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Whitehaven Coal Limited : Annual Report 2012
42 7. REMUNERATION REPORT 7.1 Message from the Board Dear Shareholder As you are aware, on 2 May 2012 the merger between the Company and Aston Resources Limited came into effect (Merger), bringing together the assets and resources of Whitehaven Coal, Aston Resources and Boardwalk Resources. As a result of the Merger, the Company became an ASX 50 company, and one of the largest listed coal companies on the Australian Securities Exchange. The Merger also resulted in the establishment of a new Board and committee structure with an increased focus on appropriate levels of independence and expertise. The Remuneration Committee is now a standalone committee comprised entirely of independent non-executive directors, being Christine McLoughlin (Chairman), Mark Vaile and John Conde. There was a fundamental need, upon the completion of the Merger, for the Company to comprehensively review and reassess its remuneration framework and arrangements to ensure that remuneration aligns with the Company's strategy and reflects its increased size and scale. The Company, with the assistance of an independent external advisor, has developed a new remuneration structure that is consistent with market practice and also appropriate for the Company's particular circumstances. The revisions to our approach (described in section 7.3 of this report) are intended to support our strategy, enable us to hire, retain and motivate the high calibre of executives our business requires, and to better align the remuneration that executives receive with the interests of our shareholders. The changes to the Company's remuneration structure have been approved by the Board. The key changes to the remuneration framework include: • fixed remuneration and incentive opportunities commensurate with the Company's new market position; • a revised short-term incentive plan with more clearly defined key performance indicators (KPIs) and a balanced scorecard approach, with deferral of 30% of any award made to KMP into shares in the Company for a further 12 and 24 month period (subject to clawback and forfeiture in certain circumstances); and • a new long-term incentive plan for FY2013 will operate as a grant of performance rights (i.e. a right to receive a share if applicable vesting conditions are met) tested against a relative total shareholder return (TSR) performance hurdle that will be measured over a two to four year period. The comparator group comprises those entities within the ASX 100 Resources Index as at 24 September 2012. DIRECTORS' REPORT
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