosure requirements than was the case last year. Is the hand of the OSC influencing the ISM report writers?

There's a few things that would horrify me, if I was a shareholder - that hasn't changed. Considering the lack of any meaningful accomplishments in the fiscal year, the total compensation of $884,500 seems a little rich. It's up from 2009, which was also a dismal year as far as accomplishments. I guess it's a mere pittance in comparison to 2008 when the Compensation Committee awarded their CEO compensation of over $4 million!

Another irritation, were I a shareholder, would be that according to the audited statements the company is under a management services agreement calling for $30,000 per month to the CEO's company . However it is disclosed that management fees paid were 6.25% more than that. I suppose the compensation committee wanted to keep the wolf from Randy's door, so they bumped things up for the cost of living increases that would have otherwise devastated Randy. If I was a shareholder, I would have hoped the Compensation Committee would have taken into account that Randy's company had started taking a $5,000 per month consulting fee from the ISM subsidiary Nitinat Minerals. During the last three months of the fiscal year, by my calculations, Randy's company was raking in $36,875 per month plus car allowance and office allowance, for providing services (presumably those of Randy Miller) to two companies that do not appear to be prospering.

The Compensation Committee is charged with these Objectives and Principles:

"The primary goal of the Corporation's executive compensation program is to attract and retain the key executives

necessary for the Corporation's long term success, to encourage executives to further the development of the

Corporation and its operations, and to motivate top quality and experienced executives. The key elements of the

executive compensation program are: (i) base salary; (ii) potential annual incentive award; and (iii) incentive stock options. The directors are of the view that all elements of the total program should be considered, rather than any single element."

The thing that worries me is Liberty Mines is about to hire a CEO. And I'm afraid that they are looking for one that's capable of running a real mining company. What kind of package are the CEO candidate's going to be looking for when they see Randy averaging $1.9 million in total compensation over the past three years, running a company that hasn't proven up an ounce of mineral reserves, or had to deal with the problems of active production? It's scary.

It get's scarier when you read the "Employment Agreement" that Randy has to protect him from loss of office, for a number of reasons. The disclosure of this gem is a bit more detailed this year, and it's even a more generous package than most of the critics feared. The dollar payout given as an example by the company totals $5.27 million. This could kick in if the agreement is terminated for other than just cause OR in the event Mr. Miller resigns "for good reason". There are a number of events that would allow Mr. Miller to decide he has good reason to resign. A couple that caught my eye were:

- "the Corporation taking any action to deprive the Mr. Miller of any material fringe benefit not hereinbefore

mentioned and enjoyed by him immediately prior to a change of control"

- "the good faith determination by Mr. Miller that his status or responsibility in the Corporation has been

diminished or he is being effectively prevented from carrying out his duties responsibilities as they existed

immediately prior to a change in control"

It would seem that any party considering a take-over has to either be happy with the status quo, or cough up $5.27 million. However, some of the good reasons could kick in without a takeover of control. One of the good reasons is:
- "any failure by the Corporation to continue in effect any benefit, bonus, profit sharing, incentive, remuneration or compensation plan, stock ownership or purchase plan, pension plan or retirement plan in which Mr. Miller is participating or entitled to participate"
That seems to me as a clause that insures the present generous compensation plan and other benefits indefinitely, take-over or no take-over, - or the multi-million dollar payout is triggered.

That seems to me to be quite a commitment, and quite a contingent liability. I'm wondering, given these circumstances why it doesn't warrant mention in the notes to the financial statements. If a one and two year compensation package with an outlay of $42,500 per month is a commitment warranting disclosure, isn't an agreement that can trigger an immediate cash payment ranging from $765,000 to $5,266,262 (or more), worthy of mention? Maybe the OSC will have a look at this, now that they're starting to pay attention to the disclosures of this company.

Nickel77, I'm curious whether whaler will discuss this over on the Big IF - as doingthejob/aatozz seems to have abandoned the Association of ISM Shareholders. It would be interesting to hear how a shareholder reacts to this take-over dis-incentive, along with what appears to be a permanent very genorous compensation package."