Wrap Text
Terms of Retirement for Outgoing CEO Marius Kloppers
BHP Billiton
NEWS RELEASE
Release Time IMMEDIATE
Date 18 April 2013
Number 09/13
TERMS OF RETIREMENT FOR OUTGOING CEO MARIUS KLOPPERS
The Board of BHP Billiton today announced the terms of retirement for outgoing Chief
Executive Officer (CEO), Marius Kloppers. As previously announced Mr Kloppers will step
down as CEO, a member of the Group Management Committee and a Director of the
Company on 10 May 2013, and will retire from the Group on 1 October 2013.
Mr Kloppers will work through the applicable notice period and accordingly no severance
payment will be made. He will receive his base salary and pension entitlement to the date of
his retirement, namely, 1 October 2013.
Other aspects of Mr Kloppers’ remuneration will be handled in accordance with the
shareholder approved plans. In summary:
- Any short term incentive payment under the Group Incentive Scheme (GIS) for the 2013
financial year can only be assessed by the Remuneration Committee after year end.
That payment will be pro rated to reflect his period of service as CEO during the 2013
financial year (namely, 1 July 2012 to 10 May 2013).
- Awards granted in previous years under the Long Term Incentive Plan (LTIP) will be pro-
rated in accordance with the Company’s usual practice. They will vest only if the
performance hurdle is met at the end of each five year performance period; and
- Mr Kloppers will be entitled to the value of the pension and superannuation funds that he
has accumulated over his 20 years with the Company.
In announcing the details, BHP Billiton Chairman, Jac Nasser, said “The terms of Marius’
departure reflect the Group's remuneration policy and the rules of our incentive plans as
approved by shareholders. No additional payments are being made.”
A summary of the key terms of Mr Kloppers’ retirement is set out in the attached schedule.
Further information on BHP Billiton can be found at: www.bhpbilliton.com.
Media Relations Investor Relations
Australia Australia
Gabrielle Notley James Agar
Tel: +61 3 9609 3830 Mobile: +61 477 325 803 Tel: +61 3 9609 2222 Mobile: +61 467 807 064
email: Gabrielle.Notley@bhpbilliton.com email: James.Agar@bhpbilliton.com
Fiona Hadley Andrew Gunn
Tel: +61 3 9609 2211 Mobile: +61 427 777 908 Tel: +61 3 9609 3575 Mobile: +61 402 087 354
email: Fiona.Hadley@bhpbilliton.com email: Andrew.Gunn@bhpbilliton.com
Eleanor Nichols United Kingdom and South Africa
Tel: +61 3 9609 2360 Mobile: +61 407 064 748
email: Eleanor.Nichols@bhpbilliton.com Tara Dines
Tel : +44 20 7802 7113 Mobile : +44 7825 342 232
United Kingdom Email : Tara.Dines@bhpbilliton.com
Ruban Yogarajah Americas
Tel: +44 20 7802 4033 Mobile: +44 7827 082 022
email: Ruban.Yogarajah@bhpbilliton.com Brendan Harris
Tel: +44 20 7802 4131 Mobile: +44 7990 527 726
Jennifer White email: Brendan.Harris@bhpbilliton.com
Tel: +44 20 7802 7462 Mobile: +44 7827 253 764
email: Jennifer.White@bhpbilliton.com Matt Chism
Tel: +1 71 359 96158 Mobile: +1 281 782 2238
Americas email: Matt.E.Chism@bhpbilliton.com
Jaryl Strong
Tel: +1 713 499 5548 Mobile: +1 281 222 6627
email: Jaryl.Strong@bhpbilliton.com
BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209
Registered in Australia Registered in England and Wales
Registered Office: 180 Lonsdale Street Registered Office: Neathouse Place
Melbourne Victoria 3000 Australia London SW1V 1BH United Kingdom
Tel +61 1300 55 4757 Fax +61 3 9609 3015 Tel +44 20 7802 4000 Fax +44 20 7802 4111
Members of the BHP Billiton Group which is headquartered in Australia
Sponsor: Absa Capital (the investment banking division of Absa Bank Limited, affiliated with
Barclays)
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Summary of terms of retirement for Mr Marius Kloppers
1. Fixed remuneration
Mr Kloppers will continue to be employed by the Company until 1 October 2013. The
Company will pay him a salary and make pension contributions until then. His base
salary is US$2,215,200 per annum and pension contributions are 40 per cent of salary.
