NEWMONT CORP /DE/
10-Qs and 10-Ks
PROXIES
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the
appropriate box:
o Preliminary Proxy Statement þ Definitive Proxy Statement o Definitive Additional Materials o Soliciting Material Pursuant to §240.14a-12 |
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
Newmont Mining Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| þ | No fee required. | |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: | ||
| (2) | Aggregate number of securities to which transaction applies: | ||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
| (4) | Proposed maximum aggregate value of transaction: | ||
| (5) | Total fee paid: | ||
| o | Fee paid previously with preliminary materials. | |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: | ||
| (2) | Form, Schedule or Registration Statement No.: | ||
| (3) | Filing Party: | ||
| (4) | Date Filed: | ||
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|
Newmont Mining Corporation 6363 South Fiddlers Green Circle Greenwood Village, Colorado 80111 USA |
Notice
of 2011 Annual Meeting of Stockholders
| Date of Meeting: | Tuesday, April 19, 2011 | |
| Time: |
11:00 a.m., local time |
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| Place: |
Hotel du Pont 11th and Market Streets Wilmington, Delaware 19801 |
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| Purpose: |
1. Elect directors;
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2. Ratify the Audit Committee’s appointment of
PricewaterhouseCoopers LLP as Newmont’s independent
auditors for 2011;
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3. Conduct an advisory vote on the compensation of the
named executive officers;
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4. Conduct an advisory vote on the frequency of
stockholders votes on executive compensation; and
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5. Transact such other business that may properly come
before the meeting.
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| Record Date: | February 18, 2011 |
Under the Securities and Exchange Commission rules, we have
elected to use the Internet for delivery of annual meeting
materials to our stockholders, enabling us to provide them with
the information they need, while lowering the costs of delivery
and reducing the environmental impact associated with our annual
meeting.
All stockholders are cordially invited to attend the meeting in
person. It is important that your shares be represented at the
meeting whether or not you are personally able to attend. If you
are unable to attend, please promptly vote your shares by
telephone or Internet or by signing, dating and returning the
enclosed proxy card at your earliest convenience. Voting by the
Internet or telephone is fast, convenient, and enables your vote
to be immediately confirmed and tabulated, which helps Newmont
reduce postage and proxy tabulation costs. Your vote is
important so that your shares will be represented and voted at
the meeting even if you cannot attend.
By Order of the Board of Directors
Jeffrey K. Reeser
Vice President and Secretary
Vice President and Secretary
March 4, 2011
IMPORTANT NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 19, 2011
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 19, 2011
Our
Notice of Meeting, Proxy Statement and Annual Report are
available at
http://bnymellon.mobular.net/bnymellon/nem
http://bnymellon.mobular.net/bnymellon/nem
2011 Proxy
Statement
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PROXY
STATEMENT
General
Information
Notice of
Internet Availability of Proxy Materials.
On or about March 10, 2011, we will furnish a Notice of
Internet Availability of Proxy Materials to most of our
stockholders containing instructions on how to access the proxy
materials and to vote online. In addition, instructions on how
to request a printed copy of these materials may be found on the
Notice. For more information on voting your stock, please see
“Voting Your Shares” below. If you received a Notice
by mail, you will not receive a paper copy of the proxy
materials unless you request such materials by following the
instructions contained on the Notice. Your vote is important no
matter the extent of your holdings.
Stockholders
Entitled to Vote.
The holders of record of the following securities at the close
of business on February 18, 2011 are entitled to vote at
Newmont Mining Corporation’s (“Newmont” or the
“Company”) 2011 Annual Meeting of Stockholders to be
held on Tuesday, April 19, 2011 (the “Annual
Meeting”):
| • | common stock of Newmont, par value $1.60 per share, of which there were 486,564,649 shares outstanding as of the record date; and | |
| • | exchangeable shares of Newmont Mining Corporation of Canada Limited, a Canadian federal corporation (“Newmont Canada”’), of which there were 6,703,999 shares as of the record date entitled to vote pursuant to the terms of the Newmont Special Voting Stock described below. |
Voting Your
Shares.
Newmont Common
Stock. Each share of common stock that you own
entitles you to one vote. Your Notice or proxy card shows the
number of shares of common stock that you own. You may elect to
vote in one of three methods:
| • | By Mail - If you have received or requested a paper copy of the proxy materials, please date and sign the proxy card and return it promptly in the accompanying envelope. | |
| • | By Internet - If you received a Notice of Internet Availability of Proxy Materials, you can access our proxy materials and vote online. Instructions to vote online are provided in the Notice. | |
| • | In Person - You may attend the Annual Meeting and vote in person. We will give you a ballot when you arrive. If your stock is held in the name of your broker, bank or another nominee (a “Nominee”), then you must present a proxy from that Nominee in order to verify that the Nominee has not already voted your shares on your behalf. | |
| • | If you hold Newmont Common Stock at your Broker - If your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice or proxy materials, as applicable, are being forwarded to you by that organization. Your voting instruction form from Broadridge or your Notice provides information on how to vote your shares. The organization holding your account is considered the shareholder of record for purposes of voting at the Annual Meeting. |
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If you are a beneficial owner of shares held in street name and
do not provide the organization that holds your shares with
specific voting instructions, the organization that holds your
shares may generally vote on “routine” matters such as
ratification of auditors but cannot vote on
“non-routine” matters, which now include matters such
as votes for the election of directors and the
Say-on-Pay
and Say-When-On-Pay proposals. Thus, if the organization that
holds your shares does not receive instructions from you on how
to vote your shares on a non-routine matter, that organization
will inform the inspector of election that it does not have the
authority to vote on this matter with respect to your shares.
This is generally referred to as a “broker non-vote.”
Newmont
Exchangeable Shares. Each Newmont
exchangeable share that you own has economic rights (such as the
right to receive dividends and other distributions) that are, as
nearly as practicable, equivalent to rights of shares of Newmont
common stock. Holders of exchangeable shares have a right
through a Voting and Exchange Trust Agreement (the
“Voting Agreement”) to vote at stockholders’
meetings of Newmont. The exchangeable shares, however, are not
shares issued by Newmont and, therefore, a holder of
exchangeable shares is not a registered stockholder of Newmont,
but is a registered stockholder of Newmont Canada. The
exchangeable shares are exchangeable at the option of the
holders into the Company’s common stock on a
one-for-one
basis. There are two ways to vote your exchangeable shares:
| • | By Mail - You may vote by signing and returning the enclosed voting instruction form. This form permits you to instruct Computershare Trust Company of Canada, as trustee under the Voting Agreement (the “Trustee”), to vote at the Annual Meeting. The Trustee holds one share of special voting stock of Newmont (the “Newmont Special Voting Stock”) that is entitled to vote on all matters on which the shares of the Company’s common stock vote. The Newmont Special Voting Stock has a number of votes in respect to the Annual Meeting equal to the lesser of (a) the number of exchangeable shares outstanding on the record date (other than the Company’s exchangeable shares held by Newmont or its affiliates), or (b) 10% of the total number of votes corresponding to the common stock then outstanding. Based upon the foregoing, the Trustee will be entitled to cast up to 6,703,999 votes at the Annual Meeting. The Trustee must receive your voting instructions by 5:00 p.m. in Toronto, Ontario, Canada, on April 18, 2011. This will give the Trustee time to tabulate the voting instructions and vote on your behalf. The Trustee will exercise each vote attached to the Newmont Special Voting Stock only on the basis of instructions received from the relevant holders of exchangeable shares. In the absence of instructions from a holder as to voting, the Trustee will not have any voting rights with respect to such exchangeable shares. | |
| • | In Person - You may attend the Annual Meeting and vote in person. As a holder of exchangeable shares, you may attend the Annual Meeting in person to vote directly the number of votes to which you are entitled under the Voting Agreement. Please refer to the Notice to Exchangeable Shareholders and Voting Instruction Form for additional instructions on voting at the meeting. |
Quorum,
Tabulation and Broker Non-Votes and Abstentions.
Quorum. The
holders of a majority of the outstanding shares of capital stock
of the Company entitled to vote at the Annual Meeting must be
present in person or represented by proxy in order to constitute
a quorum for all matters to come before the meeting. For
purposes of determining the presence of a quorum, “shares
of capital stock of the Company” include all shares of
common stock and the maximum number of shares of common stock
that the Trustee of the Newmont exchangeable shares is entitled
to vote at the Annual Meeting.
Tabulating
Votes and Voting Results. Votes at the
Annual Meeting will be tabulated by two inspectors of election
who will be appointed by the Chairman of the meeting and who
will not be candidates for election to the Board of Directors.
The inspectors of election will treat shares of capital stock
represented by a properly signed and returned proxy as present
at the Annual Meeting for purposes of determining a quorum,
without regard to whether the proxy is marked as casting a vote
or abstaining.
Broker
Non-Votes and Abstentions. Abstentions
and broker “non-votes” as to particular matters are
counted for purposes of determining whether a quorum is present
at the Annual Meeting. Abstentions are counted in tabulations of
the votes cast on proposals presented to stockholders, whereas
broker non-votes are not counted for purposes of determining
whether a proposal has been approved. Abstentions have the same
effect as votes against
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proposals presented to stockholders. A “broker
non-vote” occurs when a nominee holding shares for a
beneficial owner votes on one proposal, but does not vote on
another proposal because the nominee does not have discretionary
voting power and has not received instructions to do so from the
beneficial owner.
Votes Required to
Approve the Proposals.
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Proposal
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Vote Required
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Election of Directors
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Majority of votes cast for the Nominees. | |
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Ratification of independent auditors for 2011
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Majority of stock present in person or by proxy and entitled to vote on the Ratification. | |
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Advisory vote on compensation of named executive officers
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Non-binding advisory vote – majority of stock present in person or by proxy and entitled to vote. | |
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Advisory vote on frequency of stockholders votes on executive
compensation
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Non-binding advisory vote – majority of stock present in person or by proxy and entitled to vote. |
Election of
Directors. Beginning January 1,
2010, brokers, banks and other financial institutions can no
longer vote your stock on your behalf for the election of
directors if you have not provided instructions on your voting
instruction form, by telephone or internet. For your vote to be
counted, you must submit your voting instructions to your broker
or custodian.
Ratify
PricewaterhouseCoopers LLP as the Company’s Independent
Auditors for 2011. The affirmative
vote of a majority of the shares present and entitled to vote,
in person or by proxy, at the Annual Meeting is required to
ratify the Audit Committee’s appointment of
PricewaterhouseCoopers LLP as the Company’s independent
auditors for 2011.
Advisory
Votes. Because the votes on these
proposals are advisory in nature, they will not (1) affect
any compensation already paid or awarded to any named executive
officer, (2) be binding on or overrule any decisions by the
Board of Directors, (3) create or imply any additional
fiduciary duty on the part of the Board of Directors, and
(3) restrict or limit the ability of stockholders to make
proposals for inclusion in proxy materials related to executive
compensation. See Proposal No. 3 — Advisory
Vote on the Compensation of the Named Executive Officers and
Proposal No. 4 — Advisory Vote on the
Frequency of Stockholders Votes on Executive Compensation for a
description of these proposals.
Other
Items. If any other items are
presented at the Annual Meeting, they must receive an
affirmative vote of a majority of the shares present and
entitled to vote, in person or by proxy, in order to be approved.
Revocation of
Proxy or Voting Instruction Form.
Revocation of
Newmont Common Stock Proxy. A
stockholder who executes a proxy may revoke it by delivering to
the Secretary of the Company, at any time before the proxies are
voted, a written notice of revocation bearing a later date than
the proxy, or by attending the Annual Meeting and voting in
person (although attendance at the Annual Meeting will not in
and of itself constitute a revocation of a proxy). A stockholder
also may substitute another person in place of those persons
presently named as proxies. Written notice revoking or revising
a proxy should be sent to the attention of the Secretary,
Newmont Mining Corporation, at 6363 South Fiddlers Green Circle,
Greenwood Village, Colorado 80111 USA.
Revocation of
Newmont Exchangeable Shares Voting
Instruction Form. A registered
holder of Newmont exchangeable shares who has submitted a Voting
Instruction Form may revoke the Voting
Instruction Form by completing and signing a Voting
Instruction Form bearing a later date and depositing it
with the Trustee. No notice of revocation or later-dated Voting
Instruction Form, however, will be effective unless
received by the Trustee prior to 5:00 p.m., Toronto time,
on April 18, 2011.
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A non-registered holder of Newmont exchangeable shares may
revoke a Voting Instruction Form at any time by written
notice to the intermediary, except that an intermediary is not
required to act on a revocation of a Voting
Instruction Form that is not received by the intermediary
at least ten days prior to the Annual Meeting.
Solicitation
Costs.
The cost of preparing and mailing the Notice of Internet
Availability of Proxy Materials, requests for proxy materials,
and the cost of solicitation of proxies on behalf of the Board
of Directors will be borne by the Company. The proxy materials
will be mailed to the holders of the Company’s common
stock, and Newmont exchangeable shares, on March 10, 2011.
In addition, solicitation of proxies and voting instruction
forms may be made by certain officers and employees of the
Company by mail, telephone or in person. The Company has
retained Georgeson Inc. to aid in the solicitation of brokers,
banks, intermediaries and other institutional holders in the
United States and Canada for a fee of $15,000. All costs of the
solicitation will be borne by the Company. The Company also will
reimburse brokerage firms and others for their expenses in
forwarding proxy materials to beneficial owners of common stock
and exchangeable shares.
Notes to
Participants in Newmont Employee Retirement Savings
Plans.
Participants
in the Retirement Savings Plan of Newmont and Retirement Savings
Plan for Hourly-Rated Employees of
Newmont. If you are a participant in
the Retirement Savings Plan of Newmont or Retirement Savings
Plan for Hourly-Rated Employees of Newmont (401(k) Plans) and
hold the Company’s common stock under either of the 401(k)
Plans, you will be furnished a Notice of Internet Availability
of Proxy Materials containing instructions on how to access the
proxy materials and to vote online. In addition, instructions on
how to request a printed copy of these materials may be found on
the Notice. The 401(k) Plans are administered by Vanguard, as
trustee. The trustee, as the stockholder of record of the
Company’s common stock held in the plans, will vote the
shares held for you in accordance with the directions you
provide. If you do not vote your shares by 11:59 p.m.
Eastern time on April 15, 2011, the Trustee will vote your
common shares in the 401(k) Plans in the same proportion as it
votes shares as to which directions have been received.
Stockholder
Proposals for the 2012 Annual Meeting.
For a stockholder proposal, including a proposal for the
election of a director, to be included in the proxy statement
and form of proxy for the 2012 Annual Meeting, the proposal must
have been received by us at our principal executive offices no
later than November 11, 2011. Proposals should be sent to
the attention of the Secretary of the Company at 6363 South
Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA. We
are not required to include in our proxy statement and form of
proxy a stockholder proposal that was received after that date
or that otherwise fails to meet the requirements for stockholder
proposals established by SEC regulations.
In addition, under our By-Laws, stockholders must give advance
notice of nominations for directors or other business to be
addressed at the 2012 Annual Meeting no later than the close of
business on February 17, 2012. The advance notice must be
delivered to the attention of the Secretary of the Company at
6363 South Fiddlers Green Circle, Greenwood Village, Colorado
80111 USA.
Voting
Results.
The results of the voting at the 2011 Annual Meeting of
Stockholders will be reported on
Form 8-K
and filed with the Securities and Exchange Commission within
four business days after the end of the meeting.
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Proposal No. 1 —
Election of Directors
Voting for
Directors.
If you hold your Newmont stock through a broker, bank or other
financial institution, your Newmont stock will no longer be
voted on your behalf on the election of directors unless you
complete and return the voting instruction form or follow the
instructions provided to you to vote your stock via telephone or
the internet. If you do not instruct your broker, bank or other
financial institution how to vote, your votes will be counted as
“broker non-votes” and your shares will not be
represented in the election of directors vote at the Annual
Meeting.
Majority Vote
Standard for the Election of Directors.
