REMUNERATION COMMITTEE REPORT

Transcription

1 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT Randgold s belief is that a key part of our value creation strategy is ensuring the company has the right people in the right places to deliver value with the appropriate balance and alignment between the interests of shareholders and an attractive and appropriate reward package for its people. Andrew Quinn CHAIRMAN Christopher Coleman Jamil Kassum Olivia Kirtley Dear shareholders On behalf of the remuneration committee, I am pleased to present the directors remuneration report for 207. The year under review was another record-breaking year for Randgold. The company achieved its seventh consecutive annual production increase while at the same time driving down total cash cost per ounce to deliver a 4% increase in profit. This strong performance allowed the company to achieve its objective of building a robust cash position, which exceeded $700 million by year end, while remaining debt-free. As a result, the board has proposed a 00% increase in the dividend to shareholders, the 2th year in succession that the dividend payment has been increased, underlining the sustainably profitable business model that has been developed and delivered over the past two decades. Mrs Kirtley was appointed to the remuneration committee with effect from 2 February

2 Executive remuneration review and policy changes for 208 During 207 the remuneration committee undertook an extensive review of the current remuneration policy for executive directors in order to assess the extent to which the existing policy continues to be aligned with our strategic goals and the interests of our shareholders. The remuneration committee concluded that much of the policy remains appropriate. However in the context of evolving market expectations in relation to executive pay, it was agreed that the incentive plan policy required updating. The remuneration committee considered a range of alternative approaches for the operation of the group s long term incentive plan arrangements before deciding on the proposed policy. The key objectives of the policy review, and proposed changes to the policy, are to: Take into consideration the views of our shareholders on the remuneration policy; Maintain strong alignment between executive directors and shareholders through our remuneration arrangements; and Simplify the long term incentive plan arrangements and increase executive directors line of sight. The remuneration committee consulted with a wide range of shareholders and has taken their views into consideration, and adapted the proposed policy in the light of their feedback which, overall, has been very positive. Proposed changes to the policy The remuneration committee intends to simplify the long term incentive arrangements by removing the co-investment plan (CIP) and reducing the total incentive plan quantum. The key changes to the policy for 208 are as follows (and are set out in detail in the following section): Objective Take into consideration the views of our shareholders on the policy Maintain strong alignment between executive directors and shareholders Simplify the long term incentive plan arrangements and increase executive directors line of sight Proposed change Removal of the CIP Lower total incentive plan quantum Reduce threshold Long Term Incentive (LTI) vesting percentage Increase shareholding guidelines Extend overall LTI time horizon Increase proportion of remuneration delivered in shares Simplification of the Total Shareholder Return (TSR) measure under a new long term incentive plan (a change to the implementation of the policy) Reserve replacement measure, calculated with reference to the number of shares in issue New 208 Long Term Incentive Plan (LTIP) As the current performance share plan (the 2008 restricted share scheme (RSS)) is due to expire during 208, a new long term incentive plan (the 208 long term incentive plan (LTIP)) will be put to investors for approval at the company s 208 AGM. The terms of the plan are largely unchanged but have been updated to comply with current laws and regulation, and prevailing market practice. A key change to the plan is in relation to the individual award limit, which has been increased to 350% of salary to accommodate the proposed award level for the CEO (which represents a decrease in overall incentive quantum and LTI quantum). In addition, an exceptional individual maximum limit of 400% of salary has been introduced for use in exceptional circumstances, as determined by the remuneration committee. Remuneration outcomes for 207 The company s strong performance against 207 objectives resulted in outcomes under the annual bonus plan for the CEO and CFO of 60% and 72% respectively of the maximum bonus. The 205 co-investment plan awards vested in respect of 58% of the award, with relative TSR performance of 4.6% per annum in excess of the Euromoney Global Gold Index over the performance period. The threshold performance targets for the third and final tranche of the 203 restricted share scheme were not met and therefore the award lapsed. 227

3 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED The performance targets for the 204 restricted share scheme were partially met: TSR growth over the performance period was 9% p.a. resulting in 55% of this element of the award vesting; Additional reserves including reserve replacement performance was 30.% which resulted in 63% of this element of the award vesting; and The threshold EPS target was not met and so this element of the award lapsed. The performance outcome resulted in a total of 39% of the award vesting. Further details of the performance metrics and outcomes for 207 in relation to the annual bonus, RSS and CIP are set out on pages 240 to 249 of this annual report. In 207, the remuneration committee continued to exercise oversight of remuneration of staff below the board and received information on pay structures at all levels within the company. Other remuneration decisions in relation to 208 For the year commencing January 208, the remuneration committee has agreed to increase the CEO s base salary and the CFO s base salary by 3%, slightly below the average increase for the company s employees at management levels and in line with the broader market. Remuneration policy and principles As in previous years, the board continues to maintain a one year remuneration policy period which it believes provides shareholders with greater transparency and allows for less discretion. As Randgold is incorporated in Jersey, Channel Islands, voting on the directors remuneration policy and on the directors remuneration report (as set out on pages 232 to 239 and 240 to 255 respectively) will be advisory and the remuneration policy will become effective from 8 May 208. AGM resolutions At the 208 AGM shareholders will be asked to vote on the following resolutions: Approval of the 208 long term incentive plan; Approval of the annual report on remuneration; and Approval of the policy report. The 208 remuneration policy at a glance Summary of proposed changes No changes are being made to the policy in respect of the following elements: Base salary Benefits Pension (there is no employer pension provision) Recruitment and leaver provisions Proposed changes: Remove the co-investment plan Reduce overall incentive plan quantum (by 00% of salary for the CEO, and 50% of salary for the CFO) Increase the proportion of annual bonus to be deferred and extend the term Increase the shareholding guidelines (CEO: from 4x to 6x salary, CFO: from 2x to 3x salary) OVERVIEW OF CHANGE TO POLICY STRUCTURE AND QUANTUM MAXIMUM (AS A % OF SALARY) CEO CFO Current Proposed Current Proposed Cash bonus 200% 50% 33% 90% Deferred bonus 00% 50% 66% 90% CIP 250% n/a 25% n/a RSS / LTIP 200% 350% 00% 95% Total maximum 750% 650% 425% 375% Total difference -00% -50% 228

4 Overview of change to time frames Increase to bonus deferral period from 3 to an average of 3.5 years (50% vesting after 3 years, 50% vesting after 4 years) Increase to overall LTIP time horizon YEAR YEAR 2 YEAR 3 YEAR 4 YEAR 5 DEFERRED BONUS 3 YEARS CURRENT POLICY CIP 3 YEARS YEAR RSS 4 YEARS YEAR PROPOSED POLICY DEFERRED BONUS 50% 3 YEARS 50% 4 YEARS LTIP 3 YEARS 2 YEARS DEFERRAL PERIOD PERFORMANCE PERIOD HOLDING PERIOD Remuneration principles and philosophy The company s executive remuneration principles provide the underlying standards upon which the remuneration policies and goals are based. The remuneration principles are applied across the group and are reviewed annually by the remuneration committee. Randgold s business strategy for success is consistent, sustainable and long established, as is the people strategy and the remuneration principles that have been developed to support its business and preserve its corporate culture. Randgold is a mining company focused on Africa which grows value through discovery and development. Randgold seeks to create value for all stakeholders, including its host countries and local communities where the company operates. Randgold operates in a variety of markets and jurisdictions. In formulating its principles, the regulatory requirements of Jersey, the United Kingdom and the United States have been taken into account and the company has followed international best practice and good corporate governance. 229