Upon retiring, Mr Kloppers will be entitled to receive the accumulated value of funds
under relevant pension and superannuation plans, together with the value of any accrued
leave to 1 October 2013.
2. Severance payment
Mr Kloppers will receive no severance payment and no payment in lieu of notice.
3. Incentive arrangements
Mr Kloppers’ entitlements under the Group Incentive Scheme (GIS) and Long Term
Incentive Plan (LTIP) are governed by the shareholder-approved plan rules and the
Group’s termination policy as approved by shareholders at the 2011 Annual General
Meetings. Copies of the rules of the GIS and the LTIP are available on the BHP Billiton
website at www.bhpbilliton.com.
Short Term Incentives - GIS
Mr Kloppers will serve as CEO for almost the whole of the 2013 financial year. He will be
considered for a bonus under the GIS at the end of the year (i.e. for the year ending
30 June 2013). Whether any bonus will be paid, and the amount, will be determined by
the Remuneration Committee after an assessment of the Company’s and his personal
performance after the year end. This is consistent with the rules governing the GIS as
approved by shareholders and the established practice of the Company. Any amount
assessed as payable will be reported in the Remuneration Report that will be published in
September 2013.
While the maximum possible bonus under the GIS is 320 per cent of salary, the full
bonus is “at-risk”. Mr Kloppers did not receive any bonus in the 2012 financial year.
Even though he will be serving as an employee for a quarter of the 2014 financial year he
will not receive any bonus under the GIS for that year. While the GIS does allow the
Remuneration Committee the discretion to grant a pro rata cash bonus where a part year
has been worked, in this case the Remuneration Committee will not be using that
discretion. Under the rules of the GIS, unvested Deferred Shares are transferred to a
retiring executive on leaving; however, as no Deferred Shares were awarded to
Mr Kloppers in the 2012 financial year (because he did not receive any bonus for that
year), he will have no unvested Deferred Shares as of 1 October 2013 (assuming that the
2011 financial year GIS award vests as estimated in August 2013).
Long Term Incentives - LTIP
Mr Kloppers is a participant in the LTIP approved by shareholders. The LTIP requires
BHP Billiton to outperform our comparator group’s Total Shareholder Return (TSR) by
5.5 per cent per annum over a five year performance period for all the awards to vest.
Accordingly, the awards made under the LTIP are fully “at-risk”. The actual value of any
LTIP awards may ultimately be zero. The Remuneration Committee reviews performance
and takes advice from its independent adviser, Kepler Associates, before making any
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decisions about vesting. Importantly, even if the performance hurdle is met the
Committee has an overriding discretion under the plan rules to reduce the amount of
shares that vest.
The performance hurdle is stretching and ensures alignment with shareholders. For
example, over the life of our most recently vested LTIP award, BHP Billiton’s TSR was
41.6 per cent. In contrast, the weighted average TSR for the peer group of mining and oil
and gas companies against which the Group’s performance is measured was negative
4.0 per cent. The impact of this 45.6 per cent TSR outperformance by BHP Billiton was to
add US$75.4 billion of shareholder value from 1 July 2007 to 30 June 2012 over and
above performance in line with the weighted average of the comparators. Since the
inception of the LTIP in 2004, with the first outcomes measured in 2009, BHP Billiton has
delivered significant and consistent TSR outperformance over the peer group of mining
and oil and gas companies, leading to full vesting in each period, shown in the table
below:
LTIP five year performance period BHP Billiton TSR Peer group TSR
1 July 2004 to 30 June 2009 220.0% 71.8%
1 July 2005 to 30 June 2010 187.7% 113.6%
1 July 2006 to 30 June 2011 138.3% 66.8%
1 July 2007 to 30 June 2012 41.6% -4.0%
Under the terms of the LTIP, employees who retire are entitled to hold awards granted in
prior years. However, the number of awards is reduced to reflect the period of service in
relation to each grant. They will vest only if the performance hurdle is met, and the
Remuneration Committee confirms vesting, at the expiration of the term. The actual value
of the LTIP awards may ultimately be zero.
