To receive and consider the financial report, directors report and auditor s report for the year ended 30 September 2013.

Transcription

1 Orica Limited ABN Registered Office: Level 3, 1 Nicholson Street East Melbourne Vic 3002 Australia Notice of Meeting Notice is hereby given that the Annual General Meeting of Orica Limited will be held in ANZ Pavilion, Arts Centre, Level 8, 100 St Kilda Road, Melbourne, VIC 3000 on Thursday, 30 January 2014 at 10.30am. Ordinary Business 1 Financial Report, Directors Report and Auditor s Report To receive and consider the financial report, directors report and auditor s report for the year ended 30 September Election of Directors To consider and, if thought fit, pass the following resolutions as ordinary resolutions: 2.1 That Russell Caplan, who retires by rotation in accordance with Rule 58.1 of the Company s Constitution, being eligible and offering himself for re-election, is re-elected as a Director. 2.2 That Ian Cockerill, who retires by rotation in accordance with Rule 58.1 of the Company s Constitution, being eligible and offering himself for re-election, is re-elected as a Director. 2.3 That Lim Chee Onn, who retires by rotation in accordance with Rule 58.1 of the Company s Constitution, being eligible and offering himself for re-election, is re-elected as a Director. 2.4 That Maxine Brenner, a Director appointed by the Board since the last Annual General Meeting of the Company who retires in accordance with Rule 47 of the Company s Constitution, being eligible and offering herself for election, is elected as a Director. 2.5 That Alberto Calderon, a Director appointed by the Board since the last Annual General Meeting of the Company who retires in accordance with Rule 47 of the Company s Constitution, being eligible and offering himself for election, is elected as a Director. 2.6 That Gene Tilbrook, a Director appointed by the Board since the last Annual General Meeting of the Company who retires in accordance with Rule 47 of the Company s Constitution, being eligible and offering himself for election, is elected as a Director. Details of the persons seeking re-election are set out in the Explanatory Notes to this Notice of Meeting. Orica Limited Notice of Meeting 2013 Page 1 of 12

2 3 Adoption of Remuneration Report To consider, and if thought fit, pass the following non-binding resolution as an ordinary resolution: To adopt the remuneration report for the year ended 30 September The Remuneration Report is set out on pages 25 to 47 of the Annual Report. 4 Grant of shares to Managing Director under the Long Term Equity Incentive Plan To consider, and if thought fit, pass the following resolution as an ordinary resolution: That approval be given to the issue to, or acquisition by or on behalf of the Managing Director, Mr Ian Smith, of up to 380,000 fully paid ordinary shares in Orica Limited under Orica s Long Term Equity Incentive Plan, on the terms summarised in the Explanatory Notes 5 Proportional Takeover Bids To consider and, if thought fit, pass the following resolution as a special resolution: That the Company reinstate the partial takeover provisions as Rule 86 of the Constitution in the form set out in Attachment A in the Explanatory Notes with effect from 30 January 2014 for a period of three years. Voting exclusion statement (ASX Listing Rules and Corporations Act) applicable to resolutions 4 and 5: The Corporations Act prohibits any votes being cast on resolution 3 (in any capacity) and resolutions 4 (as a proxy) by or on behalf of any of the Company s key management personnel (as named in the Remuneration Report) or their closely related parties. In addition, the Company will disregard any votes cast on resolution 4 by Mr Smith and any of his associates in accordance with the ASX Listing Rules. However, these restrictions will not apply where a vote is cast by: a) a person if he or she does so as a proxy for a person who is permitted to vote, in accordance with a direction on the proxy form; or b) a person chairing the meeting as a proxy for a person who is permitted to vote, and the appointment expressly authorises the Chairman to exercise the undirected proxies. By order of the Board Annette Cook Company Secretary 22 November 2013 Voting Entitlement The Board has determined that a shareholder s voting entitlement at the meeting will be taken to be the entitlement of that person shown in the register of members as at 7.00pm on Tuesday, 28 January Orica Limited Notice of Meeting 2013 Page 2 of 12