5 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED REMUNERATION PRINCIPLES Principle Aligned to the long term strategy of the business and the interests of stakeholders Weighted towards performance related pay Structured to recruit and retain the right people in the right parts of the business Presence in remuneration policy Building sustainable long term value for shareholders and other stakeholders is the key objective. Accordingly, a significant proportion of our remuneration is aligned to the long term success of the company through both shares and performance-related awards. To support the alignment with shareholders and preserve the corporate culture of the company, management is encouraged to invest in and hold shares in the company. Randgold s strategy of delivering value through its partnerships with other companies (international and local), governments and the people of Randgold s host countries is clear and this flows through to Randgold s performance in terms of its KPIs which are reflected in the performance metrics under our incentive plans. Remuneration arrangements are aligned with Randgold s approach to sustainability and business risk management which takes into account the company s environmental, social and governance responsibilities, as can be seen in the metrics used in the annual bonus scheme. Randgold rewards high performance when it is consistently delivered, and consequently value to Randgold s shareholders and other stakeholders is seen as increasing from an individual s contribution. Our culture is to deliver value for shareholders. We reduce long term fixed elements of pay and as such there are no company-funded pension plans offered by the company and, while we provide access to a company-facilitated medical insurance policy, the company does not fund the contributions. A significant proportion of total remuneration varies with performance, aligning the executive directors interests with the interests of the company s shareholders and other stakeholders. A high level of performance, measured with reference to predetermined objective criteria, will be rewarded with higher levels of remuneration. The use of stretching performance measures and key performance indicators are key to benchmark performance. Randgold s belief is that a key part of our value creation strategy is ensuring the company has the right people in the right places to deliver this value with the appropriate balance and alignment between the interests of shareholders and an attractive and appropriate reward package for its people. Randgold s employees are highly motivated and have the energy and tenacity to achieve and succeed in delivering Randgold s long term vision. Randgold believes in rewarding for delivering value, showing flexibility and mobility, as well as demonstrating a proactive entrepreneurial approach. Competitive total remuneration is used to attract and retain high-calibre talent, who have the personal attributes, skills and experience necessary to deliver the company s strategy in the environment within which it operates. Randgold operates in the international gold mining industry. Reward packages need to be commensurate with its comparator groups to attract and retain high calibre people with exceptional industry ability in mining and experience in Africa. As well as being appropriately reflective of the industry, Randgold s pay philosophy is to ensure that its culture and principles are maintained. 230

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7 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED DIRECTORS REMUNERATION POLICY As the company is incorporated in Jersey, the approval of the policy will be on an advisory rather than on a binding basis. In line with the company s commitment to follow international best practice and good corporate governance, it is the board s intention to operate in line with the remuneration policy. Our new proposed remuneration policy is set out below. Please refer to our 206 annual report for our previous remuneration policy. Remuneration structure summary For 208, the remuneration of the executive directors will comprise the following: Base salary; Annual bonus with mandatory deferral of 50% into shares, half to vest after three years and half to vest after four years; and A long term incentive plan (LTIP) rewarding operational and relative outperformance over three years with a further two year post-vesting holding period. REMUNERATION POLICY Purpose Overall To ensure that the company s executive remuneration policy encourages, reinforces and rewards the delivery of sustainable shareholder value. To ensure that pay arrangements are fully aligned with the company s approach to risk management and take into account its obligations in respect of environmental, social and governance policies. Base salary Competitive base salaries to attract and retain high calibre executives. Base salaries reflect the individual s skills, experience and role. Base salary is the only material element of fixed remuneration. Operation The remuneration committee reviews the structure of the executive directors remuneration arrangements every year. Total remuneration and each element of remuneration is benchmarked periodically against a comparator group of FTSE 00, FTSE mining and comparable international gold mining companies. Base pay levels are reviewed annually by the remuneration committee (usually with effect from January each year), taking account of company performance, individual performance, changes in responsibility and levels of increase for the broader employee population. Reference is also made to pay levels within FTSE 00, FTSE mining and comparable international gold mining companies. The remuneration committee considers the impact of any base salary increase on the total remuneration package. Maximum opportunity/ performance metrics/ changes Maximum opportunity levels for individual pay elements are set out below. Page 236 of this annual report sets out the total opportunity levels for executive directors in different performance scenarios. The CEO and the CFO are each required to retain and maintain from their vested shares a number of shares in the company equal in value to six times base salary for the CEO and three times base salary for the CFO (previously four times and two times respectively). The CEO s base salary was increased from $ to $ with effect from January 208 representing an increase of 3%, which is slightly below the average increase for employees at management levels and in line with the broader market. The CFO s base salary was increased from to with effect from January 208 representing an increase of 3%, which is slightly below the average increase for employees at management levels and in line with the broader market. Base salary increases are normally in line with increases across the wider group. In exceptional circumstances, the remuneration committee reserves the right to make larger increases. 232

8 REMUNERATION POLICY CONTINUED Purpose Operation Maximum opportunity/ performance metrics/ changes Annual cash and deferred bonus Designed to encourage and reward superior performance against a range of stretching performance metrics on an annual basis. Deferral of annual bonus encourages executive share ownership and provides longer term alignment with shareholder interests. Target and maximum annual incentives are determined as a percentage of base salary. 50% of the annual bonus is paid in cash following the year end to which performance relates. 50% of the annual bonus is compulsorily deferred into shares for three years. Subject to malus provision to allow reduced payment at the discretion of the remuneration committee. Subject to clawback for a three year period from the date of payment. The circumstances under which the remuneration committee may effect malus or clawback include an assessment of the overall performance of the company (even if the specific targets have been achieved) and a misstatement of financial results. The annual bonus payable to the CEO for achieving target performance is 50% of base salary. The maximum bonus payable to the CEO for achieving outperformance is 300% of base salary. The annual bonus payable to the CFO for achieving target performance is 90% of base salary. The maximum bonus payable to the CFO for achieving outperformance is 80% of base salary. The annual bonus pays out from 0% for achievement of threshold performance. The performance metrics used to determine the annual bonus cover the same categories for both the executive directors, weighted as follows: Financial measures (25%). Group operational/ financial performance targets (25%). Role specific individual targets (25%). Health & safety and environment targets (25%). Change to policy for 208 Increase to compulsory bonus deferral from /3 to /2 of bonus. Maximum bonus for the CEO unchanged at 300% and maximum bonus for the CFO to be reduced from 200% to 80% of salary (and from 00% to 90% at target). Reduced weighting of role specific individual targets from 30% to 25%, increased weighting of safety and environment targets from 20% to 25%. 233

9 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED REMUNERATION POLICY CONTINUED Purpose Operation Maximum opportunity/ performance metrics/ changes Long Term Incentive Plan (LTIP) (previously CIP and RSS) Rewards sustainable long term performance. Focus on operational and financial performance measures and rewards absolute delivery of key strategic imperatives to build the company for the future. Awards of shares are made annually under the LTIP, determined as a percentage of base salary. Awards vest after three years subject to the achievement of stretching operational and financial targets. Vested awards are subject to a two year holding period. Awards are subject to malus provision to allow reduced vesting at the absolute discretion of the remuneration committee. Awards are subject to clawback for a three year period from the date of vesting at the absolute discretion of the remuneration committee. The circumstances under which the remuneration committee may effect malus or clawback as above include, but are not limited to, misstatement of financial results, an error in the assessment of performance against targets which lead to a higher level of vesting than would have been the case, or circumstances which would have warrented the summary dismissal of the participant. The maximum award for the CEO is 350% of salary. The maximum award for the CFO is 95% of salary. Awards may be made up to 400% of salary in exceptional circumstances, as determined by the remuneration committee. 25% of the award vests for achievement of threshold performance. Three separate measures of business growth, each weighted one third: Reserve replacement calculated with reference to the number of shares in issue. Relative TSR vs the Euromoney Global Gold Index. Total cash cost per oz. Change to policy for 208 (from CIP/RSS to LTIP) Overall LTI maximum reduced by 00% of salary (450% to 350%) for the CEO and by 30% of salary (225% to 95%) for the CFO. Vesting level for threshold performance reduced from 30% to 25% of the award. Time horizon rebalanced from a 4 + year period (performance and holding, respectively) to a year period. Reserve replacement calculated with reference to the number of shares in issue at the beginning and end of the performance period, which will exclude shares issued under the company s remuneration schemes. Change to relative TSR calculation performance for Randgold and comparator index to be assessed based on annual TSR growth rather than compound annual TSR growth. 234