Our By-Laws were amended to require that in an uncontested
election each director will be elected by a vote of the majority
of the votes cast, which means the number of votes cast
“for” a director’s election exceeds 50% of the
number of votes cast with respect to that director’s
election. Votes cast shall include votes to withhold authority,
but shall exclude abstentions. Votes will not be deemed cast if
no authority or direction is given.
If a nominee for director does not receive the vote of at least
a majority of votes cast at the Annual Meeting, it is the policy
of the Board of Directors that the director must tender his or
her resignation to the Board. In such a case, the Corporate
Governance and Nominating Committee will make a recommendation
to the Board whether to accept or reject the tendered
resignation, or whether other action should be taken, taking
into account all of the facts and circumstances. The director
who has tendered his or her resignation will not take part in
the deliberations. For additional information, our Corporate
Governance Guidelines are available on our website at
www.newmont.com/our-investors/our-governance.
Director Skills
and Qualifications.
In addition to meeting the minimum qualifications set out by the
Board of Directors under “Director Nomination Process and
Review of Director Nominees,” each nominee also brings a
strong and unique backgrounds and set of skills to the Board,
giving the Board, as a whole, competence and experience in a
wide variety of areas, including board service, corporate
governance, compensation, executive management, private equity,
finance, mining, operations, manufacturing, marketing,
government, law, international business and health, safety,
environmental and social responsibility. The unique background,
skills and qualifications that led the Board of Directors and
the Corporate Governance and Nominating Committee to the
conclusion that each of the nominees should serve as a director
for Newmont are set forth in the “Nominees” section
below.
Board of
Directors Recommendation.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
“FOR” ALL OF THE FOLLOWING NOMINEES AND, UNLESS A
STOCKHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE
CONTRARY, THE PROXIES NAMED THEREON INTEND SO TO VOTE.
Nominees.
Each of the 10 persons named below is a nominee for
election as a director at the Annual Meeting for a term of one
year or until
his/her
successor is elected and qualifies. Unless authority is
withheld, the proxies will be voted for the election of such
nominees. All such nominees are currently serving as directors
of the Company. All such nominees were elected to the Board of
Directors at the last Annual Meeting. If any such nominees
cannot be a candidate for election at the Annual Meeting, then
the proxies will be voted either for a substitute nominee
designated by the Board of Directors or for the election of only
the remaining nominees.
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The following table sets forth information as to each nominee
for election, including his or her age (as of the Record Date),
and background, including his or her principal occupation during
the past five years, current directorships, and skills and
qualifications, of each nominee:
Glen A.
Barton, 71, Retired
Chairman and Chief Executive Officer of Caterpillar Inc., having
served in that position from 1999 to 2004. Vice Chairman thereof
from 1998 to 1999 and Group President from 1990 to 1998.
Director
Qualifications:
| • | CEO/Executive Management Skills — Experience as former Chairman, Director and Chief Executive Officer of Caterpillar Inc. and other senior executive positions noted above. | |
| • | Financial Expertise — Prior service on the Audit Committee of the Board of Directors of Inco Limited and financial oversight experience in senior executive roles. | |
| • | International Experience — Prior service on the International Committee of the Board of Directors of Valmont Industries, Inc. and experience as a senior executive of an international corporation, Caterpillar Inc. | |
| • | Compensation Expertise — Prior service on the Company’s Compensation Committee, including as Chairman, and participation in compensation, benefits and related decisions in senior executive roles. Member on the Valmont Industries, Inc. Compensation Committee, including as acting Chairman. |
Board
Experience:
Service on the Company’s Board of Directors since 2001,
including prior service as Lead Director during 2004 to 2007.
Prior service on the boards of several other companies,
including Inco Limited and Caterpillar Inc., and current
director of Valmont Industries, Inc.
Vincent A.
Calarco, 68,
Non-Executive Chairman of Newmont Mining Corporation from 2008
to present. Former Chairman of Crompton Corporation (now known
as Chemtura Corporation), a specialty chemical company, having
served in that position from 1996 to 2004. President and Chief
Executive Officer thereof from 1985 to 2004.
Director
Qualifications:
| • | CEO/Executive Management Skills — Experience as Chairman, President and Chief Executive Officer of Crompton Corporation and Non-Executive Chairman of Newmont. | |
| • | Financial Expertise — Experience serving on the Company’s Audit Committee and as the Chairman of the Audit Committee of the Board of Directors of Consolidated Edison of New York. Extensive financial oversight experience in senior management roles. | |
| • | International Experience — Extensive senior executive experience working with multinational operations at Crompton Corporation, which has global manufacturing facilities on five continents and conducts business in over 120 countries, as well as experience establishing inter-industry relationships and negotiating product safety regulations as Chairman of several domestic and international chemical industry trade associations. | |
| • | Operational and Industry Expertise — Extensive experience in the chemical industry, a process industry with similar operating characteristics and issues, and prior service on the Board of Directors of a copper mining company, Asarco Corporation. | |
| • | Compensation Expertise — Current service as Chairman of the Compensation Committee of Citadel Plastics and participation in compensation, benefits and related decisions in senior executive roles. |
Board
Experience:
Service on the Company’s Board of Directors since 2000, as
well as on the boards of several other companies, including as a
current director of Consolidated Edison, Inc. and CPG
International Inc., and prior service as a director at Asarco
Corporation.
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Joseph A.
Carrabba, 58, Chairman,
President and Chief Executive Officer of Cliffs Natural
Resources Inc., formerly Cleveland-Cliffs Inc, since May 2007.
Served as the Company’s President and Chief Executive
Officer from 2006 to 2007 and as President and Chief Operating
Officer from 2005 to 2006. Previously served as President and
Chief Operating Officer of Diavik Diamond Mines, Inc. from 2003
to 2005.
Director
Qualifications:
| • | CEO/Executive Management Skills — Experience as Chairman, President and Chief Executive Officer of Cliffs Natural Resources Inc. and other executive management positions noted above. | |
| • | Financial Expertise — Extensive financial management experience in senior executive roles. | |
| • | Operational and Industry Expertise — Operational experience in the mining industry, including as former President and Chief Operating Officer of Cliffs Natural Resources Inc., former President and Chief Operating Officer of Diavik Diamond Mines, Inc. and former General Manger of Weipa Bauxite Operation of Comalco Aluminum. Awarded a Bachelor’s Degree in Geology from Capital University. | |
| • | International Experience — Extensive senior executive experience working with multinational mining operations, including with Cliffs Natural Resources Inc., which has operations in North America, Australia, Latin America and Asia. | |
| • | Health, Safety, Environmental and Social Responsibility Experience — Experience serving on the Company’s Operations and Safety Committee and the Environmental and Social Responsibility Committee. |
Board
Experience:
Service on the Company’s Board of Directors since 2007, as
well as on the boards of several other companies, including as a
current director of Cliffs Natural Resources Inc. and KeyCorp.
Noreen
Doyle, 61, Retired
First Vice President of the European Bank for Reconstruction and
Development (“EBRD”), having served in that position
from 2001 to 2005, and in other executive positions with the
EBRD since 1992.
Director
Qualifications:
| • | Financial Expertise — Extensive experience in banking and finance at Bankers Trust Company and at the EBRD, including experience as head of risk management and head of banking at EBRD. Experience serving on the Company’s Audit Committee, including as Chair, and the Audit Committees of the Board of Directors of QinetiQ Group plc and Rexam PLC. | |
| • | International Experience — Extensive senior executive experience working with businesses, global and local, and governments throughout eastern Europe and the former Soviet Union. | |
| • | Health, Safety, Environmental and Social Responsibility Experience — Experience serving on the Company’s Environmental and Social Responsibility Committee. |
Board
Experience:
Service on the Company’s Board of Directors since 2005, as
well as on the boards of several other companies, including as a
current director of Credit Suisse Group, QinetiQ plc and Rexam
PLC. Member of advisory panels for Macquarie European
Infrastructure Fund and Macquarie Renaissance Infrastructure
Fund.
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Veronica M.
Hagen, 65, Chief
Executive Officer of Polymer Group, Inc. since April 2007.
President and Chief Executive Officer of Sappi Fine Paper North
America from 2004 to 2007. Executive positions with Alcoa, Inc.
since 1998, including Vice President and Chief Customer Officer
from 2003 to 2004 and Vice President, Alcoa North American
Extrusions from 2001 to 2003.
Director
Qualifications:
| • | CEO/Executive Management Skills — Experience as Chief Executive Officer of Polymer Group, Inc., and former President and Chief Executive Officer of Sappi Fine Paper North America. | |
| • | Industry and Operational Expertise — Extensive mining industry experience, including in executive positions with Alcoa, Inc., an international aluminum producer, for over 10 years, including as former Vice President and Chief Customer Officer and former Vice President, Alcoa North American Extrusions. | |
| • | International Experience — Extensive senior executive experience including Chief Executive Officer of Polymer Group Inc., a company operating manufacturing facilities in seven countries. | |
| • | Health, Safety, Environmental and Social Responsibility Experience — Experience serving on the Company’s Operations and Safety Committee and prior experience on the Environmental and Social Responsibility Committee. | |
| • | Compensation Expertise — Experience serving as a member of the Company’s Compensation Committee. Participation in compensation, benefits and related decisions in senior executive roles. |
Board
Experience:
Service on the Company’s Board of Directors since 2005, as
well as on the boards of several other companies, including as a
current director of Southern Company. Former director of Jacuzzi
Brands, Inc.
Michael S.
Hamson, 70, Chairman,
Hamson Consultants Pty Ltd, a consulting company, since 1987;
Joint Chairman and Chief Executive Officer of McIntosh Hamson
Hoare Govett Limited (now Merrill Lynch Australia) from 1972 to
1986 and Director and Deputy Chairman of Normandy Mining Limited
from 1987 to 2002.
Director
Qualifications:
| • | CEO/Executive Management Skills — Experience as Chairman, Hamson Consultants Pty Ltd and former Joint Chairman and Chief Executive Officer of McIntosh Hamson Hoare Govett Limited. | |
| • | Financial Expertise — Experience serving on the Company’s Audit Committee, the Audit Committee of the Board of Directors of Genesis Emerging Markets Fund Ltd., membership in the Charter Accountants Institute and financial management experience in senior executive roles. | |
| • | Legal Expertise — Extensive experience as practicing lawyer in multiple jurisdictions. | |
| • | Industry and Operational Expertise — Experience as Director and Deputy Chairman of Normandy Mining Limited from 1987 to 2002. | |
| • | International Experience — Extensive senior executive experience working in global banking activities with McIntosh Hamson Hoare Govett Limited. |
Board
Experience:
Service on the Company’s Board of Directors since 2002, as
well as on the boards of several other companies, including as a
current director of Genesis Emerging Markets Fund Ltd.
8
Table of Contents
Richard T.
O’Brien, 56,
President and Chief Executive Officer of Newmont since July
2007. President and Chief Financial Officer of Newmont from
April 2007 to July 2007; Executive Vice President and Chief
Financial Officer during 2006 and 2007 and Senior Vice President
and Chief Financial Officer from 2005 to 2006. Executive Vice
President and Chief Financial Officer and Senior Vice President
and Chief Financial Officer of AGL Resources from 2001 to 2005.
Director
Qualifications:
| • | CEO/Executive Management Skills — President and Chief Executive Officer of the Company and other senior executive positions noted above. | |
| • | Financial Expertise — Extensive financial management experience in executive roles, including as President and Chief Financial Officer of the Company and other executive management positions noted above. Experience serving on the Audit Committees of Inergy Holdings, L.P. and Vulcan Materials Company. Awarded a Bachelor of Arts degree in economics from the University of Chicago. | |
| • | Industry and Operational Experience — Over 20 years of broad financial and operational experience in the energy, power and natural resources businesses. | |
| • | International Experience — Extensive senior executive experience working with the Company’s multinational mining operations. | |
| • | Compensation Expertise — Participation in compensation, benefits and related decisions in senior executive roles. | |
| • | Legal Expertise — Awarded a Doctor of Jurisprudence degree from Lewis and Clark College, Northwestern School of Law. |
Board
Experience:
Service on the Company’s Board of Directors since 2007, as
well as on the boards of several other companies, including as a
current director of Inergy Holdings, L.P. and Vulcan Materials
Company.
John B.
Prescott, 70, Chairman
of QR National Limited (“QR”) (formerly known as QR
Limited and Queensland Rail since 2006). Retired Chairman of ASC
Pty Ltd from 2000 to 2009. Retired executive of The Broken Hill
Proprietary Company Limited (now BHP Billiton Ltd
(“BHP”)), and Managing Director and Chief Executive
Officer thereof from 1991 to 1998.
Director
Qualifications:
| • | CEO/Executive Management Skills — Experience as Chairman of QR, and other executive management positions noted above. | |
| • | Financial Expertise — Extensive financial management experience in executive roles and served on the Audit Committee of the Board of Directors of QR. | |
| • | Industry and Operational Experience — Experience in the mining industry as a senior executive with BHP, a natural resource company, and as a former director of Normandy Mining Limited, a mining company. | |
| • | International Experience — Extensive senior executive experience working with multinational mining operations. | |
| • | Compensation Expertise — Experience serving on the Company’s Compensation Committee and participation in compensation, benefits and related decisions in senior executive roles. Managing Director of BHP. Member of Compensation committees of ASC Pty Ltd and QR. | |
| • | Health, Safety, Environmental and Social Responsibility Experience — Experience serving on the Company’s Operations and Safety Committee, including as Chairman, and on the Environmental and Social Responsibility Committee. |
Board
Experience:
Service on the Company’s Board of Directors since 2002, as
well as on the boards of several other companies, including
prior service as a director at ASC Pty Ltd, BHP and Normandy
Mining Limited.
9
Table of Contents
Donald C.
Roth, 67, Managing
Partner of EMP Global LLC, an international private equity firm,
since 1992. Member of Advisory Committee to the National
Treasury Management Agency, Republic of Ireland, since 1990.
Vice President and Treasurer of the World Bank from 1988 to 1992.
Director
Qualifications:
| • | Financial Expertise — Extensive financial management experience in various roles, including as former Vice President and Treasurer of the World Bank, as Chairman of the Audit Committee of Ireland’s National Pension Reserve Fund, and other executive management positions noted in the table above. | |
| • | International Experience — Extensive experience in international investment banking and capital markets. | |
| • | Compensation Expertise — Experience serving as a member of the Company’s Compensation Committee, including as Chairman. Participation in compensation, benefits and related decisions in senior executive roles. |
Board
Experience:
Service on the Company’s Board of Directors since 2004, as
well as on the boards of several other companies, including as a
current director of ISEQ Exchange Traded Fund Public
Limited Company (Ireland).
Simon R.
Thompson, 51, Executive
for the Anglo American group from 1995 to 2007; Executive
Director of Anglo American plc from 2005 to 2007; Non-Executive
Director of AngloGold Ashanti Ltd (South Africa) from 2004 to
2008; and Non-Executive Director of United Company Rusal
(Russia) from 2007 to 2009.
Director
Qualifications:
| • | Financial Expertise — Over 15 years experience in merchant and investment banking and financial management experience in executive roles. Service on the Audit Committee of the Boards of Directors of AMEC plc and Sandvik AB. | |
| • | International Experience — Extensive experience in international investment banking, as well as multinational mining experience with Anglo American, which operates in Africa, Europe, South and North America, Australia and Asia. | |
| • | Industry and Operational Experience — Over 15 years experience in the mining industry, including as former Chief Executive of Anglo Base, the base metals mining division of Anglo America, and other positions noted in the table above. Awarded a Masters Degree in Geology from Oxford University. | |
| • | Health, Safety, Environmental and Social Responsibility Expertise — Experience acting as Chairman of the Health, Safety and Environment committee of United Company Rusal and Chairman of the Compliance and Ethics committee of AMEC plc. Serves on the Company’s Operations and Safety Committee and as Chairman of the Environmental and Social Responsibility Committee. Member of Remuneration Committee of AMEC plc in 2010. |
Board
Experience:
Service on the Company’s Board of Directors since 2008, as
well as on the boards of several other companies, including as
the current Non-Executive Director of AMEC plc (United Kingdom)
and Sandvik AB (Sweden).
10
Table of Contents
Director
Nomination Process and Review of Director Nominees.