3 Explanatory Notes to Shareholders Item 1 Financial Statements and Results The Corporations Act 2001 (Cth) ( Corporations Act ) requires the financial report (which includes financial statements, notes to the financial statements and directors declaration), the directors report and the auditor s report to be laid before the Annual General Meeting. The Constitution of Orica Limited ( Orica ) provides for these reports to be received and considered at the Meeting. There is no requirement either in the Corporations Act or the Constitution for shareholders to approve the financial report, the directors report or the auditor s report. Shareholders will, however, be given a reasonable opportunity to ask questions and make comments on these reports, and on the business, operations and management of Orica. Item 2 Election of Directors Profiles of the candidates for election as Directors are set out below. Russell Caplan LLB, FAICD, FAIM Non-Executive director since 1 October 2007 and will be elected Chairman of the Company following the retirement of Peter Duncan at the close of the 2013 Annual General Meeting. Chairman of the Human Resources & Compensation Committee and member of the Board Audit and Risk Committee and Corporate Governance and Nominations Committee. Mr Caplan has considerable international and general business experience from his extensive career with the Royal Dutch / Shell Group of companies. During his time at Shell, Mr Caplan held senior roles in the upstream and downstream operations and corporate functions in Australia and overseas. From 1997 to 2006 he had international postings in the UK, Europe and the USA. Director of Aurizon Holdings Limited. Former Chairman of the Shell Group of Companies in Australia and former Director of Woodside Petroleum Limited. Mr Caplan is seeking re-election for a three year term. Ian Cockerill BSc (Hons) Geology, MSc (Mining) MDP, AMP Non-Executive director since 12 July Member of the Safety, Health and Environment Committee and the Corporate Governance and Nominations Committee. Mr Cockerill brings 38 years experience in the mining industry to the Board. He began his mining career in geological and mining departments in Union Corporation, St Helena and has extensive experience in mining operations throughout Arica, South America and Australia. Chairman of Petmin Limited and Director of African Minerals Limited, Endeavour Mining Corporation and Ivanhoe Mines Limited. Former Chief Executive of Anglo Coal and Gold Fields Limited. Previously held executive positions with AngloGold Ashanti and Anglo American Group. Mr Cockerill is seeking re-election for a three year term. Orica Limited Notice of Meeting 2013 Page 3 of 12

4 Lim Chee Onn BSc (Hons), MPA, D.Eng (Honorary) Non-Executive director since 12 July Member of the Safety, Health and Environment Committee and the Corporate Governance and Nominations Committee. Mr Lim brings valuable international experience to the Board from his time with Keppel Corporation, based in Singapore, which operates companies in offshore marine, energy, real estate and utilities. In addition, Mr Lim is an economic advisor and consultant to provincial governments in the People s Republic of China. Chairman of the Singapore-Suzhou Township Development Pte Ltd and the Advisory Board of the Sim Kee Boon Institute of Financial Economics, Singapore Management University. Board Member of the Monetary Authority of Singapore and Business China. Member of the Governing Board, Lee Kuan Yew School of Public Policy (LKYSPP), and a member of the International Advisory Panel of the Institute of Water Policy at LKYSPP and a Trustee of the Nanyang Technological University. Former Chairman of Keppel Corporation Limited and Singbridge International Singapore Pte Limited. Mr Lim is seeking re-election for a three year term. Maxine Brenner BA, LLB Non-Executive director since 8 April Member of the Human Resources & Compensation Committee and Corporate Governance and Nominations Committee. Ms Brenner has extensive experience in corporate advisory work, particularly in relation to mergers and acquisitions and general corporate activity. Director of Qantas Airways Limited and Growthpoint Properties Australia Limited and the State Library of NSW Foundation. Former deputy Chairman of Federal Airports Corporation and a Director of Neverfail Springwater Limited, Bulmer Australia Limited, and Treasury Corporation of NSW. Former member of the Takeovers Panel and former Managing Director of Investment Banking at Investec Bank (Australia) Limited. Ms Brenner is seeking election for a three year term. Orica Limited Notice of Meeting 2013 Page 4 of 12

5 Alberto Calderon PhD Econ, M Phil Econ, JD Law, BA Econ Non-Executive director since 14 August Member of the Safety, Health & Environment Committee and Corporate Governance and Nominations Committee. Dr Calderon has extensive experience in the mining industry, investment banking and corporate strategy. He joined BHP Billiton in 2006 as President Diamonds and Specialty Products, was appointed in 2007 Group Executive and Chief Commercial Officer and in 2011 was appointed Group Executive and Chief Executive Aluminium, Nickel and Corporate Development. Prior to joining BHP Billiton, he was the Chief Executive Officer of Cerrejón Coal Company and the Colombian oil company, Ecopetrol. He has held senior roles in the Colombian Government and The International Monetary Fund. Dr Calderon is seeking election for a three year term. Gene Tilbrook BSc, MBA, FAICD Non-Executive director since 14 August Member of the Board Audit & Risk Committee and Corporate Governance and Nominations Committee. Mr Tilbrook has broad experience in corporate strategy, investment and finance. He was a senior executive of Wesfarmers Limited between 1985 and 2009, including roles as Executive Director Finance and Executive Director Business Development. Director of Aurizon Holdings Limited, Fletcher Building Limited and GPT Group Limited. Former Chairman of Transpacific Industries Group Limited and Director of NBN Co Limited. Mr Tilbrook is seeking election for a three year term. The Board has considered the performance of each of the retiring directors standing for reelection and the Corporate Governance and Nominations Committee has reviewed the skills, knowledge, experience and diversity represented on the Board. The Board recommends to shareholders the re-election of Messrs Caplan, Cockerill and Lim. Ms Brenner, Dr Caldron and Mr Tilbrook, having recently been appointed to the Board, have not participated in the review process. The Board recommends the election of Ms Brenner, Dr Caldron and Mr Tilbrook. Orica Limited Notice of Meeting 2013 Page 5 of 12