10 REMUNERATION POLICY CONTINUED Purpose Pension No employer provided pensions. Funded entirely by the executive directors from their base salary. Other benefits Main benefits funded from base salary by executive directors. Operation Executive directors can elect to allocate up to 20% of their base salary to contribute to a defined contribution fund. The company does not make any further contributions to the fund. Executive directors can elect to participate in a medical aid scheme funded out of the executive s base salary. Where appropriate, executive directors may be provided with benefits while travelling for work. Life assurance cover is provided by the company through the group life assurance scheme which also provides cover for the company s senior management. The remuneration committee retains the discretion to amend or add to the current benefits offering. Maximum opportunity/ performance metrics/ changes Not applicable. Set at a level that the remuneration committee determines for the executive director to carry out their role. Payments outside the current policy Payments or share awards agreed to by the remuneration committee, granted under the previous policy or prior to the previous policy being approved, will continue to operate in line with the agreed terms. Details of outstanding share plan awards are set out in the annual report on remuneration. Outstanding payments or incentive awards that were agreed to prior to an executive director joining the board will continue to operate in line with the agreed terms. Selection of performance measures and setting of targets Performance measures are set by the remuneration committee on the basis of their alignment to the remuneration principles and the company s strategy, and to ensure the measures remain fundamental to the management of the business. Measures are reviewed annually by the remuneration committee, taking into account business performance and key priorities. Annual bonus The performance metrics for the annual bonus are set annually by the remuneration committee and are based on business priorities and strategic objectives, including financial, personal and operational measures and those relating to safety and environment. Annual bonus targets and achievement against those targets are disclosed in the annual report on remuneration for the following year. Long Term Incentive Plan The performance metrics for the long term incentive plan have been set by the remuneration committee on the basis that they are among the company s key performance indicators and drive shareholder value. The remuneration committee further believes that the performance necessary for awards to vest towards the upper end of the performance ranges is stretching. They should not, therefore, be interpreted as providing guidance on the company s expected performance over the relevant periods. For 208, the following three measures will be applied, each weighted one third: Reserve replacement calculated with reference to the number of shares in issue; Total cash cost per ounce; and Relative TSR (versus a recognised benchmark gold index). These measures provide an equal balance between sustainability, profitability and relative shareholder returns, taking into account economic conditions and gold price fluctuations. Awards vest on a straight-line sliding scale for performance between the minimum and maximum performance range for the relevant performance metric. 235

11 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED The remuneration committee will review the performance metrics of the LTIP in the event that the company issues a material number of shares. Performance targets are disclosed in advance annually. Indicative total opportunity levels for 208 As a result of the company s remuneration policy, a significant proportion of the rewards available to the executive directors is dependent on the performance of the company. The following tables illustrate how the total pay opportunities for the CEO and the CFO vary in three different performance scenarios: maximum, target and minimum. These charts are indicative only as share price movements and dividend accrual have been excluded. The tables are based on the following assumptions: Fixed elements are comprised solely of base salary; Target performance consists of base salary and incentive awards at 50% of maximum; and Maximum performance consists of base salary and incentive awards at 00% of maximum. INDICATIVE TOTAL OPPORTUNITY LEVELS FOR 208 CEO Maximum 3% 20% 20% 47% $ Target 23% 8% 8% 4% $ Minimum 00% $ $0 $ $ $ $ Fixed elements Long term variable elements Annual variable element (cash) Annual variable element (deferred shares) CFO Maximum 2% 9% 9% 4% Target Minimum 34% 6% 6% 34% % Fixed elements Long term variable elements Annual variable element (cash) Annual variable element (deferred shares) 236

12 EXECUTIVE DIRECTOR SERVICE AGREEMENTS AND LEAVER PROVISIONS Notice periods Termination payments Incentive schemes Executive director service contracts are terminable upon six months notice from Randgold or from the executive director. The executive directors service agreements are available for inspection at the company s registered office and at each annual general meeting of the company. The employment relationship can be ended immediately by the company making a payment in lieu of notice, equivalent to the base salary payable for the notice period. The executive directors duty to mitigate will be taken into account on termination. Any pension benefit due from contributions made by the executive directors to the company s provident fund will be paid out on termination or at such other time as the executive director chooses. The company does not contribute to the provident fund. Annual bonus plan Where a participant ceases employment as a good leaver or there is a change of control event, a participant will be entitled to an award based on the extent to which the performance conditions have been satisfied and pro-rated to reflect the shortened performance period. Long term incentive plan Where the participant is a good leaver or there is a change of control event, a participant will be entitled to an award based on the extent to which the relevant performance conditions have been satisfied and pro-rated to reflect the shortened performance period. Where a participant leaves under any other circumstance the remuneration committee may at its discretion allow the awards to vest, based on the extent to which the relevant performance conditions have been satisfied and pro-rated to reflect the shortened performance period. Unless the remuneration committee so permits, the awards will lapse immediately. In determining the exercise of discretion under the incentive plans, consideration will be given to the applicable contractual provisions, the circumstances under which an executive director leaves and the executive director s performance. Whether a payment is made is at the discretion of the remuneration committee. EXECUTIVE DIRECTOR RECRUITMENT POLICY General policy The company will not offer more than is necessary to attract and retain executive directors of the right calibre and experience. The remuneration policy for new executive directors will comprise of the elements within the approved remuneration policy, including base salary, benefits, pension (employee contributions only) annual and deferred bonus and LTIP. In addition, buy-out awards and expenses may be paid (see below). Base salaries Base salaries will be set based on the experience and skills of the individual, and taking into account their current remuneration arrangements. Buy-out awards For external appointments, the remuneration committee may offer additional cash/ share-based elements to replace share awards or cash forfeited by the executive director upon leaving their previous employment, where it is considered to be in the best interests of the company (and therefore shareholders). Such payments would take account of remuneration forfeited when leaving the former employer and would take into account the nature of the forfeited payment, including the time horizons and types of performance requirements attaching to that remuneration. Full details of any such payments would be announced to shareholders upon appointment. Internal promotions For appointment of an internal candidate, any variable pay element awarded in respect of the prior role may be allowed to pay out according to its terms, adjusted as relevant to take account of appointment. In addition, any ongoing remuneration arrangements existing before appointment may continue in place (including those that are inconsistent with the policy outlined above) provided that they are put to shareholders for approval at the earliest opportunity. Benefits and expenses For both external and internal appointments, the remuneration committee may agree that the company will meet certain relocation expenses as appropriate. The remuneration committee may agree to the provision of additional benefits to the extent they are considered necessary and appropriate. Incentive awards Incentive awards would be made under the annual bonus and/or LTIP in line with the approved policy. The maximum value of awards on recruitment is determined by reference to the policy in relation to each element of pay. 237

