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BIL
BIBLT
BIL - Bhp Billiton Plc - Announcement Of Terms Of Contract For Incoming CEO
Marius Kloppers
Bhp Billiton Plc
Share Code: BIL
Isin: GB0000566504
Date 26 September 2007
ANNOUNCEMENT OF TERMS OF CONTRACT FOR INCOMING CEO MARIUS KLOPPERS
The Board of BHP Billiton today announced the terms of employment for incoming
Chief Executive Officer, Marius Kloppers. The contract will be effective from
the start of his term as CEO on 1 October 2007.
In announcing the details, BHP Billiton Chairman, Don Argus, said that the terms
reflected the Group`s remuneration policy, with a significant portion of the
total potential remuneration being `at risk` and subject to the Group`s
performance.
A summary of the key terms of the contract is set out in the attached schedule.
Details of the contract will also be included in the Remuneration Report that
will form part of the Group`s Annual Report due to be published on 26 September.
Shareholders will be invited to consider and approve the Remuneration Report at
the annual general meetings to be held in London on 25 October and Adelaide on
28 November 2007.
Summary of Proposed Terms of Employment
Mr Marius Kloppers
Chief Executive Officer - BHP Billiton
1. Term
Mr Kloppers will be employed under a single contract of service with the BHP
Billiton Group with no fixed term. The contract is applicable with effect from
the date of Mr Kloppers` appointment as Chief Executive Officer on 1 October
2007. The contract can be terminated by the Group on 12 months` notice and by
Mr Kloppers on 6 months` notice. Payment can be made in lieu of notice, the
details of which are set out in section 5 below. Mr Kloppers` performance and
remuneration will be reviewed at the end of each financial year.
2. Fixed Salary
Mr Kloppers will be paid a base salary of USD $1,850,000. He will also be
entitled to receive an additional annual sum calculated at the rate of 40% of
base salary (which at the commencement of the contract will be $740,000) in lieu
of a contribution to any pension or superannuation. Mr Kloppers will be
entitled either to pay this additional sum into a superannuation or pension
scheme, or to defer receipt until retirement under the retirement savings plan,
or take this a cash payment in lieu of retirement benefits. Where Mr Kloppers
elects to allocate the retirement contribution to a superannuation, pension
scheme or the retirement savings plan, the rules of the relevant plans will
apply.
3. Benefits
In addition to his fixed salary, Mr Kloppers will receive additional benefits to
cover the cost of health insurance, life and disability insurance and costs
associated with the preparation of taxation returns.
4. Incentive arrangements
Mr Kloppers will participate in the Group Incentive Scheme (GIS) and the Long
Term Incentive Plan (LTIP). The GIS and the LTIP were approved by shareholders
in 2004. Short-term incentives are delivered under the GIS and long-term
incentives are delivered under the LTIP.
Copies of the rules of the GIS and the LTIP are available on the BHP Billiton
website at http://www.bhpbilliton.com.
GIS
Under the rules of the GIS, Mr Kloppers is entitled to incentive awards
calculated by reference to his base salary. For performance at the target
level, which requires Mr Kloppers to meet the rigorous performance hurdles set
by the Board, including delivery of the budget, Mr Kloppers would receive 70% of
his base salary as a cash bonus. Whatever amount is earned as a cash bonus
would be matched with deferred shares of an equivalent value. Those shares must
be held for two years. The Remuneration Committee has discretion to allot
options instead of deferred shares.
The grant of deferred shares and options will be subject to the approval of
shareholders where required by applicable listing rules. Any deferred shares
that are granted will be valued and reported each year in the Remuneration
Report that forms part of the Annual Report. The valuation will be subject to
audit by the Group`s auditors.
LTIP
Long-term incentives are issued under the terms of the Long Term Incentive Plan.
The number of LTIPs awarded will be determined by the Board on the
recommendation of the Remuneration Committee and must be approved by
shareholders each year. LTIPs are subject to performance hurdles which are set
out in the rules of the Plan and measured five years after the effective date of
the grant. Performance hurdles are not subject to re-testing.