6 Item 3 Remuneration Report Shareholders will be given the opportunity to comment on and ask questions about the Remuneration Report which is included in Orica s Annual Report The 2013 Remuneration Report highlights: that the remuneration policy adopted by the Board encourages Orica s performance based culture by making a significant proportion of total target remuneration at risk against performance; the strong link between Orica s financial performance and the level of reward accrued over the past 5 years; the elements of remuneration of the non-executive Directors, the Managing Director and those senior executives required to be disclosed for the 2013 financial year; and the past and current performance conditions that must be met for Executives to derive value from the at risk components of their remuneration. The vote on this item is advisory only and will not bind the Directors or Orica. However, the Board takes into account feedback from our shareholders in relation to our remuneration strategy, including the discussion and vote on this resolution, when considering the future remuneration arrangements of the Company. As a result of amendments to the Corporations Act, known generally as the two strikes rule, the Board wishes to draw to the attention of shareholders that the result of the vote on this item may affect next year s Annual General Meeting. Notwithstanding that this resolution only requires a 50% majority of those voting to be passed, if 25% or more of the votes cast on this resolution are against, and if this is repeated at the next meeting a resolution to spill the board will be put to shareholders as required by the Corporations Act. The Board recommends that you vote in favour of this non-binding ordinary resolution. Orica Limited Notice of Meeting 2013 Page 6 of 12

7 Item 4 Grant of shares to the Managing Director under the Long Term Equity Incentive Plan ( LTEIP ) The Board s remuneration policy for senior executives incorporates a strong element of remuneration being directly linked to company performance. The most senior executives (Executive Committee), long term component of remuneration is provided in the form of an allocation of fully paid ordinary shares in Orica financed by way of a non-recourse loan. This form of incentive delivers immediate share ownership for the members of the Executive Committee, linking a significant portion of remuneration to Orica s share price and returns generated for shareholders. As the outstanding balance of the loan must be repaid at the end of the 3 year performance period, the plan operates much like an option plan. The Plan incorporates a further performance based reward in the form of partial loan forgiveness should executives satisfy the applicable performance conditions. Under ASX Listing Rule 10.14, shareholder approval is required in order for a director to be issued securities under an employee incentive scheme. Accordingly, shareholders are asked to approve the issue of shares under the 2013 LTEIP offer for the Managing Director. The Board believes that an equity based long-term incentive is important to ensure an appropriate part of the executive s reward is linked to generating long term returns for shareholders. The approval being sought from shareholders relates to the fact that the Board would prefer to provide the LTI in the form of Orica shares rather than an alternative such as cash. If shareholders do not approve the long term incentive grant for the Managing Director, there are issues associated with the competitiveness of his total remuneration package, alignment of rewards with other senior executives and Orica s contractual obligations to the Managing Director. In these circumstances, the Board would provide the Managing Director with an equivalent long term cash incentive subject to the same performance conditions and performance period as described above. Further details of Mr Smith s remuneration packages, and the operation of the LTEIP, are set out in the Remuneration Report on pages 25 to 47 of the Annual Report. Date of allocation Number of shares If shareholder approval is obtained, it is expected that the loan will be made and shares will be allocated in February 2014, but in any event no later than 30 days after the AGM. The value of Mr Smith s annual LTI participation and his LTEIP loan is determined by reference to a percentage of his fixed remuneration. This remuneration value has not changed since his appointment as Managing Director. Shareholders are asked to approve the grant of up to 380,000 shares in Orica to the Managing Director. The actual number of shares to be allocated will be determined by dividing the amount of the LTEIP loan made to the Managing Director by the volume weighted average price (VWAP) of Orica shares during the 5 days immediately following the Annual General Meeting. No shares will be allocated in excess of the maximum number approved by shareholders. Orica Limited Notice of Meeting 2013 Page 7 of 12