13 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED NON-EXECUTIVE DIRECTOR POLICY Purpose Chairman s fees To attract and retain a high calibre chairman by offering a market competitive fee. The company s policy on the chairman s fees takes into account the need to attract and retain an individual of the right calibre and experience, their responsibilities and time commitment. Non-executive directors fees Letters of appointment To attract and retain a high calibre non-executive director by offering market competitive fees. The company s policy on the non-executive directors fees takes into account the need to attract and retain individuals of the right calibre and experience, their responsibilities and time commitment. Operation The decisions on the chairman s fees are made by the remuneration committee in consultation with the CEO. The chairman is paid an annual retainer fee, a chairman fee and receives an annual award of shares which is fully vested upon grant. The shares are seen as an important element of the company s approach to remuneration policy in relation to the chairman. They encourage share ownership and are provided in lieu of cash. The chairman s fees are periodically reviewed by the remuneration committee in consultation with the CEO. The decisions on the non-executive directors fees are the responsibility of the board, taking into account the fundamental principle of corporate governance that no individual is involved in the determination of their own remuneration. The chairman, the CEO and the CFO make the decisions on the nonexecutive directors fees. The chairmen of the board committees and the senior independent director are paid an additional fee to reflect their extra responsibilities. The non-executives are paid an annual retainer fee, a committee membership fee, and subject to shareholder approval, receive an annual award of shares which is fully vested upon grant. The shares are seen as an important element of the company s approach to remuneration policy in relation to non-executive directors. They encourage share ownership and are provided in lieu of cash. Non-executive directors fees are reviewed periodically by the chairman and executive directors. Maximum opportunity/ performance metrics/ changes The chairman receives a retainer fee of $60 000pa. The chairman also receives the chairman fee of $ pa (which is inclusive of committee membership fees but exclusive of the committee chairman fee). The chairman, subject to shareholder approval, will receive an annual award of shares. The chairman is required to retain and maintain from his vested shares a number of shares in the company at least equal in value (as at the beginning of the financial year) to an amount equivalent to 200% of the annual retainer fee. Each non-executive director receives a retainer fee of $60 000pa. Each non-executive director, subject to shareholder approval, will receive an annual award of 500 shares (2 000 for the senior independent director and for the chairman). Non-executive directors are required to retain and maintain from their vested shares a number of shares in the company at least equal in value (as at the beginning of the financial year) to an amount equivalent to 200% of the annual retainer fee. The senior independent director receives a fee of $85 000pa. This fee is payable in addition to other committee fees. Each committee chairman receives an additional fee of $20 000pa. Each member of a board committee (excluding the chairman of the board) receives the following fee: Audit: $35 000pa Remuneration: $25 000pa Governance & nomination: $0 000pa. Non-executive directors letters of appointment will be clear, transparent, and will be drafted by reference to best practice. Where governance principles vary or conflict across relevant jurisdictions, the board will adopt what it considers to be the appropriate standards. The non-executive directors letters of appointment are available for inspection at the company s registered office and at each annual general meeting of the company. 238

14 Considerations in developing policy Given the geographic spread of the company s workforce, the remuneration committee does not consider that consulting directly with employees on the remuneration policy for executive directors is the most appropriate use of resources, although executive directors pay is carefully considered in the context of pay and conditions across the company as a whole. The remuneration committee has oversight of remuneration policies for senior management below the board, and applies the principles of transparency, clarity and alignment of reward with performance. Management below board level has participated in the company s existing restricted share scheme since 2009 (with different performance measures to the executive directors). Members of the executive committee have also been given the opportunity to participate in a co-investment plan (similar to the one in which the executive directors have participated). As these schemes are due to be replaced by the new LTIP, subject to shareholder approval at the company s 208 AGM, the company proposes to introduce a new remuneration scheme for management below board level in 208. The scheme for the management below board level will utilise the new LTIP rules and will have performance measures that are a combination of individual strategic objectives and some of the metrics for the CEO and the CFO under their annual bonus scheme and the new LTIP. Vesting of awards under the existing restricted share scheme and the co-investment plan will continue annually in accordance with the terms of the existing awards, however no new grant of awards under these schemes will be made in 208 or thereafter. Consideration of shareholder views in developing policy As in previous years, the remuneration committee has engaged extensively during the year with its institutional shareholders and the voting guidance services on remuneration. The remuneration committee acknowledges the views of the company s shareholders and has taken account of their opinions in formulating the remuneration principles, the remuneration policy and this remuneration report. Underground manager Mohamed Cisse shows Randgold board members around the Gara underground mine. 239

15 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED ANNUAL REPORT ON REMUNERATION SUMMARY OF REMUNERATION POLICY OPERATION FOR 207 Base salary CEO: $ CFO: % increase Annual bonus CEO: 300% of salary CFO: 200% of salary (50% of maximum at target) 25% Financial 25% Operational/financial 30% Strategic 20% Safety & environment 33% deferred for 3 years 207 bonus payouts were 60% and 72% of maximum Coinvestment plan CEO: 250% of salary CFO: 25% of salary (30% of maximum at threshold) 00% Relative TSR vs the Euromoney Global Gold Index 3 year performance period + year holding period 205 award vested at 58% of maximum Restricted share plan CEO: 200% of salary CFO: 00% of salary (30% of maximum at threshold) /3 Additional reserves including reserve replacement /3 Relative TSR vs peer group /3 Total cash cost per oz 4 year performance period + year holding period 3rd tranche of the 203 award lapsed and 204 award vested at 39% Executive directors remuneration single figure table The figures contained in the single figure table below reflect the base salary and annual bonuses actually paid during the period and the value of awards that vested under the restricted share scheme and the co-investment plan where the performance period ended in the year under review (with such value determined by reference to the market price of the vested award shares on the relevant vesting date, in accordance with the United Kingdom s Large and Medium-Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 203 (the UK Regulations)). Where a share award or part of a share award has vested on or after January 207, but in respect of a performance period ended on 3 December 206, it has been included in the 206 figure and where a share award has vested on or after January 208, but in respect of a performance period ended on 3 December 207, it has been included in the 207 figure. EXECUTIVE DIRECTORS REMUNERATION SINGLE FIGURE Director ($) Year Total salary Benefits Pension Total fixed LTI award Total variable pay Bonus value pay DM Bristow n/a n/a n/a n/a GP Shuttleworth n/a n/a n/a n/a For details of the portion of bonus deferred and performance measures met, see pages 24 to 244 of this annual report. 2 Mr GP Shuttleworth s salary was paid in pounds but converted to dollars at the average rate for the year of : Mr GP Shuttleworth s bonus will be paid in pounds in March 208 but has been converted to dollars at the rate of :.36. Total EXECUTIVE DIRECTORS REMUNERATION ACCOUNTING CHARGE Director ($) Base salary Annual bonus Other payments 4 Total DM Bristow GP Shuttleworth Total For details of the portion of bonus deferred and performance measures met, see pages 24 to 244 of this annual report. 2 Mr GP Shuttleworth s salary was paid in pounds but converted to dollars at the average rate for the year of : Mr GP Shuttleworth s bonus will be paid in pounds in March 208 but has been converted to dollars at the rate of : Other payments include expenses for restricted share awards, performance share awards and co-investment plan awards which are costed in accordance with IFRS 2, based on the valuation at the date of grant rather than the value of the awards that vested in the year. Vesting is subject to a number of vesting conditions which may or may not be achieved. 240