We have established a process for identifying and nominating
director candidates that has resulted in the election of a
highly-qualified and dedicated Board of Directors. The following
is an outline of the process for nomination of candidates for
election to the Board: (a) the Chief Executive Officer, the
Corporate Governance and Nominating Committee or other members
of the Board of Directors identify the need to add new Board
members, with careful consideration of the mix of
qualifications, skills and experience represented on the Board
of Directors; (b) the Chairman of the Corporate Governance
and Nominating Committee coordinates the search for qualified
candidates with input from management and other Board members;
(c) the Corporate Governance and Nominating Committee
engages a candidate search firm to assist in identifying
potential nominees, if it deems such engagement necessary and
appropriate; (d) selected members of management and the
Board of Directors interview prospective candidates; and
(e) the Corporate Governance and Nominating Committee
recommends a nominee and seeks full Board endorsement of the
selected candidate, based on its judgment as to which candidate
will best serve the interests of Newmont’s stockholders.
The Board of Directors has determined that directors should
possess the following minimum qualifications: (a) the
highest personal and professional ethics, integrity and values;
(b) commitment to representing the long-term interest of
the stockholders; (c) broad experience at the policy-making
level in business, government, education, technology or public
interest; and (d) sufficient time to effectively fulfill
duties as a Board member. The Corporate Governance and
Nominating Committee considers any candidates submitted by
stockholders on the same basis as any other candidate. Any
stockholder proposing a nomination should submit such
candidate’s name, along with curriculum vitae or other
summary of qualifications, experience and skills to the
Secretary, Newmont Mining Corporation, 6363 South Fiddlers Green
Circle, Greenwood Village, Colorado 80111 USA.
Newmont considers diversity, age and skills in deciding on
nominees. The Corporate Governance and Nominating Committee
considers a broad range of diversity, not limited to merely
race, gender or national origin, but considering all relevant
background and experience. We consider this through discussions
at the Corporate Governance and Nominating Committee meetings.
In evaluating a director candidate, the Corporate Governance and
Nominating Committee considers factors that are in the best
interests of the Company and its stockholders.
Independence of
Directors.
The Board affirmatively determines the independence of each
director and each nominee for election as director. For each
individual deemed to be independent, the Board has determined
(a) that there is no relationship with the Company, or
(b) the relationship is immaterial. The Board has
considered the independence standards of the New York Stock
Exchange and adopted more stringent categorical independence
standards described below.
The Board has determined that the relationships that fall within
the standards described in its independence standards are
categorically immaterial. As such, provided that no law, rule or
regulation precludes a determination of independence, the
following relationships are not considered to be material
relationships with the Company for purposes of assessing
independence: service as an officer, director, employee or
trustee or greater than five percent beneficial ownership in
(i) a supplier of goods or services to the Company if the
annual sales to the Company are less than $1 million or two
percent of the gross revenues or sales of the supplier,
whichever is greater; (ii) a lender to the Company if the
total amount of the Company’s indebtedness is less than one
percent of the total consolidated assets of the lender;
(iii) a charitable organization if the total amount of the
Company’s total annual charitable contributions to the
organization is less than $1 million or two percent of that
organization’s total annual gross receipts (excluding any
amounts received through the Company’s employee matching
program for charitable contributions), whichever is greater; or
(iv) any relationship arising out of a transaction, or
series of transactions, in which the amount involved is less
than $60,000.
In making its independence determinations, the Board considered
the circumstances described below.
Mr. Hamson is a director of Genesis Emerging Markets Ltd.
The committee administering the investment of Company funds for
its pension plan selected one of the Genesis Emerging Market
funds as one investment in its portfolio in 2010. This
relationship meets categorical independence standard
(i) above.
11
Table of Contents
Mr. Thompson is a director of Sandvik AB, an international
engineering group that provides certain products to the Company
including certain mining equipment for rock excavation.
Mr. Thompson also is a director of AMEC plc, an
international engineering and project management company, which
provides certain consulting services to the Company. These
relationships both meet the categorical independence standard
(i) above.
Based on the foregoing analysis, the Board determined that the
following directors are independent:
|
Glen A. Barton
|
Noreen Doyle | John B. Prescott | ||
|
Vincent A. Calarco
|
Veronica M. Hagen | Donald C. Roth | ||
|
Joseph A. Carrabba
|
Michael S. Hamson | Simon R. Thompson | ||
In addition, based on these standards, the Board has
affirmatively determined that Richard T. O’Brien is not
independent because he is President and Chief Executive Officer
of the Company.
Stock Ownership
of Directors and Executive Officers.
As of February 18, 2011, the directors and executive
officers of the Company as a group beneficially owned, in the
aggregate, 1,482,561 shares of the Company’s
outstanding capital stock, constituting, in the aggregate, less
than 1% of the Company’s outstanding capital stock.
No director or executive officer beneficially owned
(a) more than 1% of the outstanding shares of the
Company’s common stock or the exchangeable shares, or
(b) shares voting power in excess of 1% of the voting power
of the outstanding capital stock of the Company. Each director
and executive officer has sole voting power and dispositive
power with respect to all shares beneficially owned by them,
except as set forth below.
The following table sets forth the beneficial ownership of
common stock as of February 18, 2011 held by (a) each
current director and nominee; (b) the Chief Executive
Officer, the Chief Financial Officer and each of the other
highly compensated executive officers (the “Named Executive
Officers”); and (c) all current directors and
executive officers as a group. The address for each of the named
individuals below is
c/o Newmont
Mining Corporation, 6363 South Fiddlers Green Circle, Greenwood
Village, Colorado 80111 USA.
|
Beneficial |
||||||||||||||||||||
|
Name of |
Shares |
Restricted |
401(k) |
Option |
Ownership |
|||||||||||||||
|
Beneficial Owner
|
Owned | Stock(2) | Plan(3) | Shares(4) | Total | |||||||||||||||
|
Non-Employee
Directors(1)
|
||||||||||||||||||||
|
Glen A. Barton
|
18,876 | –0– | -0- | –0– | 18,876 | |||||||||||||||
|
Vincent A. Calarco
|
16,900 | –0– | -0- | –0– | 16,900 | |||||||||||||||
|
Joseph A. Carrabba
|
9,720 | –0– | -0- | –0– | 9,720 | |||||||||||||||
|
Noreen Doyle
|
12,035 | –0– | -0- | –0– | 12,035 | |||||||||||||||
|
Veronica M. Hagen
|
12,035 | –0– | -0- | –0– | 12,035 | |||||||||||||||
|
Michael S.
Hamson(5)
|
19,578 | –0– | -0- | –0– | 19,578 | |||||||||||||||
|
John B.
Prescott(6)
|
18,235 | –0– | -0- | –0– | 18,235 | |||||||||||||||
|
Donald C. Roth
|
13,295 | –0– | -0- | –0– | 13,295 | |||||||||||||||
|
Simon R. Thompson
|
10,150 | –0– | -0- | –0– | 10,150 | |||||||||||||||
|
Named Executive Officers
|
||||||||||||||||||||
|
Richard T. O’Brien
|
64,874 | 150,173 | 1,324 | 245,176 | 461,547 | |||||||||||||||
|
Russell Ball
|
14,579 | 19,050 | 1,566 | 86,229 | 121,424 | |||||||||||||||
|
Randy Engel
|
11,309 | 16,817 | 3,126 | 48,870 | 80,122 | |||||||||||||||
|
Brian Hill
|
15,001 | 22,227 | 259 | 27,752 | 65,239 | |||||||||||||||
|
Guy Lansdown
|
18,072 | 19,843 | 802 | 57,283 | 96,000 | |||||||||||||||
|
All directors and executive officers as a group, including
those named above (22 persons)
|
320,207 | 288,414 | 15,589 | 858,351 | 1,482,561 | |||||||||||||||
| (1) | For 2010, director stock units were awarded to all non-employee directors under the 2005 Stock Incentive Plan, except Mr. Prescott elected to receive shares of the Company’s common stock. The director stock units represent the right to receive shares of common stock and are immediately fully vested and non-forfeitable. The holders of director stock units do not have the right to vote the underlying shares; however, the director stock units accrue dividend equivalents, which are paid at the time the common shares are issued. Upon retirement from the board of directors, the holder of director stock units is entitled to receive one share of common stock for each director stock unit. |
12
Table of Contents
| (2) | Restricted Stock Awards (“RSAs”) of the Company’s common stock were awarded under the Company’s 2005 Stock Incentive Plan. RSAs can be voted, but are subject to forfeiture risk and other restrictions. In 2010, the Company granted the Named Executive Officers Restricted Stock Units (“RSUs”), instead of RSAs. The RSUs do not have voting rights, and are subject to forfeiture risk and other restrictions. The RSUs accrue dividend equivalents, which are paid at the time the units vest and common stock is issued. RSUs vesting within 60 days after February 18, 2011 are included in this column as follows: Richard T. O’Brien, 28,498 RSUs; Russell Ball, 10,633 RSUs; Randy Engel, 9,421 RSUs; Brian Hill, 11,448 RSUs; Guy Lansdown, 11,107 RSUs; and all executive officers as a group, 71,107 RSUs. | |
| (3) | Equivalent shares of the Company’s common stock held by the trustee in the Company’s 401(k) Plans. Each participant in such plan instructs the trustee as to how the participant’s shares should be voted. | |
| (4) | Shares of the Company’s common stock that the executive officers have the right to acquire through stock option exercises within 60 days after February 18, 2011. | |
| (5) | Mr. Hamson’s ownership includes 2,421 shares of common stock held in trust for Mr. Hamson’s Superannuation Fund, and 4,943 shares of common stock held in trust for Mr. Hamson’s spouse in her Superannuation Fund. Mr. Hamson shares voting and investment power with his spouse. | |
| (6) | Mr. Prescott’s ownership includes 8,176 shares of common stock held in trust for Mr. Prescott’s Superannuation Fund. Mr. Prescott’s spouse is also a director of the trust. Mr. Prescott shares voting and investment power with his spouse. |
Stock Ownership
of Certain Beneficial Owners.
The following table sets forth information with respect to each
person known by the Company to be the beneficial owner of more
than 5% of any class of the Company’s voting securities.
The share information contained herein is based on investor
filings with the SEC pursuant to Section 13(d) of the
Securities Exchange Act of 1934.
|
Amount and |
||||||||||||
|
Title of |
Nature of |
Percentage |
||||||||||
|
Name and Address of Beneficial Owner
|
Class | Beneficial Ownership | of Class | |||||||||
|
BlackRock, Inc.
|
Common Stock | (1 | ) | 9.80 | % | |||||||
|
40 East 52nd Avenue
|
||||||||||||
|
New York, NY 10022
|
||||||||||||
| Capital World Investors, a Division of Capital Research and Management Company | Common Stock | (2 | ) | 7.1 | % | |||||||
|
333 South Hope Street
|
||||||||||||
|
Los Angeles, CA 90071
|
||||||||||||
| (1) | As of December 31, 2010, BlackRock, Inc. and its subsidiaries had sole power to vote and dispose of 48,372,757 shares of Newmont common stock. | |
| (2) | As of December 31, 2010, Capital World Investors, a Division of Capital Research and Management Company (“CRMC”) beneficially owned 35,109,209 shares of common stock. Capital World Investors is deemed to be the beneficial owner of such shares as a result of CRMC acting as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940. Capital World Investors reported that it had sole power to vote and dispose of all such shares. It disclaimed beneficial ownership of all reported shares. |
Directors
Compensation.
Effective January 1, 2011, the annual compensation for
non-employee directors for their service on the Board of
Directors is as follows:
|
Annual Retainer:
|
$100,000 for each Director $25,000 for the Chairman of the Audit Committee $5,000 for each Audit Committee Member $20,000 for the Chairman of the Compensation Committee $10,000 for the Chairman of each standing committee, other than the Chairman of the Audit Committee and Compensation Committee $240,000 for the Non-Executive Chairman of the Board |
|
|
Attendance Fees:
|
$2,000 for each Committee Meeting No attendance fees for Board meetings, except $2,000 for every meeting in excess of 15 per year | |
|
Stock Award:
|
$120,000 of common stock or director stock units each year under the 2005 Stock Incentive Plan. The fair market value is determined on the third business day following election by the Board or re-election at the Company’s Annual Meeting. |
13
Table of Contents
During 2010, the annual compensation for non-employee directors
for their service on the Board of Directors was the same as set
forth above, except for:
|
2010 Annual Retainer:
|
$80,000 for each Director $225,000 for the Non-Executive Chairman of the Board $15,000 for the Chairman of the Audit Committee $15,000 for the Chairman of the Compensation Committee |
The following table summarizes the total compensation paid or
earned by the Company’s non-employee directors during 2010:
2010 Directors
Compensation
|
Fees Earned or |
All Other |
|||||||||||||||
|
Paid in Cash |
Stock
Awards(2) |
Compensation |
Total |
|||||||||||||
|
Name(1)
|
($) | ($) | ($) | ($) | ||||||||||||
|
Glen A. Barton
|
$ | 102,000 | $ | 120,000 | –0– | $ | 222,000 | |||||||||
|
Vincent A. Calarco
|
$ | 338,000 | $ | 120,000 | –0– | $ | 458,000 | |||||||||
|
Joseph A. Carrabba
|
$ | 98,000 | $ | 120,000 | –0– | $ | 218,000 | |||||||||
|
Noreen Doyle
|
$ | 108,000 | $ | 120,000 | –0– | $ | 228,000 | |||||||||
|
Veronica M. Hagen
|
$ | 102,000 | $ | 120,000 | –0– | $ | 222,000 | |||||||||
|
Michael S. Hamson
|
$ | 93,000 | $ | 120,000 | –0– | $ | 213,000 | |||||||||
|
Robert J.
Miller(3)
|
$ | 29,200 | –0– | $ | 253,488 | $ | 282,688 | |||||||||
|
John B. Prescott
|
$ | 100,000 | $ | 120,000 | –0– | $ | 220,000 | |||||||||
|
Donald C. Roth
|
$ | 117,000 | $ | 120,000 | –0– | $ | 237,000 | |||||||||
|
James V.
Taranik(4)
|
$ | 56,087 | $ | 120,000 | $ | 709,111 | $ | 885,198 | ||||||||
|
Simon R. Thompson
|
$ | 108,000 | $ | 120,000 | –0– | $ | 228,000 | |||||||||
| (1) | Mr. O’Brien’s compensation is shown in the Summary Compensation Table. | |
| (2) | For 2010, all non-employee directors elected to receive $120,000 in the form of director stock units, except Mr. Prescott who elected to receive his award in the form of the Company’s common stock. Amounts shown represent dollar amounts recognized for 2010 for financial statement reporting purposes under Statement of Financial Accounting Standard No. 123R. The number of shares of common stock was calculated based on the fair value of the Company’s common stock on the third business day following re-election at the Company’s Annual Meeting by taking the average of the high and low sales prices for a share of common stock on the New York Stock Exchange for such date, as reported by Bloomberg Professional, the independent commercial reporting service selected by the Compensation Committee of the Board of Directors. There are no other assumptions made in the valuation of the stock awards. | |
| (3) | Gov. Miller retired from the Board of Directors in April 2010. Upon retirement, 1,303 director stock units awarded in 2005 in connection with Newmont’s director stock award program, vested and one share of Newmont common stock for each director stock award was issued to Gov. Miller. The value of such stock award was determined by taking the closing price of a share of Newmont common stock on Gov. Miller’s date of retirement. The amount shown as All Other Compensation represents (a) $69,189 for common stock issued on retirement, (b) $34,305 in cash retirement payments (see description under “Retirement” below), (c) accrued dividends of $2,475, and (d) $147,519 for services as Chairman of the Nevada Advisory Panel as described on page 18. | |
| (4) | Dr. Taranik retired from the Board of Directors in July 2010. Upon retirement, 12,214 director stock units awarded to Dr. Taranik from 2005 to 2010 in connection with Newmont’s director stock award program, vested and one share of Newmont common stock for each director stock award was issued to Dr. Taranik. The value of such stock award was determined by taking the closing price of a share of Newmont common stock on Dr. Taranik’s date of retirement. The amount shown as All Other Compensation represents (a) $676,655 for common stock issued on retirement from the Board, (b) $21,236 in cash retirement payments, and (b) accrued dividends of $11,220. It is currently contemplated that in 2011 Dr. Taranik will receive approximately $80,000 for consulting services, such amount is not included above. |
Retirement.