8 Key terms of the loan Performance conditions (for loan forgiveness) Orica or another Group company will make a loan to the Managing Director in the amount required to acquire the LTEIP shares, on the following terms: The LTEIP loan is advanced for the sole purpose of acquiring shares in the Company. Whilst there is no interest charge to the Managing Director on the loan, an interest component is taken into account in determining the level of performance-based debt forgiveness that may be awarded. During the loan period, 51.5% of any dividend paid on the shares is applied in part repayment of the loan. The balance of the dividend is paid directly to the Managing Director to fund his tax liability on the dividends received. Part of the loan (to a maximum of 35% of the loan) may be forgiven at the end of the performance period subject to satisfaction of the performance conditions described below. The loan may not be otherwise repaid during the 3 year performance period. The shares are held as security for the loan. Following the end of the performance period, the Managing Director must repay the then outstanding loan balance. If the value of the shares is less than the outstanding loan balance at the end of the performance period, the shares may be surrendered in full settlement of the loan. The performance based reward available to the Managing Director is in the form of forgiveness of a part of the loan. The level of forgiveness to be granted is determined by performance against two independent conditions. The first condition requires the compound annual growth in Orica s reported basic earnings per share (EPS), before any adjustment for material items, over the 3 year performance period to exceed 5% per annum. The Board has retained discretion to adjust EPS in exceptional circumstances for individually material items, whether positively or negatively. Loan forgiveness is then granted according to the schedule below. Compound EPS growth per annum Less than 5% 0% 5% (Threshold performance) 5% 10% (Target performance) 10% Loan forgiveness 15% (Stretch performance) 15% (maximum loan forgiveness) EPS growth will be rounded to 1 decimal place and straight line debt forgiveness will be granted between 5% and 15% CAGR (for example, EPS growth of 12.1% will result in 12.1% loan forgiveness). No loan forgiveness will be granted should CAGR in EPS not equal or exceed 5% over the 3 year performance period. The second condition is based upon Orica s relative total shareholder return (TSR) when ranked against the ASX 100 (with no exclusions) over the performance period. Orica Limited Notice of Meeting 2013 Page 8 of 12

9 Loan forgiveness is then granted according to the schedule below. TSR percentile ranking Loan forgiveness Below 50th 0% 50th (Target Performance) 10% 75th or above 20% (maximum loan forgiveness) (Stretch performance) Straight line debt forgiveness will be granted for performance between the 50th and 75th percentile ranking (rounded to one decimal place). For example, TSR performance at the 59th percentile will result in 13.6% loan forgiveness. No loan forgiveness will be granted should TSR ranking be below the 50th percentile over the performance period. Cessation of employment Other required information ASX Listing Rules If the Managing Director resigns from the Group or is terminated for cause during the loan period, in general, the shares are forfeited and surrendered to the Group (in full settlement of the loan) and the individual has no further interest in the shares. The Board retains discretion to determine otherwise in appropriate circumstances. This may include allowing the Managing Director to repay the loan and retain the capital appreciation or, where performance warrants, grant partial loan forgiveness on a pro rata basis. The Board may also determine to leave the loan in place for the remainder of the performance period and test the loan forgiveness provisions at the end of the performance period in appropriate circumstances. The Managing Director is the only current director of Orica entitled to participate in the LTEIP scheme. In accordance with the approval received from shareholders at the 2012 Annual General Meeting, during the 2013 financial year, the company allocated 293,080 shares to the Managing Director at a price of $26.23 per share. The Board, other than the Managing Director who has an interest in resolution 4, recommends that shareholders vote in favour of resolution 4. Orica Limited Notice of Meeting 2013 Page 9 of 12