16 Base salary The CEO s and the CFO s base salaries are determined by the remuneration committee, taking into account the performance of the individual. The company also benchmarks each element of remuneration and the total remuneration package in comparison to FTSE 00, FTSE mining and comparable international gold mining companies. When setting base salaries, the remuneration committee also takes into consideration the requirement for extensive travel and time spent at the company s operations, which is considered key to the effective management of the company s business. At 3 December 207, the annual base salaries of the executive directors were as follows: CEO: Dr DM Bristow $ CFO: Mr GP Shuttleworth During the year, the remuneration committee was provided with information detailing salaries of the broader employee population. The remuneration committee reviewed the information on the employees salaries and any increases made are also taken into account when considering the base salary increases for the CEO and the CFO. The increases for the employees took effect in October 207 and ranged from 2.% to 5.9%. The average increase in employee salaries was approximately 3.4%. Retirement benefits No retirement benefits were provided to the executive directors during 207. Executive directors can elect to sacrifice up to 20% of their base salary to contribute to a defined contribution fund. The defined contribution fund is also offered to senior management. The company does not make any contribution to the defined contribution fund. Other benefits No other benefits were provided to the executive directors during 207. Executive directors can elect to receive other benefits, including medical aid, funded out of their base salary. Where appropriate, executive directors may be provided with benefits while travelling for work and the cost of membership of professional associations. Life assurance cover is provided to the executive directors by the company through the group life assurance scheme and is also made available to senior management. 207 annual bonus The 207 annual bonus paid out at 60% of maximum for the CEO and at 72% of maximum for the CFO. The tables below set out an overview of the performance measures, weightings and targets, and each executive director s achievement of those targets. CEO Weightings Measures Threshold 0% Target 50% Maximum 300% Achievement for 207 % achievement of measure Bonus amount awarded Financial (25%) Operational (25%) EPS growth $2.64 $2.90 $3.6 $ % $ Total cash cost per ounce of gold $640 $605 $570 $620 29% $86 88 Growth in reserves (2%) 0% 2% (4.5%) 0% $0 Production of gold ounces.20moz.275moz.35moz.32moz 77% $50 77 Safety (0%) LTIFR % $0 Environment Class incidents % $ (0%) Class 2 incidents % $ Strategic (30%) Individual strategic outputs 70% 80% 90% 94.4% 00% $ Total bonus 0% 300% 60% $ The LTIFR for the year was 0.5, however, as a contractor suffered a fatal accident during the year, the rate has been adjusted to result in a 0% achievement for this measure. 24

17 DIVIDER NAME SECTION HEADING CONTINUED CFO Weightings Measures Financial (25%) EPS growth $2.64 $2.90 $3.6 $ % Total cash cost per ounce of gold $640 $605 $570 $620 29% $38.6m $303.4m $303.96m 98% $02.8m $97.9m $94. 00% Capital expenditure compared to Operational approved budget $333.7m (25%) Inventory reductions $07.7m Target 00% % Bonus Maximum Achievement achievement amount 200% for 207 of measure awarded Threshold 0% Safety (0%) LTIFR % 0 Environment Class incidents (0%) Class 2 incidents % % % 87.9% 90% % Strategic (30%) Individual strategic outputs 0% Total bonus 70% 80% 200% The LTIFR for the year was 0.5, however, as a contractor suffered a fatal accident during the year, the rate has been adjusted to result in a 0% achievement for this measure. Individual strategic objectives Each of the executive directors and the senior management team below board level typically have individual strategic objectives for the year. These individual objectives are assessed at the end of the year as part of a process of 360 degree feedback. The individual objectives are directly related to the key business objectives. Consequently their achievement is an appropriate measure of performance and is complementary to the various financial metrics included in the annual bonus calculation. Individual objectives for the CEO, the CFO and senior management are determined through the company s annual strategic planning process. Senior management identifies the key objectives and deliverables the company needs to achieve for the business to be successful as a whole. The process includes a combination of scenario planning, SWOT analysis and other strategic discussions. The company s key business objectives are then allocated to the appropriate members of senior management responsible for their delivery, including the CEO and the CFO, as their individual strategic objectives. These individual objectives are then reviewed with the teams and business units throughout the group, to ensure that the key business objectives and the overall strategy of the group are clearly articulated and understood throughout the organisation. The tables on the following pages set out details as to how the CEO and the CFO performed against their individual strategic objectives for 207. The individual strategic objectives have been grouped into broad categories and further sub-divided into more detailed measures, and weighted according to the number of specific individual objectives that fall within each measure. The results reflect the number of individual objectives successfully achieved. The individual objectives are mostly specific and where not disclosed on pages 243 and 244 are considered to be commercially sensitive, including corporate activity such as a discussion with a potential merger or acquisition target. However, the remuneration committee believes that the broad categories and measures highlighted on pages 243 and 244 provide a summary of the areas that are the focus of the individual objectives. 242

18 CEO ACHIEVEMENT OF STRATEGIC OUTPUTS FOR 207 Building and maintaining relationships with key partners and stakeholders Measures Internal relations and development programmes Develop and drive innovation and technical excellence group initiative. Conference monthly with the company s chairman. Objectives Chair the ESG group review committee and report to the board quarterly. Drive and develop employee engagement to an even higher level (In-Reach programme). Arrange and chair quarterly face to face meetings with executive committee. Weighted outcome % 22.2% out of 22.2% Investor relations Host governments and business and local partnerships communities Bi-annual global Hold mass roadshow meetings with investors on every and ensure operation. 80% coverage Host at least of existing shareholders. one press day in every country in Meet with chief which we have de village an operation and other or advanced local business project. partners. Meet with Meet and mining review existing ministers and partner government relationships representatives (supply chain, of key mining mining, etc) jurisdictions. and engage Engage with in meeting potential new national and partners. local authorities to develop sustainable solutions to illegal mining around the mine sites..% out of.% 20.4% out of 22.2% Strategic improvements Key projects Implementing Developing strategic decisions Participation in key specific aspects of or key operational projects, including the business improvements site visits Participate in Present Visit and review mine, capital company all group projects and strategy to the exploration exploration board and projects reviews. strategic obtain signoff. plans on all Meet and visit Deliver on operations. all open cast 207 business operations with Meet with JV plans with the chairman partner CEOs at on guidance of our opencast least twice per (production; mining JV year. total cash partner. cost/oz). Meet and Review Kibali explore opportunities underground for value owner miner combinations/ strategy. partnerships Remain with specific CEOs of engaged other mining with mining companies. code issues in Senegal, Mali and DRC and Hold formal review quarterly. new business Complete and meetings with management commission team quarterly. Kibali shaft and underground mine. 8.5% out of 8.5% 4.8% out of 8.6% 7.4% out of 7.4% 243