The Company has no current retirement plan for non-employee
directors. The retirement payments included in the “All
Other Compensation” column of the table above paid to Gov.
Miller and Dr. Taranik were grandfathered under the
previous plan, which provided that on retirement from the Board
of Directors at any time after attaining age 65, a
non-employee director who was serving on the Board of Directors
on January 27, 1999 and who has served for at least ten
consecutive years as a Director is entitled to be paid an annual
sum of $50,000 for life.
14
Table of Contents
Outstanding
Awards. The following table shows
outstanding equity compensation for all non-employee directors
of the Company as of December 31, 2010:
| Stock Awards | ||||||||
|
Aggregate |
Market Value |
|||||||
|
Director |
of Outstanding |
|||||||
|
Stock Units |
Director Stock |
|||||||
|
Outstanding |
Units |
|||||||
|
Name
|
(#) | ($) | ||||||
|
Glen A. Barton
|
9,213 | $ | 565,955 | |||||
|
Vincent A. Calarco
|
12,214 | $ | 750,306 | |||||
|
Joseph A. Carrabba
|
9,720 | $ | 597,100 | |||||
|
Noreen Doyle
|
12,035 | $ | 739,310 | |||||
|
Veronica M. Hagen
|
12,035 | $ | 739,310 | |||||
|
Michael S. Hamson
|
12,214 | $ | 750,306 | |||||
|
John B. Prescott
|
10,059 | $ | 617,924 | |||||
|
Donald C. Roth
|
12,214 | $ | 750,306 | |||||
|
Simon R. Thompson
|
10,150 | $ | 623,515 | |||||
Share
Ownership Guidelines. All directors are
encouraged to have a significant long-term financial interest in
the Company. To encourage alignment of the interests of the
directors and the stockholders, each director is expected to
own, or acquire within three years of becoming a director,
shares of the Company’s common stock having a market value
of five times the annual cash retainer payable under the
Company’s director compensation policy. All directors meet
the share ownership guidelines.
Compensation
Consultant. The Board of Directors has
engaged Frederic W. Cook & Co. (“Cook &
Co.”) during 2010 to assist in the evaluation of
independent director compensation. For a description of
executive compensation consulting services provided by
Cook & Co. to the Compensation Committee of the Board
of Directors, see
pages 25-26
of the Compensation, Discussion and Analysis.
Committees of the
Board of Directors and Attendance.
Attendance at
Meetings. During 2010, the Board of
Directors held eight meetings. Each incumbent director attended
75% or more of all meetings of the Board of Directors and
committees of the Board of Directors on which he or she served.
It is the policy and practice of the Company that nominees for
election at the Annual Meeting of Stockholders attend the
meeting. All of the Board members at the time of the 2010 Annual
Meeting of Stockholders held on April 23, 2010, attended
the meeting.
Board
Committees. The Board of Directors has, in
addition to other committees, Audit, Compensation, Corporate
Governance and Nominating, Operations and Safety, and
Environmental and Social Responsibility Committees. All members
of these five committees are independent, as defined in the
listing standards of the New York Stock Exchange and the
Company’s Corporate Governance Guidelines. Each Committee
functions under a written charter adopted by the Board which are
available on our website at
http://www.newmont.com/our-investors/our-governance.
The current members of these Committees and the number of
meetings held in 2010 are shown in the following table:
15
Table of Contents
Committees
of the Board of Directors
|
Audit |
Meetings |
|||||
|
Committee Members
|
Functions of the Committee
|
in 2010 | ||||
|
Noreen Doyle, Chair
|
• | please refer to “Audit Committee Report.” | 4 | |||
|
Vincent A. Calarco Michael S. Hamson |
|
Compensation |
Meetings |
|||||
|
Committee Members
|
Functions of the Committee
|
in 2010 | ||||
|
Donald C. Roth, Chairman Glen A. Barton |
• | determines the components and compensation of the Company’s key employees, including its executive officers. | 6 | |||
|
Veronica M. Hagen
|
• | reviews plans for management development and senior executive succession. | ||||
| • | administers (determines) awards of stock based compensation, including stock options, restricted stock and restricted stock units, which are subject to ratification by the full Board of Directors. | |||||
| • | please refer to “Report of the Compensation Committee on Executive Compensation” and the “Compensation, Discussion and Analysis” beginning on pages 19 and 20, respectively. |
|
Corporate Governance |
||||||
|
and Nominating |
Meetings |
|||||
|
Committee
Members(1)
|
Functions of the Committee
|
in 2010 | ||||
|
Vincent A. Calarco, Chairman
|
• | proposes slates of directors to be nominated for election or re-election. | 5 | |||
|
Glen A. Barton
|
• | proposes slates of officers to be elected. | ||||
|
Donald C. Roth
|
• | conducts annual Board and committee evaluations. | ||||
| • | conducts evaluations of the performance of the chief executive officer. | |||||
| • | responsible for recommending amount of director compensation. | |||||
| • | advises Board of corporate governance issues. |
|
Operations and Safety |
Meetings |
|||||
|
Committee
Members(1)
|
Functions of the Committee
|
in 2010 | ||||
|
John B. Prescott, Chairman
|
• | assists the Board in its oversight of operations and safety issues. | 5 | |||
|
Joseph A. Carrabba Veronica M. Hagen Simon R. Thompson |
• | administers the Company’s policies, processes, standards and procedures designed to accomplish the Company’s goals and objectives relating to these issues. |
|
Environmental and |
||||||
|
Social Responsibility |
Meetings |
|||||
|
Committee
Members(1)
|
Functions of the Committee
|
in 2010 | ||||
|
Simon Thompson, Chairman Joseph A. Carrabba |
• | assists the Board in its oversight of sustainable development, environmental affairs, community relations and communications issues. | 4 | |||
| Noreen Doyle(2) | • | administers the Company’s policies, processes, standards and procedures designated to accomplish the Company’s goals and objectives relating to these issues. |
| (1) | Following Gov. Miller’s retirement, the Board reduced the size of the Corporate Governance and Nominating Committee to three members and the Environmental and Social Responsibility Committee to three members. Following Dr. Taranik’s retirement, the Board also reduced the size of the Operations and Safety Committee to four members. | |
| (2) | Noreen Doyle was appointed a member of the Environmental and Social Responsibility Committee following Dr. Taranik’s retirement. |
Corporate
Governance.
Corporate
Governance Guidelines and Charters. The
Company has adopted Corporate Governance Guidelines that outline
important policies and practices regarding the governance of the
Company. In addition, each of the committees has adopted a
charter outlining responsibilities and operations. The Corporate
Governance Guidelines and the charters are available on our
website at
http://www.newmont.com/our-investors/our-governance.
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Board
Leadership and Independent Chairman. The
Board of Directors selects the Chairman of the Board in the
manner and upon the criteria that it deems best for the Company
at the time of selection. The Board of Directors does not have a
prescribed policy on whether the roles of the Chairman and Chief
Executive Officer should be separate or combined. At all times,
the Board of Directors has either a Non-Executive Chairman or
lead director of the Board, which Chairman or lead director will
meet the Company’s independence criteria and will be
elected annually by the independent members of the Board of
Directors.
Before 2008, the positions of Chairman of the Board and Chief
Executive Officer were held by a single person. Due to the
potential efficiencies of having the Chief Executive Officer
also serve in the role of Chairman of the Board and the long
tenure of the Chief Executive Officer, the Board of Directors
determined that the interests of the Company and its
stockholders were best served by the leadership and direction
provided by a single person as Chairman and Chief Executive
Officer. In 2007, the Board of Directors considered a
shareholder proposal included in the 2007 Proxy Statement
regarding the separation of such roles. The Board agreed to
separate the roles as of January 1, 2008 in response to the
stockholder vote and the Board’s determination regarding
what was in the best interest of the Company at such time. The
Board will continue to evaluate whether this leadership
structure is in the best interests of the stockholders on a
regular basis.
In January 2008, the independent members of the Board of
Directors elected Vincent A. Calarco an independent
Non-Executive Chairman of the Board. Mr. Calarco has been
re-elected each year since 2008 as Non-Executive Chairman. He
presides at independent directors sessions scheduled at each
regular Board meeting. The Non-Executive Chairman serves as
liaison between the Chief Executive Officer and the other
independent directors, approves meeting agendas and schedules
and notifies other members of the Board of Directors regarding
any significant concerns of stockholders or interested parties
of which he or she becomes aware. The Non-Executive Chairman
presides at stockholders meetings and provides advice and
counsel to the Chief Executive Officer.
Board
Oversight of Risk Management. The Board
of Directors is engaged in company-wide risk management
oversight. Directors are entitled to rely on management and the
advice of the Company’s outside advisors and auditors, but
must at all times have a reasonable basis for such reliance. The
Board of Directors relies upon the Chief Executive Officer and
Chief Financial Officer to supervise the
day-to-day
risk management, each of whom provides reports directly to the
Board of Directors and certain Board Committees, as appropriate.
The Company has a global Enterprise Risk Management team, led by
the Company’s Vice President and Treasurer. The Enterprise
Risk Management team’s objectives include conducting the
compensation risk assessment and reporting the process and
findings to the Audit Committee and the Compensation Committee
regularly, and to the full Board of Directors on at least an
annual basis.
The Board of Directors also delegates certain oversight
responsibilities to its Board Committees. For a description of
the functions of the various Board Committees, see “Board
Committees” above. For example, while the primary
responsibility for financial and other reporting, internal
controls, compliance with laws and regulations, and ethics rests
with the management of the Company, the Audit Committee provides
risk oversight with respect to the Company’s financial
statements, the Company’s compliance with legal and
regulatory requirements and corporate policies and controls, the
independent auditor’s selection, retention, qualifications,
objectivity and independence, and the performance of the
Company’s internal audit function. Additionally, the
Compensation Committee provides risk oversight with respect to
the Company’s compensation program. For a discussion of the
Compensation Committee and Enterprise Risk Management
team’s assessments of compensation-related risks, see
“Compensation Discussion and Analysis — Risk
Assessment.” The Operations and Safety Committee provides
oversight and direction with regard to safety and operating
risks. The Environmental and Social Responsibility Committee
provides oversight and direction with respect to environmental,
social responsibility and community relations risks.
Communications
with Stockholders or Interested
Parties. Any stockholder or interested
party who desires to contact the Company’s Chairman, the
non-management directors as a group or the other members of the
Board of Directors may do so by writing to the Secretary,
Newmont Mining Corporation, 6363 South Fiddlers Green Circle,
Greenwood Village, Colorado 80111 USA. Any such communication
should state the number of shares owned, if applicable. The
Secretary will forward to the Chairman any such communication
addressed to him, the non-management directors as a group or to
the Board of Directors generally, and will forward such
communication to other Board members, as appropriate, provided
that such communication addresses a legitimate business issue.
Any communication relating to accounting, auditing or fraud will
be forwarded immediately to the Chairman of the Audit Committee.
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Majority
Voting Policy. At the 2010 Annual
Meeting of Stockholders, the stockholders approved a proposal
submitted by United Brotherhood of Carpenters and Joiners of
America to initiate the appropriate process to amend the
Company’s governance documents to provide that director
nominees be elected by the affirmative vote of the majority of
votes cast at an Annual Meeting in a non-contested election. As
a result, the Board of Directors amended the Company’s
By-Laws to require that in an uncontested election each director
will be elected by a vote of the majority of the votes cast,
which means the number of votes cast “for” a
director’s election exceeds 50% of the number of votes cast
with respect to that director’s election. Notwithstanding
the foregoing, in the event of a “contested election”
of the directors (as defined in the Company’s By-Laws),
directors shall be elected by the vote of a plurality of the
votes cast at any meeting for the election of directors at which
a quorum is present.
If a nominee for director does not receive the vote of at least
a majority of votes cast at an Annual Meeting, it is the policy
of the Board of Directors that the director must tender his or
her resignation to the Board. In such a case, the Corporate
Governance and Nominating Committee will make a recommendation
to the Board, whether to accept or reject the tendered
resignation, taking into account all of the facts and
circumstances. The director who has tendered his or her
resignation will not take part in the deliberations. For
additional information, our Corporate Governance Guidelines
describing this policy are available on our website at
www.newmont.com/our-investors/our-governance.
Retirement
Age. The Company’s retirement
policy for non-employee directors provides that, except at the
request of the Board of Directors, no non-employee director may
stand for re-election to the Board after reaching age 72.
Code of
Business Ethics and Conduct. Newmont has
adopted a Code of Business Ethics and Conduct (the
“Code”) applicable to all of its directors, officers
and employees, including the Chief Executive Officer, the Chief
Financial Officer, the Chief Accounting Officer and other
persons performing financial reporting functions. The Code is
available on our website at
http://www.newmont.com/our-investors/our-governance.
The Code is designed to deter wrongdoing and promote
(a) honest and ethical conduct; (b) full, fair,
accurate, timely and understandable disclosures;
(c) compliance with laws, rules and regulations;
(d) prompt internal reporting of Code violations; and
(e) accountability for adherence to the Code. The Company
will disclose any amendments to, or waivers from, certain
provisions of the Code that apply to the Company’s
directors or executive officers within four days of such event
on
Form 8-K.
Related Person
Transactions. The Board has adopted
written policies and procedures for approving related person
transactions. Any transaction with a related person, other than
transactions available to all employees generally or involving
aggregate amounts of less than $120,000 must be approved or
ratified by the Audit Committee, the Compensation Committee for
compensation matters or disinterested members of the Board. The
policies apply to all executive officers, directors and their
family members and entities in which any of these individuals
has a substantial ownership interest or control.
With approval of the Board of Directors, Gov. Miller, who
retired from the Board of Directors in April 2010, was appointed
the Newmont Chairman of a Nevada Advisory Panel, for a two-year
term effective April 23, 2010 through April 22, 2012.
Gov. Miller has provided and will continue to provide high-level
strategic advice on Nevada political and operational issues to
the Company. For his services, Newmont will pay him an annual
fee of $215,000, $147,519 of which was paid to Gov. Miller in
2010 for services rendered.
18
Table of Contents
Report
of the Compensation Committee on Executive
Compensation
Compensation
The Compensation Committee of the Board of Directors (the
“Compensation Committee”) is composed entirely of
directors who are not officers or employees of the Company or
any of its subsidiaries, and are independent, as defined in the
listing standards of the New York Stock Exchange and the
Company’s Corporate Governance Guidelines. The Compensation
Committee has adopted a Charter that describes its
responsibilities in detail, and the Compensation Committee and
Board review and assess the adequacy of the Charter on a regular
basis. The Compensation Committee has the responsibility of
taking the leadership role with respect to the Board’s
responsibilities relating to compensation of the Company’s
key employees, including the Chief Executive Officer, the Chief
Financial Officer and the other executive officers. Additional
information about the Compensation Committee’s role in
corporate governance can be found in the Compensation
Committee’s Charter, available on the Company’s web
site at www.newmont.com under the Our Investors
section.
The Compensation Committee has reviewed and discussed with
management the Company’s Compensation Discussion and
Analysis section of this Proxy Statement. Based on such review
and discussions, the Compensation Committee has recommended to
the Board of Directors that the Compensation Discussion and
Analysis section be included in this Proxy Statement and the
Company’s Annual Report on
Form 10-K
for the year ended December 31, 2010.