10 Item 5 Proportional Takeover Provisions The Corporations Act permits a Company s constitution to include a provision that enables it to refuse to register shares acquired under a proportional takeover bid unless shareholders approve the bid. Current Rule 86 of the Constitution was last approved at the 2010 AGM. The Directors consider it in the interests of shareholders to continue Rule 86 for the maximum period permitted by law, being a further three years as follows. Proportional Takeover Bid A proportional takeover bid is a takeover bid where the offer made to each shareholder is only for a proportion of that shareholder s shares (i.e. less than 100 per cent). Effect of a Proportional Takeover Bid Provision If a proportional takeover bid is made, the Directors must ensure that a meeting is held, more than 14 days before the last day of the bid period, at which shareholders will consider a resolution to approve the takeover bid. Each shareholder has one vote for each fully paid share held. The vote is decided on a simple majority. The bidder and its associates are not allowed to vote. If the resolution is not passed, no transfer will be registered as a result of the takeover bid and the offer will be taken to have been withdrawn. If the resolution is not voted on, the bid is taken to have been approved. If the bid is approved (or taken to have been approved) all valid transfers must be registered. The proportional takeover approval provisions do not apply to full takeover bids and Rule 86 will, if approved by shareholders, apply until 30 January 2017 unless again renewed by shareholders. Knowledge of any Acquisition Proposals As at the date this Notice of Meeting was prepared, no Director is aware of any proposal by any person to acquire or to increase the extent of a substantial interest in the Company. Reasons for and Potential Advantages and Disadvantages of Rule 86 The Directors consider that the takeover approval provisions have no potential advantages for them. The reasons for and potential advantages of Rule 86 for shareholders include: (a) (b) (c) (d) shareholders have the right to decide by majority vote whether to accept a proportional takeover bid; it may help shareholders to avoid being locked in as a minority and avoid the bidder acquiring control of the Company without paying an adequate control premium (i.e. paying for all of their shares); it increases shareholders bargaining power and may assist in ensuring that any proportional takeover bid is adequately priced; and knowing the view of the majority of shareholders may help each individual shareholder to form an opinion on whether to accept or reject an offer under the bid. Orica Limited Notice of Meeting 2013 Page 10 of 12

11 The potential disadvantages for shareholders of Rule 86 include: (a) (b) (c) proportional takeover bids for shares in the Company may be discouraged; shareholders may lose an opportunity to sell some of their shares at a premium; and the likelihood of a proportional takeover succeeding may be reduced. While the existing proportional takeover provisions have been in effect there have been no takeover bids for the Company. The Directors are not aware of any potential bid that was discouraged by Rule 86. The Directors do not believe the possible disadvantages outweigh the advantages of the proportional takeover provisions operating for the next three years. The Board unanimously recommends that shareholders vote in favour of this resolution. Attachment A Rule If offers are made under a proportional takeover bid for securities in the Company: (a) the registration of a transfer giving effect to a takeover contract for the bid is prohibited unless and until a resolution (an Approving Resolution) to approve the proportional takeover scheme is passed (or is taken to have been passed) in accordance with this Rule 86; (b) a person (other than the bidder or an associate of the bidder) who, as at the end of the day on which the first offer under the proportional takeover bid was made, held bid class securities is entitled to vote on an Approving Resolution; (c) an Approving Resolution is to be voted on at a meeting, convened and conducted by the Company, of the persons entitled to vote on the Approving Resolution. The meeting to vote on the Approving Resolution must be held at least 14 days before the last day of the bid period for the proportional takeover (Approving Resolution Deadline); (d) an Approving Resolution that has been voted on in accordance with this Rule is taken to have been passed if the proportion that the number of votes in favour of the resolution bears to the total number of votes on the resolution is greater than 50%, and otherwise is taken to have been rejected; and (e) if an Approving Resolution has not been voted on in accordance with this Rule 86 as at the end of the day before the Approving Resolution Deadline, an Approving Resolution will be taken to have been passed in accordance with this Rule This rule ceases to apply on the third anniversary of its adoption or last renewal. Orica Limited Notice of Meeting 2013 Page 11 of 12

12 Parking and Directions to the ANZ Pavilion Directions from Flinders Street Station / City Walk over Princes Bridge along St Kilda Road towards the Arts Centre or take any tram (except number 1) along St Kilda Road and disembark at the Arts Centre Melbourne, stop number 14. When you arrive at the main entrance on St Kilda Road you will be on Level 6. Please take the stairs or elevators up to Level 8 and follow the signage to the ANZ Paivilion. Directions from Arts Centre Melbourne Car Park Entry to the Arts Centre car park is located on the corner of Stuart and Kavanagh Streets, Southbank and can be accessed from St Kilda Road / Southbank Boulevard and Alexandra Avenue / City Road. Located beneath the National Gallery of Victoria, there is undercover lift and stair access and wheelchair access is available on all levels of the car park. Proceed from the Car Park to the Arts Centre via the payment office. As you enter the Arts Centre you will arrive in the Smorgon Family Plaza. Pleae make your way to the elevators (located on the opposite side to the Box Office) and head up to Level 8 and follow the signage to the ANZ Pavilion. Orica Limited Notice of Meeting 2013 Page 12 of 12