19 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED CFO ACHIEVEMENT OF STRATEGIC OUTPUTS FOR 207 Measures Objectives Weighted outcome % Communication and reporting obligations and functional objectives Internal communications Participate in strategy through sharing market knowledge/data and manage interface with investment banks and new business group. Meet mining and finance ministers and government representatives in key mining jurisdictions. Develop succession plans for finance department and identify training needs. 6.9% out of 0.3% Risk management, controls and reporting requirements Present updated Corporate risk assessment to the board. Prepare and obtain board approval for annual group budget. Sign off Annual Report and Accounts and File form 20-F by 30 March. Ensure unqualified audit report. Sign off quarterly reports as per agreed timetable. Implement business assurance plan as approved by board. 7.3% out of 7.3% Key functional objectives Reduce interim audit findings. Review and highlight any deviations from the capital plan. Successfully manage tax disputes in Mali. Reduce outstanding VAT balance at Kibali and Loulo. Reduce existing group stock holding to ensure total stock remains flat including the new project additions. Manage cash costs within $580/oz - $630/oz. Successfully replace revolving credit facility with new facility on similarly favourable terms. 24.% out of 3% Strategic and process / IT improvements Strategic improvements or initiatives Set up and lead workshops for finance/supply chain/legal/ IT and other functions. Review group insurance levels and present company to global insurers. Educate mine level finance teams to understand and identify required new controls. 0.3% out of 0.3% Process and IT improvements Ensure 80% of IT projects successfully completed. Ensure satellite facilities at mines, exploration sites and corporate are upgraded to enhance communication. Review group network structure including a review of service providers. Successfully implement new group HR software system. 5.5% out of 7.3% Key projects Participation in key projects Design, develop and implement new remuneration policy and schemes. Review, design and develop new layout of directors remuneration report. Ensure all material contracts are reviewed and signed off by group legal and commercial heads in line with revised authorisation matrix. Manage mining code review in Mali and Senegal and ensure active engagement from the group. 3.8% out of 3.8% The remuneration committee has the ability to exercise its discretion in respect of the annual bonus calculation, however, in respect of the year under review it did not do so and relied solely on the application of the performance metrics. 207 deferred annual bonus One third of the annual bonus earned is compulsorily deferred. This amount is used to acquire shares that are held for a period of three years. The annual bonus amounts that were deferred for 207 are $ for the CEO and $ for the CFO. Amounts awarded under the annual bonus plan are subject to clawback in the event of a material misstatement of the company s annual report and accounts on which they were based. Long term incentive outcomes for 207 Restricted share scheme outcome The vesting of the restricted share scheme awards granted in 203 for the CEO and the CFO, were subject to the achievement of operational and financial targets. Four separate measures of business growth were used, each weighted 25%, with tranches of awards vesting after three, four and five years as follows: Additional reserves including reserve replacement Absolute reserves excluding reserve replacement EPS growth Absolute TSR 244

20 None of the performance conditions for the final tranche of the 203 award were met during the year and therefore this tranche of the award lapsed. The vesting of the restricted share scheme awards granted in 204 for the CEO and the CFO, were subject to the achievement of operational and financial targets. Three separate measures of business growth were used, each weighted /3, with tranches of awards vesting after four years (with an additional year holding period) as follows: Additional reserves including reserve replacement EPS growth Absolute TSR The performance targets for the 204 restricted share scheme were partially met: TSR growth over the performance period was 9% p.a. resulting in 55% of this element of the award vesting; Additional reserves including reserve replacement performance was 30.% which resulted in 63% of this element of the award vesting; and The threshold EPS target was not met and so this element of the award lapsed. The performance outcome resulted in a total of 39% of the award vesting, representing a value of $ and $ for the CEO and the CFO, at a closing share price on 29 December 207 of $ Co-investment plan outcome The vesting of the co-investment plan awards granted in 205 to the CEO and the CFO were subject to a performance condition which measures the company s Total Shareholder Return (TSR) performance against the Euromoney Global Gold Index TSR performance (see table on page 246 for performance targets). The company s annualised TSR performance exceeded the index TSR performance by 4.6% compound per year and as a result the performance condition was only partially met. Accordingly 58% of the awards vested, representing a value of $ and $ for the CEO and the CFO respectively, at a closing share price on 29 December 207 of $ CEO Performance shares outcome At the company s annual general meeting in 203, shareholders approved a one-off award of performance shares to the CEO. The vesting of the performance shares was subject to the achievement of the following conditions and the CEO continuing to hold office or employment with the company during the period of three years from 29 April 203, being the date of grant of the award. The conditions to which vesting of the award was subject were designed to reflect the value enhancement and focus on the establishment and operation of the Kibali gold mine. Satisfaction of each condition would result in the vesting of one-fifth of the shares subject to the award. At 3 December 206, four out of five of the performance conditions had been met and the CEO completed the minimum service period applicable to the award: The first gold pour occurs at the Kibali gold mine; The cumulative production at the Kibali gold mine in aggregate equals or exceeds oz of gold; Gold production of the Randgold group in aggregate equals or exceeds Moz per annum, for any financial year of the company; and The Nzoro II hydroelectric power station provides electricity to the Kibali gold mine. As a result a total of shares were transferred from the employee share trust to Dr Mark Bristow s nominee on 29 April 206. The final performance condition was met in January 208 and the release of the final tranche of the award was approved by the board in February 208: The vertical shaft at the Kibali gold mine is completed and signed-off by the contractor of the vertical shaft and by the representative of the Kibali gold mine. As a result, a total of shares will be transferred from the employee share trust to Dr Mark Bristow s nominee in March 208. The shares are restricted from dealing and will only be released when the CEO leaves the service of the company. In the interim Dr Bristow will be entitled to vote the shares (on direction to the nominee) and will be entitled to receive any dividends accrued on those shares at the time the shares are released. 245

21 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED The award is subject to clawback (up to a maximum value of $ ) at the discretion of the remuneration committee where a material misstatement is found contained in the annual report and accounts of the company on which vesting of the award (or any part thereof) was based. Long term incentive award grants in 207 Summary of award grants in 207 The table below sets out a summary of the award grants made in 207. Further details in relation to the performance measures and targets attached to these awards are set out below. Plan/director CIP DM Bristow GP Shuttleworth RSS DM Bristow GP Shuttleworth Type of award Face value ($) Conditional shares $ Conditional shares $ Conditional shares $ Conditional shares $ % vesting for threshold performance 30% 30% Summary of performance measures 00% Relative TSR performance /3 Reserve replacement ratio /3 Total cash cost per oz /3 Relative TSR performance Performance period January December 209 (with one year post-vesting holding requirement) January December 2020 (with one year post-vesting holding requirement) NASDAQ Global Select Market closing price on day preceding date of grant or if a public holiday, the next trading day. Co-investment plan The co-investment plan rewards sustained growth in Total Shareholder Return relative to the Euromoney Global Gold Index over a three year period. Vested awards are held for a further year. The maximum level of match is 250% of salary for the CEO and 25% of salary for the CFO. The match is made on a to basis and is dependent on the executive director commiting shares purchased in the market, or from their personal shareholding, to the plan. 00% vests for maximum performance and 30% vests for threshold performance. TSR is assessed based on the compound annual growth rate (CAGR) over the period. PERFORMANCE TARGETS TSR GROWTH RELATIVE TO THE INDEX (CAGR) Compound annual growth rate Level of vesting of matching shares Below the index 0% Equal to the index 30% Index +2% 44% Index +4% 58% Index +6% 72% Index +8% 86% Index +0% or higher 00% Awards vest on a stepped basis. The performance period for awards is January 207 to 3 December

22 VALUE OF HYPOTHETICAL 00 HOLDING OF ORDINARY SHARES IN RANDGOLD COMPARED AGAINST THE FTSE 00 (3 MONTH AVERAGE AT 3 DECEMBER) Randgold Resources FTSE 00 VALUE OF HYPOTHETICAL $00 HOLDING OF AMERICAN DEPOSITORY RECEIPTS IN RANDGOLD COMPARED AGAINST THE EUROMONEY GLOBAL GOLD INDEX (AT 3 DECEMBER) Randgold Resources Euromoney Global Gold Index Restricted share scheme The restricted share scheme rewards sustained operational and financial performance over a 4 year period. Vested shares are held for a further year. Award levels for 207 were 200% of salary for the CEO and 00% of salary for the CFO. PERFORMANCE TARGETS Vesting (as a % of maximum) Performance measures 0% 30% 00% Reserve replacement ratio of reserves added compared to reserves mined (cumulative over four years) Total cash cost per oz (average of four years weighted by annual production in ounces) TSR performance relative to peers (over four years end to end) Less than 75% 75% 0 % More than high end of costs guidance range Equal to high end of costs guidance range Equal to or lower than the low end of the costs guidance range Below median Median Upper quartile 247