Submitted by the following members of the Compensation Committee
of the Board of Directors:
Donald C. Roth, Chairman
Glen A. Barton
Veronica M. Hagen
Glen A. Barton
Veronica M. Hagen
19
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Compensation
Discussion and Analysis
Our Compensation Discussion and Analysis (“CD&A”)
describes Newmont’s executive compensation programs and
compensation decisions in 2010 for our Named Executive Officers
(“Officers”), who for 2010 includes:
| • | Richard T. O’Brien, President and Chief Executive Officer; | |
| • | Russell Ball, Executive Vice President and Chief Financial Officer; | |
| • | Brian A. Hill, Executive Vice President, Operations; | |
| • | Randy Engel, Executive Vice President, Strategic Development; and | |
| • | Guy Lansdown, Executive Vice President, Discovery and Development. |
The information is presented in the CD&A as follows:
| • | Executive Summary: Provides the highlights of the Company’s business performance, executive compensation structure and the relationship between the two, and the key Compensation Committee actions in 2010; | |
| • | Philosophy and Objectives: An overview of the compensation philosophy and objectives of the executive compensation program at Newmont; | |
| • | Components of Total Compensation: Provides details of the components within executive pay, how they are structured and why they are used; | |
| • | 2010 Compensation: Provides details regarding current pay levels and incentive programs; and | |
| • | Other Policies and Considerations: Provides information on other programs, governance, risk and related items. |
Executive
Summary.
Company
Overview and Summary of 2010 Business
Results. Newmont is one of the world’s
largest gold producers and is the only gold company included in
the S&P 500 Index and Fortune 500, and was the first gold
company included in the Dow Jones Sustainability Index-World. We
are engaged in the exploration for and acquisition of gold,
copper and certain base metals properties. We have significant
assets or operations in the United States, Australia, Peru,
Indonesia, Ghana, Canada, New Zealand and Mexico.
During 2010 the Company continued on its journey of
transformation and evolution. In our drive to be the most valued
and respected mining company through industry-leading
performance, we have successfully executed on the key benchmarks
that we set out for the Company at the beginning of the year.
Delivered
strong operating and financial performance.
| • | Consolidated gold production of approximately 6.5 million ounces (5.4 million ounces attributable to Newmont) at costs applicable to sales of $485 per ounce; | |
| • | Consolidated copper production of approximately 600 million pounds (327 million pounds attributable to Newmont) at costs applicable to sales of $0.80 per pound; | |
| • | Record Revenues of $9.54 billion, an increase of 24% over 2009; | |
| • | Gold operating margin (average realized price per ounce less consolidated costs applicable to sales per ounce) of $737 per ounce, an increase of 30% over 2009 compared to an increase of 25% in the average realized gold price for the same period; | |
| • | Record net income attributable to Newmont stockholders of $4.63 per share; | |
| • | Record cash flow from continuing operations of $3.2 billion, an increase of 9% over 2009; |
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| • | Net increase of 1.7 million ounces of gold reserves to 93.5 million ounces at December 31, 2010; and | |
| • | Total Shareholder Return (“TSR”) of 26%. |
Implemented
Business Excellence initiatives to further drive continuous
improvement and business efficiencies in our
organization.
| • | Continuing to improve our safety performance; | |
| • | Continuing evolution to a process-driven culture; | |
| • | Maintaining our industry-leading environmental, social and community relations commitments; | |
| • | Remaining a leading member of the Dow Jones Sustainability World Index; and | |
| • | Investing in people. |
Our executive compensation programs support the achievement of
the results stated above, as further described in our CD&A.
Compensation
Structure. Our executive compensation
program — composed of salary, short-term incentives
and long-term incentives — is intended to align the
interests of our Officers with those of our stockholders. This
program accomplishes this by rewarding performance that is
designed to, over time, result in an increase in the value of
our stockholder’s investments in Newmont. We believe that
the proportion of at-risk, performance-based compensation should
rise as an employee’s level of responsibility increases. As
such, short- and long-term incentives made up approximately 80%
of 2010 target total compensation (as noted in the charts below)
with long-term and equity compensation representing a
significant portion of total pay. Overall, approximately
two-thirds of targeted compensation for our Officers is based on
the long-term financial and stock price performance of Newmont.
The incentive compensation actually received by Officers varies
based upon the Company’s short-term and long-term
performance and Newmont’s stock price. While incenting
performance, the design of our program is intended to mitigate
excessive risk taking by executives. The mix and structure of
compensation as described in this CD&A strike an
appropriate balance to promote sustained performance without
motivating or rewarding excessive risk.
Managing
Executive Compensation in the Commodities
Industry. Our stock price is heavily
influenced by gold, copper and other commodity prices, which are
in turn primarily driven by macroeconomic factors that are
outside of the Company’s control. Since our stock price is
significantly influenced by these external factors,
Newmont’s compensation program is designed to focus
management’s efforts in areas where they have the most
influence on driving business performance, as well as to
motivate and retain outstanding leadership through various
economic and commodity price cycles. We believe this approach
aligns the incentive structure with business performance
elements that support the goal of providing long-term
performance gains for our stockholders. To achieve this, the
Company utilizes a comprehensive performance-based compensation
structure, ensuring an appropriate balance of operational,
financial and share price incentives based on:
| • | Annual and long-term performance; | |
| • | Internal and external performance comparisons; | |
| • | Absolute and relative performance measures; and | |
| • | Formulaic and discretionary programs. |
This structure is illustrated in the following chart.
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Newmont’s
Executive Compensation Structure
Company
Performance and Relationship to Officer Compensation for
2010. In 2010, management delivered solid
results on operational, financial and stockholder return
measures, and these results had direct linkages to our incentive
compensation plans. The measures used in incentive compensation
are what we believe to be the key drivers of Newmont’s
long-term success and stock price performance, and are directly
correlated to the pay received by the Company’s Officers.
Components of Officer compensation increased or decreased in
2010 based on the level of achievement of these goals as shown
in the chart below.
(See the “2010 Compensation” section of this Proxy
Statement for additional information on the measures, results
and payments.)
|
Corporate Metric |
Newmont Performance |
|||||||||||
| Incentive Plan Measures | Supported | (against target) | Resulting Officer Compensation | Linkage to Officer Compensation | ||||||||
|
Gold and Copper Production
|
Revenue | Below target | Below target | |||||||||
|
Costs Applicable to Sales
|
Operating Income | At target | At target | |||||||||
|
Capital Expenditures
|
Efficient Use of Assets/Balance Sheet Strength | Above target | Above target |
Short-term Incentives; Financial Performance Long-term Incentives |
||||||||
|
Reserves
|
Assets; Future Revenue | Above target | Above target | |||||||||
|
Non-Reserve Mineralization
|
Assets; Future Revenue | Above target | Above target | |||||||||
|
Share Price Growth
|
Share Price Performance | Above median | Above target | |||||||||
|
Total Shareholder Return vs. Peers
|
Share Price Performance vs. Peers | Above target | Above target |
Performance-Leveraged Long-term Incentives |
||||||||
22
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Incentive Plan
Measures, Overall Company Performance and Resulting
Compensation. The metrics listed below are
general indicators of the Company’s overall performance in
2010 which results from the performance on the incentive plan
measures. The Compensation Committee believes the incentive plan
measures are the key drivers of the metrics below and support
sustained, long-term performance. As noted previously, the
Compensation Committee prefers to use a balance of operational
and financial measures, rather than only high-level financial
measures, to provide a more direct “line of sight” and
to incent management’s performance on the key performance
drivers. Again, this balanced approach also helps to manage
commodity price volatility, such as the record gold price
experienced in 2010, by incorporating measures that are not
significantly influenced by commodity prices.
|
(1)
|
“2010 Pay” includes an estimated stock option award for 2010 performance as it was not determined as of the date of the filing of this Proxy Statement. |
Summary of Key
Compensation Committee Actions. The
following highlights some of the key actions by the Compensation
Committee, as well as the changes in Officer compensation, in
2010.
Policy changes:
| • | Introduced a new long-term incentive plan, based on share price performance to further align executive compensation, stockholder returns and company performance, is based on: |
| • | Newmont’s change in share price over the performance period; and | |
| • | Newmont’s TSR performance relative to its peer group TSR; |
| • | Added copper to the incentive plan measures for both production and costs given the Company’s significant production of copper; | |
| • | Increased the stock ownership requirements for the Chief Executive Officer from four-times to five-times base salary; | |
| • | Revised the executive pay philosophy to reflect a “reasonable range” for targeting compensation based on a variety of internal and external factors; | |
| • | Revised the Compensation Committee charter to formally add items regarding annual review of stockholder relations, peer group review, management development and succession planning, and annual review of severance policies; and | |
| • | Established the “Compensation Committee Operating System” to support the governance activities of the Compensation Committee. |
These policy changes build upon our strong governance model and
other policies that are in place, including:
| • | Stock ownership requirements for Officers to own significant holdings of Newmont stock; |
23
Table of Contents
| • | A clawback policy to recover excess compensation from incentive payouts and stock gains if the financial results were misstated, whether intentionally or by administrative error; | |
| • | Stock trading policy prohibiting executives from buying Newmont stock on margin, or hedging Newmont stock holdings; | |
| • | Change-of-control plans that provide cash payments only upon termination following a change-of-control (“double-trigger”); | |
| • | No employment contracts for Officers; | |
| • | Prohibition against the repricing of stock options without stockholder approval; and | |
| • | Use of an independent compensation consultant, Frederic W. Cook & Co., Inc. (“Cook & Co.”), to advise regarding executive and director compensation (the consultant does not perform any other services to the Company). |
Summary of Changes in Compensation, Performance Results and
Corresponding Compensation Plan Payments (further details are
provided in the “2010 Compensation” section of this
CD&A):
| • | The Company adjusted base salaries following a competitive market review completed by the Compensation Committee’s independent consultant, Cook & Co. The base salaries of the Officers were below the targeted competitive market position. Given this, and based on the performance of the Officers and overall Company performance, the Compensation Committee approved salary increases which place the Officers within their competitive range; | |
| • | For the Corporate Performance Bonus (based on the measures stated above), the aggregate performance for 2010 was 124.3% of target; | |
| • | For the Strategic Objectives Bonus (based on individual qualitative and quantitative goals), the awards ranged from 98%-136% of the mid-point; | |
| • | For the Financial Performance Stock Bonus Plan (based on the weighted average three-year prior performance of the financial and operational measures noted above), the aggregate three-year performance was 126.7% of target; | |
| • | For the Performance-Leveraged Stock Units (based on stock price growth and relative total shareholder return), Newmont’s stock price increased 25.3% in 2010, resulting in a TSR performance that placed Newmont at the 74.7th percentile of the peer companies, which combined, funded the program at 174.7%; and | |
| • | In addition, the Company awarded stock options to the Officers with compensation from the stock options fully tied to any growth in share price over the vesting period. |
Philosophy and
Objectives.
Compensation
Philosophy. Newmont’s executive
compensation programs are designed to effectively link the
actions of our executives to business outcomes that drive value
creation for stockholders. In designing these programs, we are
guided by the following principles:
| • | Maintaining a clear link between the achievement of business goals and compensation payout. Our Compensation Committee believes that (1) Officers should be measured and paid on performance that leads to long-term success and relative stock price improvement, and (2) Officer compensation programs can be an effective means of driving the behavior needed to accomplish our objectives, but only if each executive clearly understands how achievement of predetermined business goals influences his or her compensation. | |
| • | Selecting the right performance measures. Equally important is the selection of those performance measures which need to be measurable and linked to both increased stockholder value and Newmont’s short- and long-term success. | |
| • | Sharing information and encouraging feedback. Focused and clear program design supports transparency for our stockholders. It is important for stockholders to understand the basis for our Officers’ compensation, as this provides stockholders insight into our goals, direction and the manner in which |
24
Table of Contents
| resources are being used to increase stockholder value. We welcome stockholder input and have regularly responded to feedback from stockholders in this regard. |
As a core component of Newmont’s values, we are committed
to transparency and open disclosure. We hope this information
provides insight into the process that we follow in designing
and implementing our executive compensation programs.
Compensation
Objectives. We believe that executive
compensation should be directly linked to continuous
improvements in corporate performance and increases in
stockholder value. Newmont’s executive compensation
programs are designed to:
| • | Motivate executives to achieve business goals that drive value for our stockholders; | |
| • | Provide competitive compensation opportunities to attract and retain highly qualified executives; | |
| • | Emphasize long-term performance, which includes our high safety and social responsibility standards; | |
| • | Blend the mix of cash and equity compensation and financial and non-financial performance; | |
| • | Provide incentives to improve performance without taking excessive risks; and | |
| • | Encourage an ownership mentality and stewardship of long-term stockholder interests. |
Components of
Total Compensation.
The components of target total direct compensation for our
Officers are described in the Executive Summary and stated
below. As noted in our Philosophy section, we emphasize
performance-based “at-risk” compensation, based on
operational, financial and share price performance.
Developing Our
Executive Compensation Program. Each year
the Compensation Committee conducts a detailed analysis of
executive compensation designed to:
| • | Assess the competitiveness of the Company’s executive compensation levels against peer groups; | |
| • | Consider the desired target benchmark for total executive compensation levels; and | |
| • | Make necessary refinements to the compensation components to further align executive compensation with performance goals and ensure good governance practices. |
The Compensation Committee meets on a regular basis with the
Chief Executive Officer, representatives from the Company’s
Human Resources, Corporate Legal, and Finance Departments. The
role of management is to provide the Compensation Committee with
perspectives on the business context and individual performance
to assist the Compensation Committee in making its decisions.
The Company’s Human Resources Department support the
Compensation Committee by providing data and analyses on
compensation levels and trends. In addition, external
independent compensation experts consult with the Compensation
Committee regarding specific topics as further described in the
following paragraph. An executive session, without management
present, is generally held at the end of each Compensation
Committee meeting. The independent members of the Board of
Directors make all decisions regarding the Chief Executive
Officer’s compensation in executive session, upon the
recommendation of the Compensation Committee. The Committee
Chairman provides regular reports to the Board of Directors
regarding actions and discussions at Compensation Committee
meetings.
The Compensation Committee, which has the authority to retain
special counsel and other experts, including compensation
consultants, has engaged Cook & Co. to assist the
Compensation Committee in making its decision
25
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and to provide (1) advice regarding trends in executive
compensation, (2) independent review of management
proposals and (3) an independent review and recommendation
on Chief Executive Officer compensation, as well as other items
that come before the Compensation Committee. Cook &
Co. has reviewed the compensation philosophy, objectives,
strategy, benchmark analyses and recommendations regarding
Officer compensation. Cook & Co. is engaged solely by
the Compensation Committee and does not provide any services or
advice directly to management.
When making compensation decisions for Officers, the
Compensation Committee considers factors beyond market data and
the advice of consultants. The Compensation Committee considers
the individual’s performance, tenure and experience, the
overall performance of the Company, any retention concerns, the
individual’s historical compensation and the compensation
of the individual’s peers within the Company and market.
While the Compensation Committee does have certain guidelines,
goals, and tools that it uses to make its decisions, as
explained below, the compensation process is not an exact
science but incorporates the reasoned business judgment of the
Compensation Committee. In making decisions for executives other
than the Chief Executive Officer, the input and perspective of
the Chief Executive Officer is considered by the Compensation
Committee.
Compensation
Components and Alignment to Compensation Philosophy.
The components of our executive compensation program contain six
main elements as shown in the chart above. We explain the
philosophy and key features of each below.
Determining
the Proper Mix of Different Pay Elements. In
determining how we allocate an executive’s total
compensation package among various components, we emphasize
compensation elements that reward performance on measures that
align closely with business success, underscoring the
pay-for-performance
philosophy. A significant portion of our executive compensation
is performance-based or “at-risk.” Our Chief Executive
Officer and other Officers have a higher percentage of at-risk
compensation relative to other employees. We believe this is
appropriate because our Officers have the greatest influence on
Company performance. Stock-based long-term incentives represent
the largest component of pay, in order to encourage sustained
long-term performance and ensure alignment with stockholders. In
the graphs below, we show the emphasis on at-risk or stockholder
aligned compensation through performance-based short-term and
long-term incentives compared to base salary.
Components of
Compensation and Alignment to Goals. The
Company recognizes that its share price is heavily influenced by
the price of gold, copper and other commodities, which are
outside of the control of the Company. Thus, as a way to balance
the commodity fluctuation, the Company grants a mix of
incentives including stock options, financial performance stock
bonuses (common stock and restricted stock units) and
performance leveraged stock units (based on share return
measures) to align the interests of management with the
long-term interests of stockholders. This balanced approach
means that management needs to achieve specific performance
goals to earn the common stock and restricted stock units even
in periods of positive gold/copper price movement, and that the
equity package continues to motivate performance in down-cycles
as the common stock and restricted stock units retain value and
have motivational impact even when gold/copper prices are
falling. At the same time, the use of stock options ensures that
the highest rewards will only occur with an increasing share
price.