Mr Kloppers’ 2008 LTIP award will be assessed for vesting before he leaves, but the
LTIP awards granted in 2009, 2010, 2011 and 2012 will therefore be pro rated according
to the rules of the plan and in each case must be held for the full five years from the date
of grant (see table on page five). He will not be granted any LTIP awards in 2013.
4. Outstanding share awards
A. Awards that will vest before retirement date
The table below provides details of the awards, granted in prior years under the GIS,
which will vest prior to Mr Kloppers’ departure. These Deferred Shares were awarded in
2011 and represented half of the bonus paid under the short term incentive plan as
approved by shareholders. The shares must be held for two years and therefore will
vest in 2013.
Original
Estimated Vesting Awards to
Award number of
vesting date outcome vest
awards
GIS FY11 64,705 Aug-13 100% 64,705
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B. Awards that will be assessed for vesting before retirement date
The table below provides details of the awards, granted in prior years under the LTIP,
that may vest to Mr Kloppers prior to his departure. These performance shares were
granted in 2008. Whether they vest will depend on BHP Billiton’s relative TSR
performance over the five year period from 1 June 2008 to 30 June 2013. The
Remuneration Committee will review performance and take independent advice before
making a decision about vesting. Importantly, even if the performance hurdle is met the
Committee has an overriding discretion under the plan rules to reduce the amount of
awards that vest. Accordingly, the vesting outcome and the number of LTIP awards
which will vest is unknown at this time.
Original Estimated Estimated
Estimated
Award number of vesting awards to
vesting date
awards outcome vest
LTIP 2008 500,000 Aug-13 Unknown Unknown
C. Awards that will be unvested at the retirement date
The table below provides details of the awards, granted in prior years under the LTIP
that may vest in the four years after Mr Kloppers’ departure.
As noted above, under the terms of the LTIP employees who retire are entitled to hold
awards granted in prior years. However, the number of awards is reduced to reflect the
period of service in relation to each grant. The pro rata rule of the LTIP will thus impact
the number of awards Mr Kloppers retains on departure. To determine the award
Mr Kloppers will retain on departure, each individual award needs to be calculated on a
pro rata basis according to the time worked over the relevant five year performance
period (e.g. if Mr Kloppers had worked half the five year performance period then he
would retain half the awards). The details of the awards Mr Kloppers will retain are set
out below.
Whether the awards vest will depend on BHP Billiton’s relative TSR performance over
the five year periods to 30 June 2014, 2015, 2016 and 2017, respectively. In addition,
as indicated above, even if the performance hurdle is met the Committee has an
overriding discretion under the plan rules to reduce the amount of awards that vest.
Accordingly, the vesting outcome and the number of LTIP awards which will vest is
unknown at this time.
Pro rated
Original Awards to Estimated Estimated Estimated
awards
Award number of lapse on vesting vesting awards to
retained on
awards retirement date outcome vest
retirement
LTIP 2009 250,000 37,500 212,500 Aug-14 Unknown Unknown
LTIP 2010 200,000 70,000 130,000 Aug-15 Unknown Unknown
LTIP 2011 226,721 124,697 102,024 Aug-16 Unknown Unknown
LTIP 2012 240,603 180,452 60,151 Aug-17 Unknown Unknown
Total 917,324 412,649 504,675
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D. Awards vested and shares held
Mr Kloppers holds 88,327 vested LTIP awards, vested in 2012, yet to be exercised.
These awards were unable to be exercised upon vesting in 2012 as a consequence of the
LTIP rules limiting annual exercises to no more than four times base salary.
In addition, in his personal capacity, Mr Kloppers has a direct interest in 363,520 BHP
Billiton Plc shares and an indirect interest through family trusts in 265,462 BHP Billiton Plc
shares. He also has an indirect interest in 373,535 ordinary shares in BHP Billiton Limited
through his family trusts. These shares were earned over Mr Kloppers’ 20 year career
with BHP Billiton.
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