23 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED Vesting is on a straight line basis between threshold and maximum. The performance period for awards is January 207 to 3 December Reserve replacement ratio calculated as a ratio of the cumulative four year reserves added compared with the cumulative four year reserves mined. Total cash cost per ounce measured over four consecutive one year periods, with vesting at the end of four years. The overall vesting will be the average annual outcome against market guidance weighted by annual production in ounces. Threshold will equal the maximum cost per ounce guidance each year and maximum vesting will be at the minimum cost per ounce guidance based on the market guidance range approved by the board and communicated to the market in February each year. Relative TSR TSR is measured over the three months before the start and the three months before the end of the performance period and compared to the TSR, calculated in the same way, of a defined comparator group of international listed gold mining companies. Vesting is based on the relative TSR outcome over the four year period. The defined comparator group for 207 (subject to the remuneration committee discretion to add or amend the group from time to time) is: Agnico Eagle Mines Limited; AngloGold Ashanti Limited; Barrick Gold Corporation; Eldorado Gold Corporation; B2 Gold Corporation; Gold Fields Limited; Goldcorp Incorporated; Kinross Gold Corporation; Newcrest Mining Limited; Newmont Mining Corporation; Yamana Gold Incorporated; Buenaventura Mining Company Incorporated; and New Gold Incorporated. TSR performance and comparison to CEO remuneration This graph illustrates the company s performance against the Euromoney Global Gold Index over the past nine years. This index has been chosen as an appropriate comparator since Randgold is a constituent of this index. The table below the TSR chart sets out the remuneration for the CEO during each of the last nine financial years. VALUE OF A HYPOTHETICAL 00 INVESTMENT Randgold Resources Euromoney Global Gold Index CEO NINE YEAR TOTAL REMUNERATION Total remuneration (single figure) ($) Annual variable pay (% of maximum) 00% 00% 69% 57% 54% 6% 60% 65% 60% Long term variable pay (% of maximum) 00% 0% 00% 00% 00% 76% 6% 28% 50% Change in annual TSR 0% (5%) 6% (4%) (35%) (2%) (3%) 25% 2% Change in remuneration - (43%) 25% (28%) 36% 7% (%) (8%) 53% 248

24 Directors share awards The table below sets out a summary of executive director share interests for the year under review as at 3 December 207: Director Outstanding incentive scheme interests Total share interests Shareholding requirement for 207 (as a % of salary) Requirement met? Share awards Unvested share awards (subject to performance) Unvested share awards (without performance conditions) Vested but not exercised share awards DM Bristow % Yes GP Shuttleworth % Yes Vesting of awards was subject to performance conditions in respect of the period ended 3 December 207. Share awards are granted as conditional awards. There were no changes to share interests between 3 December 207 and 4 March 208. Implementation of policy during 208 The new remuneration policy will be implemented from the 208 AGM, as set out below. Base salary Salaries effective from January 208: CEO: $ (3% increase) CFO: (3% increase) Increases are slightly below the wider workforce. Benefits In line with remuneration policy (main benefits funded from base salary by executive directors; no employer provided pensions). Annual cash and deferred bonus Quantum and structure in line with remuneration policy. Measures and weightings for both executives for 208 are as follows: CEO Categories Financial performance 25% Operational performance 25% Strategic performance 25% Safety and environment 25% Measures Performance measures Individual weightings Threshold Target Maximum EPS Growth 208 annual 208 annual 208 annual 2.5% report report report Total cash cost per ounce 2.5% $660 $625 $ Growth in annual reserves annual annual annual 2.5% report report report Production of ounces of gold 2.5% oz oz oz Individual strategic outputs 25% 70% 80% 90% Safety (LTIFR) with zero fatalities 0% Environmental (Class incidents) 5% 0 0 Environmental (Class 2 incidents) 5% Fresh water usage/t milled 5%

25 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED CFO Categories Financial performance 25% Operational performance 25% Strategic performance 25% Safety and environment 25% Measures Performance measures Individual weightings Threshold Target Maximum EPS growth 208 annual 208 annual 208 annual 2.5% report report report Total cash cost per ounce 2.5% $660 $625 $590 Capital expenditure 2 2.5% Inventory reductions 2.5% 208 annual report 208 annual report 208 annual report 208 annual report 208 annual report 208 annual report Individual strategic outputs 25% 70% 80% 90% Safety (LTIFR) with zero fatalities 0% Environmental (Class incidents) 5% 0 0 Environmental (Class 2 incidents) 5% Fresh water usage/t milled 5% Performance measures will be disclosed in 208 annual report. 2 The capital expenditure performance ranges are based on the current approved budgets, but are subject to adjustment by the board in the event of an agreed / approved change by the board, taking into account the needs of the business and company strategy. Individual strategic outputs include: Categories Relationships with key partners and stakeholders Strategic improvements Key projects Measures Internal relations and development programmes Investor relations and business partnerships Host-governments and local communities Developing specific aspects of the business Implementing strategic decisions or key operational improvements Oversight of key projects including site visits Long Term Incentive Plan Quantum and structure in line with remuneration policy. For awards granted in 208, the following three measures and targets will apply: Total cash cost per ounce (/3) The overall vesting will be the average annual outcome against market guidance weighted by annual production in ounces. Average weighted by annual production in ounces Vesting as a % of maximum More than the higher end of costs guidance range 0% Equal to the higher end of costs guidance range 25% Equal to lower end of costs guidance range 00% Relative TSR vs the Euromoney Global Gold Index (/3) Annual TSR growth relative to the Index Vesting as a % of maximum Below the Index 0% Equal the Index 25% Index + 0% 00% Reserve replacement ratio (/3) Vesting is based on the reserve replacement ratio adjusted for dilution over the performance period (the change to the number of shares in issue over the period, excluding shares issued under remuneration schemes). Reserve replacement ratio Vesting as a % of maximum Less than 75% 0% 75% 25% 0 % 00% ¹ Straight-line vesting between performance points. 250