26
Table of Contents
The components of the compensation structure are:
| Time Horizon | Component | Purpose | Key Features | ||||||
|
Current
|
Base Salary | Compensation for the level of responsibility, experience, skills, and sustained individual performance |
Fixed compensation is not subject to financial performance risk;
Targeted to the 62.5 percentile of the peer group to ensure the ability to attract strong leaders in an increasingly competitive executive talent market; Used to determine pay-based benefits; and Individual compensation can vary above or below the market reference point based on such factors as performance, skills, experience and scope of the role relative to internal and external peers. |
||||||
|
Short-Term
(annual) |
Corporate Performance Bonus | Supports annual operating and financial performance, based on defined performance metrics |
Annual cash award which ranges from 0-200% of target based on:
• Production;
• Cost of sales;
• Capital expenditures;
• Reserve additions; and
• Non-reserve mineralization additions.
|
||||||
| Strategic Objectives Bonus | Rewards for the achievement of group and individual strategic objectives designed to support current initiatives and long-term sustainability and performance of the Company | Annual cash award based on stated measures and objectives approved in advance by the Compensation Committee. | |||||||
|
Long-Term
(3-10 years) |
Performance Leveraged Stock Units | Incentive to outperform peer group share price performance to make Newmont the preferred gold stock; aligns pay with stockholder interests and long-term Company/stock price performance | Awards are based on absolute stock price growth and relative stock price performance against the peer group, over a three-year period. | ||||||
| Financial Performance Stock Bonus | Supports consistent long-term operational and financial performance measures that drive the success of the Company; stability in production and key financial and operational targets | Three-year rolling weighted average of the Corporate Performance Bonus metrics (2010: 50%; 2009: 30%; 2008: 20%). | |||||||
| Stock Options | Reward for growth in the Company’s share price over the long-term | Grant of stock options that only deliver value in the event of increased share price following three-year vesting period; Grant is adjusted based on individual performance. Stock options have a 10 year life following grant. | |||||||
| Grant amount is based on individual performance. | |||||||||
Determination
of Target Total Compensation. We consider a
variety of factors when determining target Officer compensation
to ensure we have a comprehensive understanding of alignment of
goals, reasonableness of pay, internal equity, pay for
performance, and ability to attract and retain executive talent.
The primary items are discussed in detail below, and include:
| • | Market information; |
27
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| • | Individual performance; | |
| • | Experience, skills and scope of responsibilities; | |
| • | Company performance; | |
| • | Succession planning; | |
| • | Value of the compensation relative to the corresponding objective; and | |
| • | Other key measures which assist in providing a comprehensive understanding of pay, such as pay mix, internal equity, Chief Executive Officer compensation versus Total Shareholder Return, and performance sensitivity analysis. |
Competitive
Considerations (Market information).
Peer
Group. We strive to compensate our Officers
competitively relative to industry peers. To evaluate the
reasonableness and competitiveness of Newmont’s position in
the industry, the Compensation Committee spent considerable time
in 2009 selecting a relevant peer group with the aid of its
independent consultant, Cook & Co., and with input
from management. The resulting peer group consists of mining and
extractive industry companies. This peer group was reviewed
again in 2010 and reaffirmed as an appropriate benchmark
reference. To create the peer group, the Compensation
Committee’s analysis included a review of each potential
peer company’s industry, complexity of their business and
organizational size information, including revenue, net income,
total assets, market capitalization and number of employees.
This approach ensures each company’s industry and size
provide a reasonable basis of comparison. Below is the peer
group selected by the Compensation Committee:
|
Agnico Eagle Mines Ltd
|
Goldcorp Inc | Consol Energy Inc | ||
|
Anglogold Ashanti Ltd
|
Kinross Gold Corp | EOG Resources Inc | ||
|
Barrick Gold Corp
|
Teck Resources Ltd | Peabody Energy Corp | ||
|
Freeport-McMoran Copper and Gold Inc
|
Apache Corp | Talisman Energy Inc | ||
|
Gold Fields Ltd
|
Chesapeake Energy Corp | Vulcan Materials Co |
The companies included in the comparator group differ from those
listed in the General Industry Classification Standard
(“GICS”), a grouping commonly used by advisory
services, as the Compensation Committee does not believe the
GICS comparator group appropriately represents the mining and
extractive industry companies, which constitute a directly
relevant industry and labor peer group.
The table below compares Newmont’s 2010 company scope
metrics versus the peer group. While Newmont tends to be larger
than the companies in the peer group (and has outperformed the
peers on several key measures as noted in the table below),
which is a conservative approach for pay comparison, the
Compensation Committee believes that those selected are
appropriate reference points based on the industry.
Additionally, the Compensation Committee recognizes that Newmont
is one of the world’s largest gold companies, and
therefore, will be by default one of the larger companies in the
gold mining peer group. Newmont’s relative size and
performance is considered by the Compensation Committee when
determining an appropriate compensation market reference point,
as described in the following section.
| (1) | Data based on the most recent disclosed 2010 performance. |
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Positioning of
Pay Relative to Peers. Upon completing an
in-depth analysis of executive compensation in 2009, the Company
determined that Newmont’s Officer pay was below the
historical target positioning. Specifically, the results of the
2009 peer group comparison found that base salaries, targeted
annual cash compensation, long-term incentives and target total
direct compensation were below the 50th percentile of the
peer group.
Because executive pay was well below its targeted position in
2009, the Compensation Committee decided to take a measured
approach and target compensation between the 50th and 75th
percentile, gradually moving compensation back into this range
over time as performance, scope and other key criteria
warranted. In 2010, the Compensation Committee again reviewed
our pay philosophy and determined that for 2011, it would be
appropriate to target the 62.5 percentile of the market and to
use the broader philosophy of “market median up to the
75th percentile as the reasonable range for target
compensation, considering Company and peer group metrics,
individual and Company performance, and the industry labor
market context.” This philosophy was formulated with input
from the Compensation Committee’s consultant,
Cook & Co. Under this more general approach, the
Compensation Committee retains flexibility in determining the
appropriate target for compensation each year based on a variety
of factors such as performance, company size, changes in peer
group, competition for talent,
year-over-year
changes in market pay, and other factors.
Material
Differences Among Officers. With the
exception of the Chief Executive Officer, the Company has set
the same target percentages of base salary for each compensation
component for all of the Officers for 2010. The Chief Executive
Officer’s target percentage for each incentive compensation
component is greater than the other Officers due to his position
as the top executive officer of the Company. Market pay levels
for top executives are in general significantly higher than the
pay levels for other executives, as indicated by general survey
and peer group data utilized by the Compensation Committee and
described above. Additionally, the pay mix for the Chief
Executive Officer typically includes a greater emphasis on
at-risk pay, commensurate with the level of responsibility of
the Chief Executive Officer position and the greater degree of
impact that this executive can have on overall business results.
Other Factors
Used to Determine
Compensation.
Effect of
Individual Performance. The Compensation
Committee takes into consideration subjective elements, such as
the Officer’s skill set, individual achievements and role
with Newmont during the relevant fiscal year. Additionally, an
assessment of each Officer’s progress against their stated
Strategic Objectives (discussed later in this CD&A) is
completed by the Compensation Committee based on input provided
by the Chief Executive Officer. The Compensation Committee
ultimately makes the compensation decisions for all of the
Officers, based on the Committee members’ own collective
experience and business judgment.
Effect of
Compensation Previously Received on Future Pay
Decisions. We consider actual compensation
received in determining whether our compensation programs are
meeting their
pay-for-performance
and retention objectives. Adjustments to future awards may be
considered based on results. However, the Compensation Committee
generally does not reduce compensation plan targets based on
compensation received in the past to avoid creating a
disincentive for exceptional performance.
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Table of Contents
Other analyses used in determining appropriate levels of
compensation include:
| Analysis | Purpose | ||
|
Pay Mix
|
To ensure pay “at-risk” is consistent with philosophy and comparator group practices; a significant majority of pay should be “at-risk.” | ||
| Internal Equity | To understand whether internal pay differences are reasonable between executive levels and consistent with market practice. The Compensation Committee also considers scope and accountability of the role in determining reasonable differences for internal compensation rates. | ||
| Total Compensation | To understand the purpose and amount of each pay component as well as the sum of all compensation elements in order to gauge the reasonableness and the total potential expense. | ||
| Chief Executive Officer and other Officer compensation versus Total Shareholder Return (“Pay-for-Performance Charts”) | To ensure that pay is aligned with performance and set appropriately given industry performance and pay rates. | ||
| Performance Sensitivity Analysis | To understand potential payments assuming various company performance outcomes; understand how potential performance extremes are reflected in pay; a component of our compensation risk assessment. | ||
2010
Compensation.
While the amount of compensation may differ among our Officers,
the compensation policies and factors affecting the amounts, as
considered by the Compensation Committee, are generally the same
for each of our Officers, including our Chief Executive Officer.
In this section, we discuss the Compensation Committee’s
considerations with respect to each element of compensation paid
in 2010.
Base
Salary. The Compensation Committee
considered the compensation levels of comparable positions in
the survey data as a general guidepost in setting base salaries,
but also considered individual performance, tenure and
experience, the overall Company performance, any retention
concerns, individual historical compensation and input from
other Board members. Based on these considerations, the
Compensation Committee implemented certain salary adjustments in
2010 to more closely align the salaries of our Officers with
base salaries offered to similarly positioned senior executives
at our peer companies. While the Compensation Committee has not
adopted a policy with regard to the internal relationship of
compensation among the Officers or other employees, this
relationship is reviewed and discussed when the Compensation
Committee determines total compensation for our Officers. The
increases in base salaries earned in 2010 from those earned in
2009 were as follows:
|
Name
|
2009 Base Salary
|
2010 Base Salary
|
Change
|
|||||||||
|
Richard O’Brien
|
$ | 1,025,000 | $ | 1,060,000 | 3 | % | ||||||
|
Russell Ball
|
$ | 544,667 | $ | 565,000 | 4 | % | ||||||
|
Randy Engel
|
$ | 486,917 | $ | 545,000 | 12 | % | ||||||
|
Brian Hill
|
$ | 625,660 | $ | 605,000 | −3 | % | ||||||
|
Guy Lansdown
|
$ | 574,000 | $ | 605,000 | 5 | % | ||||||
With the exception of Randy Engel and Brian Hill, the salary
increases ranged from 3% to 5%. Because Randy Engel serves in a
unique role that incorporates various company functions, the
Compensation Committee determined that an above average increase
was appropriate in recognition of the added scope of his role
and his sustained performance. Brian Hill transferred from
Australia to the U.S. in 2009 and the reduction in the pay
rate is primarily related to him becoming eligible for the
U.S. Pension Plan, rather than the superannuation benefits
in Australia.
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Table of Contents
Short-Term
Non-Equity Incentive Compensation.
Short-Term
Incentive Compensation Highlights
| • | Comprised of two components: |
| • | Corporate Performance Bonus (50% of the total short-term incentive opportunity); and | |
| • | Strategic Objectives Bonus (50% of the total short-term incentive opportunity). |
Short-term non-equity incentives include a Corporate Performance
Bonus and a Strategic Objectives Bonus. Each is expressed as a
percentage of base salary. The Corporate Performance Bonus has a
target level and the Strategic Objectives Bonus has a maximum
level, leaving the Board full discretion to decrease the maximum
level. The total of the target Corporate Performance Bonus and
50% of the maximum Strategic Objectives Bonus is designed to
achieve between the 50th and 75th percentile of the peer data
for total short-term compensation, as described above.
2010
Short-Term Non-Equity Incentives
|
Target Corporate Performance |
Mid-Point of Strategic |
|||||||||||
|
Bonus as a Percentage of Base |
Objectives Bonus Range as a |
Total as a Percentage of Base |
||||||||||
|
Name
|
Salary (A) | Percentage of Salary (B)(1) | Salary (A+B) | |||||||||
|
Richard O’Brien
|
75.0 | % | 75.0 | % | 150 | % | ||||||
|
Russell Ball
|
42.5 | % | 42.5 | % | 85 | % | ||||||
|
Randy Engel
|
42.5 | % | 42.5 | % | 85 | % | ||||||
|
Brian Hill
|
42.5 | % | 42.5 | % | 85 | % | ||||||
|
Guy Lansdown
|
42.5 | % | 42.5 | % | 85 | % | ||||||
| (1) | The Compensation Committee set the Strategic Objectives Bonuses at a maximum opportunity for each Officer, rather than a target, with the intent that the Compensation Committee will exercise its business judgment in determining the amount of payout. |
Corporate
Performance Bonus.
Corporate
Performance Bonus Highlights
| • | Annual Company financial and operational measures; | |
| • | Payment based on overall Corporate performance; | |
| • | Payment ranges from 0-200% of target Corporate performance; | |
| • | Five of seven measures performed near target or above target levels; | |
| • | Low or no payment for the two measures that were below target levels; and | |
| • | Weighted performance resulted in an award of 124.3% of target payment. |
The Corporate Performance Bonus provides an annual reward based
on seven publicly-reported
measures1
designed to balance short-term and long-term factors, business
performance and successful investment in and development of
Company assets. The Compensation Committee reviews and approves
the performance metrics and target levels of performance
annually. The amounts of 2010 Corporate Performance Bonuses
earned by the Officers are shown in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation Table. The
metrics that the Compensation Committee established for 2010 are
listed below.
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Table of Contents
|
Corporate Performance |
||||||
| Bonus Measure(1) |
What It Is |
Why It Is Used |
||||
|
Equity Production
|
Measures the ounces of gold and pounds of copper produced each year |
• Production of gold and copper is the
basis of Newmont’s business. Production is the primary
factor within the Company’s control.
• The metric also provides incentive to bring various projects into production in a timely manner. |
||||
|
Costs Applicable to Sales
|
Measures the costs of producing an ounce of gold and pound of copper |
• The cost metric balances the production
metric by encouraging efficient, safe production.
• The cost metric is designed to promote implementation of Company-wide cost control measures. |
||||
|
Capital Expenditures
|
Measures actual capital expense against the planned capital investments for the year, as approved by the Board. The target includes assumptions for variables such as commodities prices, currency fluctuation, and deferral or acceleration of projects. At the end of the year, the actual impact of these variables is determined, and the target is adjusted up or down, accordingly. |
• As a capital intensive business, the
capital expenditure metric focuses on efficient utilization of
capital in developing and completing projects. Efficient use of
capital impacts the years to payback and the overall long-term
return of the project.
|
||||
|
Reserves and Non-Reserve
Mineralization |
Measures the proven and probable mineral reserves (Reserves) as well as the mineralization not yet proven to the level required for public disclosure (Non-Reserve Mineralization) |
• The Reserves and Non-Reserve
Mineralization metrics promote the discovery of new deposits and
the successful completion of the work needed to report these as
reserves and non-reserve mineralization. In a business that
depletes its resources every year through production, the
ability to maintain reserve levels is a substantial challenge,
but necessary for sustainability.
|
||||
| (1) | For Equity Production and Costs Applicable to Sales, both gold and copper are measured separately. In addition, Reserves and Non-Reserve Mineralization are also measured separately, resulting in a total of 7 measures. |
Calculation of
Corporate Performance Bonuses. The 2010
targets were a mix of demanding financial, production, and
reserve/non-reserve mineralization targets derived from the
annual business planning process. It is the Compensation
Committee’s perspective that the target should be
challenging, yet achievable, and the target is structured
accordingly. Over the past 10 years, the Company bonus plan
has paid below target in four years, which we consider as one
measure of the level of difficulty of achieving a target award.
If the Company achieves its targeted performance for each of the
metrics, the payout percentage for the Corporate Performance
Bonus is 100%. If the minimum amounts are not achieved for a
particular metric (the “threshold”), no Corporate
Performance Bonus is payable for that metric. For performance
between the threshold and maximum for any metric, the amount is
prorated to result in a payout percentage between 50% and 200%.