The performance hurdle requires BHP Billiton`s total shareholder return (TSR)
over a five-year performance period to be greater than the weighted average TSR
of an index of a peer group of companies. If BHP Billiton`s TSR is equal to or
less than the weighted average TSR of the index, the performance hurdle will not
have been met and the LTIPs award will be forfeited.
For all the LTIPs to vest, BHP Billiton`s TSR must exceed the weighted average
TSR of the index by a specified percentage. The Remuneration Committee
determines the percentage each year. For the 2007 financial year the percentage
was set at 5.5%.
For performance between the weighted average TSR of the index and the percentage
determined by the Remuneration Committee, vesting occurs on a sliding scale.
The value of shares awarded to Mr Kloppers will be reported in the Remuneration
Report that forms part of the Annual Report. The valuation will be subject to
audit by the Group`s auditors.
5. Termination of contract
The Group retains the right to terminate the contract by giving 12 months`
notice or by making payment in lieu of notice to 12 months` base salary plus the
amount paid in lieu of a contribution to a superannuation or retirement scheme
(i.e. a total of $2,590,000). Mr Kloppers would also be entitled to any accrued
entitlements such as earned but untaken leave.
6. Entitlements under the GIS and LTIP on termination
The rules of the GIS and LTIP set out the entitlement of participants on
termination of employment. (Copies of the rules of the GIS and the LTIP are
available on the BHP Billiton website at http://www.bhpbilliton.com.)
Resignation or termination for cause
The rules provide that where employment is terminated by the resignation of the
executive, or by the Group for cause, a participant is not entitled to any cash
incentive for the year in question. All deferred shares or options that have
been issued but which are not yet exercisable lapse. Any LTIPs issued but which
are not yet exercisable also lapse.
Special provisions relate to events described as "uncontrollable" such as death,
serious injury and retrenchment. In those circumstances, all of the deferred
shares, options and LTIPs that have been awarded but which are not exercisable
become immediately exercisable by Mr Kloppers or his estate.
Termination by mutual agreement
In the event of Mr Kloppers` employment terminating by mutual agreement:
- any deferred shares or options that had been granted, but which were not
exercisable at the date of departure, would vest in full;
- if the performance hurdles have been met for the year in which Mr Kloppers
departs, he would be entitled to a pro rata short-term cash incentive for his
period of service during that year based on performance; and
Mr Kloppers would have a right to retain entitlements to LTIPs that have been
granted but that are not exercisable, pending satisfaction of future performance
hurdles. The number of entitlements Mr Kloppers would be permitted to retain
would be reduced pro rata to reflect his period of service. These entitlements
would become exercisable only if the performance hurdles are ultimately met.
If Mr Kloppers leaves employment by mutual agreement on or after the third
anniversary of his date of appointment, the Remuneration Committee will exercise
its discretion to determine that Mr Kloppers shall receive an amount in respect
of the performance year in which he leaves. The amount he receives will be pro
rated to reflect the actual period of service and will be determined by the
Committee having regard to his performance assessed against the pre-determined
performance hurdles.
Further information on BHP Billiton can be found on our Internet site:
www.bhpbilliton.com
Australia United Kingdom
Samantha Evans, Media Relations Mark Lidiard, Investor & Media
Tel: +61 3 9609 2898 Mobile: +61 Relations
400 693 915 Tel: +44 20 7802 4156 Mobile: +44
email: 7769 934 942
Samantha.Evans@bhpbilliton.com email:
Mark.Lidiard@bhpbilliton.com
Jane Belcher, Investor Relations Illtud Harri, Media Relations
Tel: +61 3 9609 3952 Mobile: +61 Tel: +44 20 7802 4195 Mobile: +44
417 031 653 7920 237 246
email: email:
Jane.H.Belcher@bhpbilliton.com Illtud.Harri@bhpbilliton.com
United States South Africa
Tracey Whitehead, Investor & Media Alison GIlbert, Investor Relations
Relations Tel: SA +27 11 376 2121 or UK +44
Tel: US +1 713 599 6100 or UK +44 20 7802 4183
20 7802 4031 Mobile: +44 7769 936 227
Mobile: +44 7917 648 093 Email:
email: Alison.Gilbert@bhpbilliton.com
Tracey.Whitehead@bhpbilliton.com
Date: 26/09/2007 08:02:43 Produced by the JSE SENS Department.
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