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Whitehaven Coal Limited : Annual Report 2013
96 Whitehaven Coal Limited Annual Report 2013 8.7 Employment contracts -- audited The following section sets out an overview of the remuneration and other key terms of employment for the executive KMP, as provided in their service agreements. 8.7.1 Appointment of new Managing Director and CEO Paul Flynn was appointed as Managing Director and CEO of the Company on 25 March 2013. This table outlines the key terms of Mr Flynn's new contract of employment, as disclosed to the ASX on 21 February 2013. Fixed remuneration Mr Flynn's total xed remuneration (TFR) is $1,300,000 per annum, which includes salary, superannuation contributions, any components under Whitehaven's salary packaging guidelines and all Director's fees. While Mr Flynn's TFR is signi cantly higher than the TFR for the former CEO, the Company received external advice that Mr Haggarty was underpaid in comparison to CEOs of comparable ASX listed entities. Notably, the remuneration package received by Mr Flynn was originally recommended for Mr Haggarty (although Mr Haggarty elected not to accept any increase due to his signi cant shareholding in the Company). Upon Mr Flynn's appointment, the Board, having regard to recommendations received from the Remuneration Committee and external benchmarking data and advice from Egan Associates, determined that $1,300,000 continued to be the appropriate level of TFR for the CEO and in line with the Company's stated market positioning. TFR will be reviewed annually from 2014 onwards. Short-term incentive Mr Flynn is eligible to participate in the annual STI plan, as described in section 8.5 of this Remuneration Report. At target level of performance, his STI opportunity is 50% of TFR, with up to 75% of TFR for stretch performance. For the FY2014 grant, 70% of Mr Flynn's STI award will be measured by reference to clear nancial and project milestone targets, including EBITDA, costs per saleable tonne, production targets and Maules Creek milestones, with the remaining 30% tested against de ned individual measures (such as safety improvement targets and identi ed leadership components). The performance period for Mr Flynn's initial STI grant will operate over an extended period from his commencement date of 25 March 2013 to 30 June 2014. Subsequent annual performance periods will commence on 1 July. Long-term incentive Mr Flynn is eligible to participate in the LTI plan on terms similar to those applicable to grants made to other senior executives of Whitehaven (as set out in section 8.5) and subject to receiving any required or appropriate shareholder approval. Shareholder approval for the initial grant will be sought at the 2013 Annual General Meeting. The initial grant is proposed to be made in the form of performance rights. If they vest, those rights would provide Paul with an entitlement to receive 590,909 Whitehaven shares with a face value equal to $1,300,000 at the commencement of the performance period (100% of TFR at the date of Mr Flynn's appointment, with 20% representing a pro rata portion of the FY2013 LTI opportunity and 80% representing his FY2014 LTI opportunity). If there is a change of control of Whitehaven in the rst 12 months following Mr Flynn's appointment as CEO, unvested incentive awards will vest on a basis consistent with target performance. If the change of control occurs prior to the initial LTI award being granted, Mr Flynn is entitled under his employment agreement to receive a cash payment equivalent to the value of the performance rights that would have vested (again, based on target performance). 8. REMUNERATION REPORT CONTINUED Directors' Report
Annual Report 2012