The slope of the bonus payout range increases upon reaching
target performance in an effort to provide a stronger
32
Table of Contents
incentive and reward for outperforming the targets. Below target
performance, upon reaching the threshold level, the incremental
payout for each increment of performance remains moderate,
ensuring an appropriate incentive and reward while not
compensating beyond the reasonable amount for the given level of
performance.
2010
Corporate Performance Bonus Metrics and Calculation
The structure of the Corporate Performance Bonus as well as the
performance and bonus results for 2010 are provided in the table
below:
| Bonus Structure | Bonus Payment Range | 2010 Results | ||||||||||||||||||||||||||||||||||||
|
Performance |
Minimum |
Target |
Maximum |
2010 |
Performance |
Payout |
||||||||||||||||||||||||||||||||
| Metric | Measure | Weighting | (50%) | (100%) | (200%) | Performance | Percentage | Percentage (1) | ||||||||||||||||||||||||||||||
|
Equity Production |
Gold (oz.000) |
20 | % | 5,217 | 5,491 | 5,684 | 5,391 | 81.7 | % | 16.3 | % | |||||||||||||||||||||||||||
|
Copper
(million lb.) |
5 | % | 366 | 385 | 399 | 348 | 0.0 | % | 0.0 | % | ||||||||||||||||||||||||||||
|
Cost Applicable to Sales |
Gold ($/oz.) |
20 | % | $ | 509 | $ | 467 | $ | 439 | $ | 485 | 79.0 | % | 15.8 | % | |||||||||||||||||||||||
|
Copper ($/lb.) |
5 | % | $ | 0.97 | $ | 0.89 | $ | 0.84 | $ | 0.80 | 200.0 | % | 10.0 | % | ||||||||||||||||||||||||
|
Capital Expenditures |
($million) | 25 | % | $ | 1,518 | $ | 1,445 | $ | 1,272 | $ | 1,375 | 140.6 | % | 35.2 | % | |||||||||||||||||||||||
|
Reserves
|
(Moz.) | 16.67 | % | 4.00 | 6.75 | 9.00 | 8.59 | 181.7 | % | 30.3 | % | |||||||||||||||||||||||||||
|
Non-Reserve Mineralization |
(Moz.) | 8.33 | % | 3.00 | 4.25 | 6.36 | 7.96 | 200.0 | % | 16.7 | % | |||||||||||||||||||||||||||
|
(1)
Calculated by multiplying “Weighting” x
“Performance Percentage”
|
||||||||||||||||||||||||||||||||||||||
|
Total Payout =
|
124.3 | % | ||||||||||||||||||||||||||||||||||||
While the Compensation Committee may exercise discretion
regarding cash bonus awards under the Corporate Performance
Bonus Plan, all of the Officers received cash bonus awards based
solely on the formula funding results prescribed by the bonus
structure as stated above.
To calculate the Corporate Performance Bonus for each of the
Officers, the relevant target percentage of base salary was
multiplied by 124.3%.
The targets for 2011 Corporate Performance Bonus had not been
finalized as of the date of filing of this Proxy Statement.
Strategic
Objectives Bonus.
Strategic
Objectives Bonus Highlights
| • | Individualized strategic objectives established for each Officer by the Compensation Committee; | |
| • | Objectives support long-term sustainability and performance; | |
| • | Incorporates the leadership areas of people and organizational development, safety, operational execution and efficiency, corporate sustainability and financial strength; | |
| • | Objectives are pre-approved by the Compensation Committee; | |
| • | May be single or multi-year; and | |
| • | Payments based on discretion and reasoned business judgment of the Compensation Committee as a percent of maximum. |
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Table of Contents
The purpose of the Strategic Objectives Bonus is to align
personal performance with key individualized strategic
objectives that will support the long-term sustainability and
performance of the Company. The strategic objectives encompass
the broad spectrum of responsibilities inherent in senior
leadership roles and in many cases, do not have immediate or
tangible measures. The Strategic Objectives component of the
executive compensation program provides for a well-rounded
assessment of executive performance, resulting in an improved
correlation of pay and performance. Specifically, the program
serves to provide the ability to:
| • | Holistically consider performance against a broad set of strategic, operational, environmental, social and financial business goals; | |
| • | Incentivize and reward efforts that are difficult to quantify, but provide long-term stockholder value; | |
| • | Reward for timely adjustments to business dynamics not anticipated prior to the performance period; | |
| • | Consider the multitude of complex factors that can affect performance inside and outside of management’s control for the purpose of assessing performance and providing appropriate compensation (e.g., economic cycles, market volatility, and fluctuations in commodities prices); | |
| • | Take an extended long-term perspective ensuring directional alignment of current performance with the vision of the organization’s future; | |
| • | Control the potential risk of sub-optimized results due to a focus on set goals which may no longer be a key priority; and | |
| • | Differentiate awards based on a broad perspective of an individual’s contribution to the Company. |
The Strategic Objectives Bonus is not formulaic given the
difficulty in explicitly quantifying the aggregate performance.
Accordingly, payments under this program are awarded at the
discretion of the Compensation Committee pursuant to the
qualified business judgment of its members. The Compensation
Committee can award payments out of a total bonus opportunity
assigned to each Officer based upon their overall performance on
the variety of business objectives. To assist the Compensation
Committee’s understanding of each individual’s
achievements, the Compensation Committee receives a year-end
performance assessment and recommendation for each of the
Officers (except for the Chief Executive Officer) from the Chief
Executive Officer. For the Chief Executive Officer, the Board of
Directors determines the Strategic Objectives Bonus based on his
performance against the stated strategic objectives for the
year, as well as other factors potentially not contemplated
prior to the start of the year. While the Strategic Objectives
Bonus is based on pre-established individual Strategic
Objectives, these pre-established individual Strategic
Objectives do not constitute performance measures the
achievement of which automatically results in specific payout
levels, but instead provide a context for the Board and
Compensation Committee to evaluate each Officer’s
performance and contributions to the Company’s success when
making the bonus payout determinations.
The Board designated several common Strategic Objectives for
each Officer in 2010, and also designated Strategic Objectives
tailored to each Officer’s specific role. The common
Strategic Objectives for the Officers in 2010 included:
| • | People, Our Most Valued Resource — Retain, Develop and Attract Employees; | |
| • | Operational and Project Planning and Execution — Deliver On Our Plans in a Safe and Environmentally and Socially Responsible Manner; | |
| • | Sustainability through Financial Strength and Flexibility and through Growth — Think and Invest Strategically; and | |
| • | Leverage, Scope and Scale — Create Operating and Business Efficiencies. |
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Table of Contents
Regarding the common Strategic Objectives, the efforts of the
Officers resulted in the following achievements: targets in
areas of performance management and talent development were
exceeded; good progress was made on implementation of safety and
Community Relationships Review programs; operating targets were
generally met or exceeded; excellent liquidity and balance sheet
strength were achieved; cost savings, productivity and
efficiency were enhanced through business process improvements.
While no single Strategic Objective is either material to an
understanding of the Company’s compensation policies
relating to the Strategic Objective Bonus program or dispositive
in the Compensation Committee’s decisions regarding the
specific payout levels, in determining the awards for 2010, the
Compensation Committee considered the following key
accomplishments of each Officer, in each case concluding that
the Officer had successfully achieved and often exceeded the
stated Strategic Objectives:
| • | Richard O’Brien: led efforts to promote cultural changes with the objective of positioning the Company to deliver high performance over the long-term, such as through enhancing the Company’s safety mindset and improving planning capabilities; enhanced governmental and external relationship programs; positioned the Company’s environmental and social responsibility programs as competitive strengths through sound environmental performance and enhanced programs; fully established the foundation of the ongoing Community Relationships Review Program; increased the Company’s Human Resources capabilities, including improved succession planning, management training and employee engagement; delivered on the Company’s business plans in a safe, environmentally and socially responsible manner; refined the Company’s overall strategic plans, including defining the appropriate mix between internal projects/development opportunities and external merger/acquisition opportunities; managed the Company’s divestiture obligations and external relationships relating to the Company’s interest in the Batu Hijau mine in Indonesia; improved the Company’s financial strength and flexibility; and implemented programs to achieve operational efficiency. | |
| • | Russell Ball: ensured access to capital and financial flexibility; eliminated waste and maximized value of assets through Business Excellence programs, such as Continuous Improvement and creation of a Management Operating System; successfully strengthened Newmont’s balance sheet; and successfully completed the integrations for the supply chain, information technology, accounting and tax functions. | |
| • | Randy Engel: developed and led a planning initiative, making changes to allow increased understanding of the direction of the business, promoting focused analysis of results and options around alternative plan decisions; identified and analyzed several growth opportunities; enhanced Newmont’s Investor Relations function; and improved bench strength in the groups he oversees. | |
| • | Brian Hill: delivered on targeted operating metrics in-line with expectations despite geotechnical events and ore grade reconciliation issues; deployed the Business Excellence programs resulting in cost reductions and operational improvements; established and led the Company’s Safety Task Force; and improved leadership bench strength. | |
| • | Guy Lansdown: built and led exploration programs that delivered above targets; successfully advanced key development and exploration projects, including the Conga project in Peru and the Akyem project in Ghana; reinstituted innovation and research and development to advance Newmont’s technical practices. |
The Compensation Committee considered each Officer’s
performance and key accomplishments listed above in determining
his bonus amount. In most cases, each of the Officers
successfully achieved and often exceeded the stated objectives.
Based on these reviews, the overall performance of the Company,
and recommendations from Richard O’Brien in the case of
Russell Ball, Randy Engel, Brian Hill and Guy Lansdown, each of
the Officers received the following amounts:
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|
2010 Maximum |
2010 Strategic |
|||||||
|
Strategic |
Objectives Bonus |
|||||||
|
Objectives Bonus |
Awarded |
|||||||
|
Name
|
($) | ($) | ||||||
|
Richard O’Brien
|
$ | 1,590,000 | $ | 779,100 | ||||
|
Russell Ball
|
$ | 480,250 | $ | 300,000 | ||||
|
Randy Engel
|
$ | 463,250 | $ | 300,000 | ||||
|
Brian Hill
|
$ | 514,250 | $ | 325,000 | ||||
|
Guy Lansdown
|
$ | 514,250 | $ | 300,000 | ||||
Long-Term
Equity Incentive Compensation.
Long-term
Equity Incentive Compensation Highlights
| • | Includes three performance-based elements: |
| • | Financial Performance Stock Bonus; | |
| • | Stock Options; and | |
| • | Performance Leveraged Stock Units. |
Mix of Equity
Incentive Components. Each component of the
long-term equity incentive represents one-third of the total
equity opportunity. Three elements are used to balance long-term
financial, operational and share price performance, as well as
to balance incentives for company and peer group performance.
Equity Award
Target Values. The Compensation Committee
designed target values of equity incentives for each Officer
based upon competitive market data to achieve the target range
as discussed above. The Compensation Committee has determined
that all of the Officers, with the exception of the Chief
Executive Officer, should have the same target as a percentage
of salary for 2010 to balance competitiveness of compensation
with teamwork and relative contributions to Newmont’s
success. These target values are expressed as a percentage of
base salary as follows:
2010
Target Long-Term Equity Incentives
|
Name
|
% of Base Salary | |||
|
Richard O’Brien
|
465 | % | ||
|
Russell Ball
|
270 | % | ||
|
Randy Engel
|
270 | % | ||
|
Brian Hill
|
270 | % | ||
|
Guy Lansdown
|
270 | % | ||
Determination
of Awards. Equity awards are granted by the
Board of Directors, based upon the recommendation of the
Compensation Committee. In addition to the targets discussed
above, the Compensation Committee is responsible for determining
who should receive awards, when the awards should be made, the
exercise price/purchase price per share and the number of shares
to be granted for each award, in accordance with Newmont’s
policy with Respect to the Granting of Equity Compensation (as
described below). The Compensation Committee considers grants of
long-term incentive awards to the Officers each fiscal year,
usually at meetings scheduled shortly after the release of
quarterly earnings, in which case, financial performance and
potentially other material items have already been disclosed
publicly, prior to the granting of any awards.
Criteria
Considered in Determining the Amount of Equity-Based
Compensation Awards. The Compensation
Committee considers several factors in its determination as to
the amount of equity awards to grant to our Officers, including
market practice, projected business needs, the projected impact
on stockholder dilution, and the associated compensation expense
that will be included in our financial statements. Based on
these
36
Table of Contents
considerations, the Compensation Committee has managed
stockholder dilution well within the norms of our peers and
stated guidelines from proxy advisory services and institutional
investors. For 2010, Newmont’s net dilution (net annual use
of shares as a percentage of shares outstanding) was 0.4%, well
below the median of our peer group of 1.0%.
Equity Awards
Granted in 2010. In 2009, the Compensation
Committee conducted an in-depth analysis of the Company’s
executive pay positioning with the assistance of its independent
consultant, Cook & Co. The data indicated a
significant gap in long-term incentive compensation versus our
peer group. Based on these findings, the Compensation Committee
designed a new long-term incentive equity vehicle for 2010 in an
effort to bridge the gap to the targeted pay position and
further align executive compensation to long-term Company and
share price performance. This new program, Performance Leveraged
Stock Units, rewards executives for absolute share price growth
over the measurement period and for total shareholder return
(“TSR”) performance relative to the TSR peer group.
Awards granted in 2010 were determined in accordance with the
terms of each long-term incentive plan as approved by the
Compensation Committee. In the case of stock options, the awards
were also based upon each Officer’s individual performance.
Newmont’s
Policy with Respect to the Granting of Equity
Compensation. Equity awards are granted by
the Board of Directors, based upon the recommendation of the
Compensation Committee.
Financial
Performance Stock.
Financial
Performance Share Highlights
| • | Provides long-term focus on key operational and financial measures that drive Company success; | |
| • | Supports linearity in production, supporting stable and predictable long-term results; | |
| • | Performance basis is the weighted average of the Corporate Performance Bonus over three years; | |
| • | Performance is weighted 20% for 2008, 30% for 2009, 50% for 2010; | |
| • | Shares are set at the beginning of the performance period, so pay is “at-risk” to changes in share price over the performance period; and | |
| • | Weighted payout for 2010 was 126.7% of the target award. |
The Financial Performance Stock Bonus is tied to overall Company
performance in two ways:
| • | The target grant is set in number of shares, versus dollars, so that the Officer is “at-risk” to changes in share price over the performance period. |
| • | Target shares are set by dividing the Officer’s eligible wages by the average Newmont share price for the month prior to the performance period. |
| • | The number of shares granted at the end of the performance period is based upon the three year weighted average of the Corporate Performance Bonus metrics and can range from 0% to 200% of target. |
For the 2010 Financial Performance Stock Bonus, the payout
factor was 126.7%, calculated as shown below:
|
Corporate |
Weighted |
|||||||||||
|
Performance Bonus |
Performance Factor |
|||||||||||
|
Year
|
Weighting (A) | Result (B) | (AxB) | |||||||||
|
2010
|
50 | % | 124.3 | % | 62.2 | % | ||||||
|
2009
|
30 | % | 129.6 | % | 38.9 | % | ||||||
|
2008
|
20 | % | 128.1 | % | 25.6 | % | ||||||
|
Total
Payout(1)
|
126.7 | % | ||||||||||
| (1) | Represents the sum of the “Weighted Performance Factor” for each year. |
37
Table of Contents
2010
Financial Performance Stock Bonuses
On February 28, 2011, the Company awarded Financial
Performance Stock Bonuses for 2010 performance in the following
amounts:
|
2010 Target as a |
Stock Price Basis |
Number of Shares |
||||||||||||||||||||||
|
Eligible Earnings |
Percentage of |
used for Setting |
Target Shares (D) |
Granted March 1, |
||||||||||||||||||||
| Name | (A) | Base Salary (B) | Target Shares (C) | = (AxB)/C | Payout Factor (E) | 2011 (DxE) | ||||||||||||||||||
|
Richard T. O’Brien
|
$ | 1,060,000 | 165 | % | $ | 50.18 | 32,742 | 126.7 | % | 41,467 | ||||||||||||||
|
Russell Ball
|
$ | 565,000 | 90 | % | $ | 50.18 | 10,134 | 126.7 | % | 12,834 | ||||||||||||||
|
Randy Engel
|
$ | 545,000 | 90 | % | $ | 50.18 | 9,775 | 126.7 | % | 12,379 | ||||||||||||||
|
Brian Hill
|
$ | 605,000 | 90 | % | $ | 50.18 | 10,851 | 126.7 | % | 13,742 | ||||||||||||||
|
Guy Lansdown
|
$ | 605,000 | 90 | % | $ | 50.18 | 10,851 | 126.7 | % | 13,742 | ||||||||||||||
One third of the Financial Performance Stock Bonus was paid in
common shares on the date of actual grant (February 28,
2011) and two-thirds of the Financial Performance Stock
Bonus will be paid in restricted stock units that vest in equal
annual increments on the second and third anniversaries from the
date of grant (February 28, 2012 and 2013).