26 DIRECTORS SHAREHOLDINGS at 3 Dec at 3 Dec 206 Beneficial/non-beneficial DM Bristow Beneficial GP Shuttleworth Beneficial CL Coleman Beneficial S Ba-N Daw Beneficial K Dagdelen Beneficial J Kassum Beneficial O Kirtley n/a Beneficial J Mabunda Lioko Beneficial AJ Quinn Beneficial TOTAL Dr Dagdelen s shareholding as at 2 May 207, which is the date of his retirement from the board. 2 Mrs Kirtley was appointed to the board on 2 February There have been no changes in the interests of each of the current directors in the period from the end of the period under review to 4 March 208. Distribution statement The following table demonstrates the relative importance of remuneration spend, and shows year-onyear percentage change in each of () profit, (2) dividends and (3) overall spend on pay. DISTRIBUTION STATEMENT Underlying group profits $ million % change 4% 38% Dividends paid during the year (group) $ million % change 52% % Employee numbers ¹ (group) % change 4% (%) Payroll costs for employees¹ (including taxes) $ million % change 7% 8% Excludes people employed by contractors and inclusive of joint venture employees. Payments to past directors and loss of office payments There were no payments to past directors or loss of office payments in 207. Percentage change in CEO remuneration In 207, the CEO s salary was increased by 3% and his total remuneration decreased by %. This compares to an average increase in salaries across the group of approximately 3.4%. Remuneration structure of employees below the board During the year the remuneration committee reviewed and considered changes to the senior management, together with their respective remuneration packages. The remuneration committee s oversight is an integral part of the company s succession planning process. For details on succession planning of the senior management please refer to the governance & nomination committee report on pages 256 to 265 of this annual report. In November 207, the remuneration committee also reviewed the remuneration packages of the 25 most senior members of management. The remuneration policy is broadly consistent throughout the business and is designed to encourage, reinforce and reward the delivery of sustainable value to our shareholders and to stakeholders in the countries where we operate. The remuneration package for employees below the board takes into account the local markets and business divisions in which our employees operate. 25

27 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED SUMMARY OF REMUNERATION BELOW THE BOARD IN 208 Element Policy Base salary Pay competitive base salaries to attract and retain key employees. Base salary levels are set taking into account the following factors: individual knowledge, experience and skills, the size and scope of the role, market data and pay elsewhere in the country and the group. Base salary is the only material element of fixed remuneration, there is no pension entitlement, except in countries where statutory deductions are required. The average increase in salaries across the group was approximately 3.4% in 207, however, individual salary increases will vary. Benefits Benefits are provided based on local practice and role requirements. Where it is deemed necessary for the performance of duties, specific loans and temporary accommodation provisions are provided to mining employees in certain jurisdictions. For members of management who add strategic and operational value to the business, share ownership is regarded as key to delivering long term value: Long term incentives As of 3 December 207, 373 members of management participate in our long-term incentive schemes. Employees that are eligible to participate in long term incentive arrangements will cease to be granted awards under the co-investment plan and the restricted share scheme from 208. As these schemes are due to be replaced by the new LTIP, subject to shareholder approval at the company s 208 AGM, the company proposes to introduce a new remuneration scheme for management below board level in 208. The scheme for the management below board level will utilise the new LTIP rules and will have performance measures that are a combination of individual strategic objectives and some of the metrics for the CEO and the CFO under their annual bonus scheme and the new LTIP. Vesting of awards under the existing restricted share scheme and the co-investment plan will continue annually in accordance with the terms of the existing awards, however no new grant of awards under these schemes will be made in 208 or thereafter. Participation levels are reviewed each year by the remuneration committee. For all other employees, Randgold seeks to create a strong link between pay and performance, and this philosophy runs across the entire organisation: Bonuses The company operates at least two bonus plans at each of its operating mines which are extended to all permanent employees not participating in a long term incentive plan, including: Annual bonus Excellence/motivational bonus Production bonus Participation in each bonus plan is extended to all permanent employees not participating in the restricted share scheme. Performance is assessed based on operational and safety parameters and on meeting certain operational targets, with reference to the annual budget. Bonuses are targeted as a percentage of monthly or quarterly salary. The company is committed to ensuring its employees are treated fairly and equally, and that all have the same opportunities to progress their careers inclusive of all genders, backgrounds and cultures. The remuneration committee is determined that there should be no internal barriers to prevent our employees from reaching their full potential, and whilst we do recognise that there can be a negative impact on equal pay linked to local laws, gender, culture and ethnicity, especially in the countries where we operate, we are committed to the principle of equal pay for equal work, irrespective of gender or ethnicity. Non-executive directors remuneration single figure table The figures contained in the single figure table below reflect the fees actually paid during the period and the value of shares issued and allotted to the non-executive directors during the period (with such value determined by reference to the market price of the vested award shares on the relevant vesting date). NON-EXECUTIVE DIRECTORS REMUNERATION SINGLE FIGURE Director ($) Total fees Benefits Share award value Remuneration total CL Coleman n/a n/a S Ba-N Daw n/a n/a K Dagdelen n/a n/a n/a J Kassum n/a n/a O Kirtley n/a n/a n/a n/a n/a J Mabunda Lioko n/a n/a AJ Quinn n/a n/a No benefits are provided to the non-executive directors. 2 Dr Dagdelen retired from the board on 2 May Mrs Kirtley was appointed to the board on 2 February

28 NON-EXECUTIVE DIRECTORS REMUNERATION ACCOUNTING CHARGE Director ($) Fees Other payments Total CL Coleman S Ba-N Daw K Dagdelen n/a J Kassum O Kirtley n/a n/a n/a J Mabunda Lioko AJ Quinn TOTAL Other payments consisted only of the annual award of shares to each non-executive director approved at the AGM (NASDAQ Global Select Market closing price on day preceding date of grant or if a public holiday, the next trading day 207: $88.95 per share; 206: $99.68 per share). 2 Dr Dagdelen retired from the board on 2 May Mrs Kirtley was appointed to the board on 2 February 207. NON-EXECUTIVE DIRECTORS SHARE AWARDS GRANTED AT THE COMPANY S 206 AND 207 ANNUAL GENERAL MEETINGS Director Date of vesting Number of shares awarded Market price at date of vesting ($) CL Coleman 3 May May S Ba-N Daw 3 May May K Dagdelen 2 3 May May 207 n/a n/a J Kassum 3 May May O Kirtley 3 3 May 206 n/a n/a 8 May J Mabunda Lioko 3 May May AJ Quinn 3 May May NASDAQ Global Select Market closing price on day preceding date of grant or if a public holiday, the next trading day. 2 Dr Dagdelen retired from the board on 2 May Mrs Kirtley was appointed to the board on 2 February 207. Committee responsibilities The remuneration committee s responsibilities are set out in its terms of reference, which can be found on the company s website DUTIES, ROLES AND RESPONSIBILITIES OF THE REMUNERATION COMMITTEE Remuneration policy and its specific application to the executive directors, as well as its general application to the senior management below the board. The determination of levels of reward for the executive directors, and oversight of the remuneration of senior management below the board. Providing guidance on evaluating the performance of the CEO, management development plans and succession planning. Awards made under the restricted share scheme and the co-investment plan and any other remuneration plans approved by shareholders Communication with shareholders on the remuneration policy and the remuneration committee s work on behalf of the board. 253

29 DIRECTORS REPORTS REMUNERATION COMMITTEE REPORT CONTINUED Membership and meeting attendance During 207, the members of the remuneration committee were AJ Quinn (chairman), CL Coleman, J Kassum and O Kirtley (appointed 2 February 207). The current members of the remuneration committee are independent non-executive directors in line with the independence requirements of the Code. The remuneration committee met four times during 207, and attendance is set out below. At the invitation of the remuneration committee chairman, the CEO attended all four meetings. The chairman, the senior independent director and the CEO were not in attendance when decisions taken on their own remuneration were considered. COMMITTEE MEETING ATTENDANCE Member Date appointed to the committee 2 February 207 May July October 207 AJ Quinn 3 May 204 CL Coleman 2 February 2009 J Kassum 2 August 206 O Kirtley 2 February 207 Committee performance and effectiveness The remuneration committee conducts a formal review of its effectiveness on an annual basis in conjunction with the board. The committee concluded that it effectively carried out its duties in accordance with the Code during 207. Details of the board and committee evaluation process are set out on pages 264 to 265 of this annual report. Advisers During the year, the remuneration committee received independent external advice from two separate advisers (see the independent external advisers table on the following page). 254