The Company accrues cash dividend equivalents on restricted
stock units and pays them upon vesting when common stock is
issued.
Stock Option
Awards.
Stock
Option Highlights
| • | Directly align executive Officers and stockholder interests; | |
| • | Performance-based, at-risk incentive as the executive does not receive any benefit unless the stock price rises after the date of grant; | |
| • | Further performance-based as the award size is also subject to the Officer’s performance; | |
| • | Exercise price is equal to the fair market value on the date of grant; | |
| • | Awards are only granted at predetermined Compensation Committee meeting dates; and | |
| • | Awards vest over three years, sale of shares after exercise is subject to each executive meeting Newmont’s stock ownership requirements. |
The stock option vehicle rewards executives for growth in the
value of Company stock over the long-term. This is the
high-risk, high-return component of the executive total
compensation program because stock options deliver value to an
executive only if the share price is above the grant price after
the date of vesting. Therefore, stock price volatility will have
a greater impact on total compensation results delivered from
stock options as compared to restricted stock units.
Each Officer has a target percent of base salary to be awarded
in options. The Compensation Committee has discretion to grant
above or below the target, with management’s recommendation
that individuals with high personal performance should receive a
grant above target. In April 2010, all of the Officers received
at least the targeted amount of stock options, as well as
additional options in recognition of high personal performance
during 2009. The Compensation Committee makes recommendations
regarding the amount of option grants, and such recommendations
are ratified by the full Board. The 2010 option grants were
based upon the Compensation Committee’s subjective
evaluation of each Officer’s performance as measured
against 2009 Strategic Objectives. In this context, the
Compensation Committee considered the following key
accomplishments of each Officer, in each case concluding that
the Officer had successfully achieved and often exceeded the
stated Strategic Objectives:
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Table of Contents
| • | Richard O’Brien: improved company work environment to allow retention and attraction of high performing employees; delivered on Company business plans in a safe en environmentally and socially responsible manner; successfully implemented strategic business plans related to the Boddington mine in Australia; refined the Company’s overall strategic plans; implemented plans to achieve operational efficiency and improved the Company’s financial strength and flexibility through successful capital markets transactions. | |
| • | Russell Ball: successfully completed the capital effectiveness program; exceeded goal to provide additional liquidity for improved financial strength and flexibility through a two billion dollar debt offering and a $1.3 billion equity issuance; successfully completed integrations for supply chain, information technology, accounting and tax functions; and led an operating review for improved efficiencies. | |
| • | Randy Engel: led the successful closing of a number of transactions, including the acquisition of the outstanding ownership interest in the Boddington project; identified other growth opportunities; implemented improved process for earnings communications and other investor engagements; and led the re-engineering project for the planning function. | |
| • | Brian Hill: deployed the business excellence program resulting in $140 million of cost reductions and operational improvements; established Management Operating System designed to drive organizational efficiency; launched Newmont’s safety journey; improved leadership bench strength; and delivered solid operating results. | |
| • | Guy Lansdown: successfully executed key development and exploration projects including the Boddington project in Australia and the Conga project in Peru; exceeded the number of planned due diligence reviews; completed projects that are expected to result in overachieving on the non-reserve mineralization and reserve growth targets; reinstituted innovation and research and development to advance Newmont’s operating practices. |
To determine the exact number of options to grant, the Company
divides the percentage of base salary for the grant by the Black
Scholes value on the date of grant, which was $20.01 for 2010.
The stock option exercise price granted by Newmont (i.e. not an
option assumed or granted in relation to an acquisition) is the
average of the high and low sales share price on the date of
grant.
2010
Stock Option Awards
|
Black-Scholes per |
||||||||||||||||||||
|
2010 Target as a |
Modified Target |
Share used to |
||||||||||||||||||
|
Percentage of |
Target Dollar Value |
Based on |
Determine Options |
Stock Options |
||||||||||||||||
| Name | Eligible Wages(1) | of Option Grant | Performance (A) | Granted (B) | Granted (A/B) | |||||||||||||||
|
Richard O’Brien
|
135 | % | $ | 1,383,750 | $ | 1,600,000 | $ | 20.01 | 79,960 | |||||||||||
|
Russell Ball
|
110 | % | $ | 599,133 | $ | 700,000 | $ | 20.01 | 34,983 | |||||||||||
|
Randy Engel
|
110 | % | $ | 535,608 | $ | 700,000 | $ | 20.01 | 34,983 | |||||||||||
|
Brian Hill
|
110 | % | $ | 706,327 | $ | 750,000 | $ | 20.01 | 37,481 | |||||||||||
|
Guy Lansdown
|
110 | % | $ | 631,400 | $ | 750,000 | $ | 20.01 | 37,481 | |||||||||||
| (1) | For awards related to 2009 performance, the 2009 percent weighting was used. For awards granted for 2010 performance, the weighting is 165% for the CEO and 90% for other Officers. |
The numbers and grant date fair values of stock options granted
to the Officers in 2010 are shown in the 2010 Grants of
Plan-Based Awards Table. The awards for 2010 performance were
not yet determined as of the filing of this Proxy Statement.
39
Table of Contents
2010
Performance Leveraged Stock Units (PSUs).
PSU
Compensation Highlights
| • | Long-term pay-for-performance vehicle based on: |
| • | Newmont’s share price performance versus peers; and | |
| • | Absolute share price growth over the performance period. |
| • | Contains a baseline to support retention and succession planning in down commodity cycles; | |
| • | Performance Period is three years; and | |
| • | 2010 performance resulted in a weighted payout of 174.7% of target. |
The Performance Leveraged Stock Units (“PSUs”) align
Officer compensation to long-term Company and stock price
performance. The number of PSUs earned is determined at the end
of a three-year performance period based upon the change in
Newmont’s stock price and the relative performance of
Newmont’s stock price versus the peer group. Payment for
the PSU program can range from 50% to 200% in total, as detailed
below.
Determining
PSU Awards. The calculation of the PSU
awards is based on the Target Stock Bonus, Market Payout Factor
and the TSR Payout Factor:
PSU Award =
Target Stock Bonus x (Market Payout Factor + TSR Payout Factor)
• Target Stock Bonus. The target stock bonus
for each Officer is calculated by multiplying the Officer’s
base salary by their target PSU award percentage. This value is
then divided by the average daily closing price for the fourth
quarter prior to the performance period (the
“baseline”).
Target Stock
Bonus = (base salary x target %) / baseline
• Market Payout Factor (“MPF”). The
MPF is based on the absolute stock price change versus the
baseline over the three year performance period. The baseline is
compared to the average daily closing price of the last quarter
of the performance period to determine the overall stock price
change.
The payment for the MPF can range from a minimum of 50% to a cap
of 150% of target based on the absolute stock price performance
during the performance period. A minimum award of 50% of target
is provided for retention, succession and competitive pay
purposes. The minimum award is also provided in recognition that
significant stock price declines may be related to changes in
commodities prices which are outside of the Company’s
control. Conversely, Officers can earn up to 150% of target to
incent performance. The award is capped at 150% in recognition
that significant stock price appreciation may be related to
changes in commodities prices. This range of payment is believed
to strike an appropriate balance between retention, incentive
and mitigation of excessive risk. The performance range is
displayed in the graph below.
• TSR
Payout Factor (“TPF”). The TPF is
based on the relative Total Shareholder Return (“TSR”)
of Newmont over the three- year performance period versus the
TSR of an index of gold mining peer companies. The stock prices
used in the TPF calculation are based on the same approach as
noted for the MPF, however the calculation also adjusts for
dividends paid during the period.
40
Table of Contents
The payment for the TPF can range from 0 to 50% of target based
on Newmont’s relative share price performance.
Newmont’s stock price must reach at least threshold
performance for Officers to receive any level of payment.
Threshold performance under the TPF is defined as the median
(50th percentile) TSR of the peer group index. Upon exceeding
the peer group median TSR, each percent increase above the
median TSR corresponds to a payment equal to 2% of target, up to
a maximum of 50%. This 2% multiplier is used to incent
over-achievement yet make the maximum award realizable without
incenting excessive risk taking. For example, if Newmont’s
TSR percentile ranking reaches the 60th percentile (10% above
the median), the resulting payment would be 20% of target (10%
above the median X 2% multiplier).
In sum, the maximum PSU payout of 200% of the target PSUs would
be awarded if the Company’s stock price at the end of the
performance period equals 150% of the baseline and if the
Company’s TSR reaches the 75th percentile of the peer
group. If the Company’s TSR is at or below the median of
the peer group, there will be no payout of PSUs for the TPF
(TSR) metric.
Implementation
of PSUs in 2010. In addition to the
three-year PSU target set in 2010 which will result in payouts
in 2013, in 2010 the Company set one-time target PSU awards for
each participant equal to the value of the 2010 target award.
The Compensation Committee implemented initial one- and two-year
periods (“feather-in awards”; award values were
weighted at one-third and two-thirds of the three-year values)
to provide a transition into the new long-term program, allowing
executives the opportunity to earn PSUs prior to early 2013,
which is the payout date of the first full three-year PSU
performance period.
PSU Peer
Group. The companies in the TSR peer group
are listed below, and may be altered from time to time due to
mergers, acquisitions or at the discretion of the Compensation
Committee:
|
Agnico Eagle Mines Ltd
|
Gold Fields Ltd | |
|
Anglogold Ltd
|
Harmony Gold Mining Co Ltd | |
|
Barrick Gold Corp
|
Kinross Gold Corp | |
|
Compania De Minas Buenaventura SA
|
Newcrest Mining Ltd | |
|
Freeport-McMoran Copper and Gold Inc
|
Yamana Gold Inc | |
|
Goldcorp Inc
|
The TSR peer group varies from the total compensation peer group
because the TSR peer group is comprised of only companies with
large gold mining operations and irrespective of comparable
company size. The Compensation Committee determined that a
relative TSR peer group should focus on gold operations
entities, as those are the Company’s direct competitors for
investors. The total compensation peer group includes companies
without gold operations, but those entities are more similar in
revenue, net income, total assets, market capitalization and
number of employees. The Compensation Committee determined that
the total compensation peer group is a superior peer group for
total compensation, rather than the TSR peer group, because the
entities in the total compensation peer group are the
Company’s competitors for employees and whose business
operations are of a relatively comparable size.
41
Table of Contents
PSU results
for 2010. The Company experienced solid
stock price growth and stock price growth versus its peer group
in 2010. With respect to the PSU components, Newmont’s
stock price increase (“MPF”) was 25.31% or 125.31% of
the baseline. Newmont’s relative TSR versus peers
(“TPF”) ended the year at the 75th percentile. This
stock price performance resulted in an overall PSU payout for
2010 of 174.7%. The chart below shows the payments for each
Officer, based on the results of the PSU award for 2010.
|
Average |
2010 Target “Feather- |
|||||||||||||||||||||||||||
|
2010 Eligible |
Target |
Closing Price |
in” Stock Award (D)* |
2010 Price |
2010 Relative |
Resulting PSU Award = |
||||||||||||||||||||||
|
Name
|
Earnings (A) | % (B) | for Q4 2009 (C) | = ((A x B)/C)/3 | Appreciation (E) | TSR Ranking (F) | D x (E + (F-50)x2) | |||||||||||||||||||||
|
Richard T. O’Brien
|
$ | 1,060,000 | 155 | % | $ | 48.66 | 11,255 | 125 | % | 74.7 | % | 19,663 | ||||||||||||||||
|
Russell Ball
|
$ | 565,000 | 90 | % | $ | 48.66 | 3,483 | 125 | % | 74.7 | % | 6,085 | ||||||||||||||||
|
Randy Engel
|
$ | 545,000 | 90 | % | $ | 48.66 | 3,360 | 125 | % | 74.7 | % | 5,870 | ||||||||||||||||
|
Brian Hill
|
$ | 605,000 | 90 | % | $ | 48.66 | 3,730 | 125 | % | 74.7 | % | 6,516 | ||||||||||||||||
|
Guy Lansdown
|
$ | 605,000 | 90 | % | $ | 48.66 | 3,730 | 125 | % | 74.7 | % | 6,516 | ||||||||||||||||
| * | The amounts listed represent the one-year “feather-in award” which equates to one-third of the full value, as described above. |
Summary of
Compensation Earned in 2010.
The following table summarizes the Total Direct Compensation
(base salary + annual bonus awards + long-term
incentives) as described in the sections above for 2010. The
table is not intended to supersede the Summary Compensation
Table, but provides a condensed summary of actual Total Direct
Compensation awarded to the Officers for their performance in
2010.
| Corporate Performance Bonus | Strategic Objectives Bonus | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2010 |
2010 |
Financial Performance Stock(1) | Performance Leveraged Stock Units(3) |
Actual Total |
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Corporate |
Percent of |
Strategic |
Financial |
Stock Options(2) |
PSU |
2010 Total |
Direct |
|||||||||||||||||||||||||||||||||||||||||||||||||
|
2010 Base |
Performance |
Performance |
Target |
Objectives |
Performance |
Performance |
Percent of |
Performance |
Direct |
Compensation |
Newmont |
|||||||||||||||||||||||||||||||||||||||||||||
|
Name
|
Salary | Result | Bonus | Award | Bonus | Result | Stock | Target Awarded | Stock Options | Result | PSUs | Compensation | versus Target | 2010 TSR | ||||||||||||||||||||||||||||||||||||||||||
|
Richard T. O’Brien
|
$ | 1,060,000 | 124.3 | % | $ | 988,185 | 98.0 | % | $ | 779,100 | 126.7 | % | $ | 2,268,867 | Target | $ | 1,643,000 | 174.7 | % | $ | 1,075,861 | $ | 7,815,013 | 121 | % | |||||||||||||||||||||||||||||||
|
Russell Ball
|
$ | 565,000 | 124.3 | % | $ | 298,475 | 124.9 | % | $ | 300,000 | 126.7 | % | $ | 702,212 | Target | $ | 508,500 | 174.7 | % | $ | 332,941 | $ | 2,707,128 | 121 | % | |||||||||||||||||||||||||||||||
|
Randy Engel
|
$ | 545,000 | 124.3 | % | $ | 287,910 | 129.5 | % | $ | 300,000 | 126.7 | % | $ | 677,317 | Target | $ | 490,500 | 174.7 | % | $ | 321,177 | $ | 2,621,904 | 122 | % | 26 | % | |||||||||||||||||||||||||||||
|
Brian Hill
|
$ | 605,000 | 124.3 | % | $ | 319,606 | 136.1 | % | $ | 325,000 | 126.7 | % | $ | 751,894 | Target | $ | 544,500 | 174.7 | % | $ | 356,523 | $ | 2,902,523 | 121 | % | |||||||||||||||||||||||||||||||
|
Guy Lansdown
|
$ | 605,000 | 124.3 | % | $ | 319,606 | 116.7 | % | $ | 300,000 | 126.7 | % | $ | 751,894 | Target | $ | 544,500 | 174.7 | % | $ | 356,523 | $ | 2,877,523 | 120 | % | |||||||||||||||||||||||||||||||
| (1) | Value displayed is based on the estimated value on grant date by multiplying the Company’s average opening and closing share price as of February 28, 2011 by the number of shares awarded as described in the CD&A. | |
| (2) | Value displayed is target value of stock options; the stock option award for 2010 performance was not determined as of the filing of the Proxy Statement. | |
| (3) | Value displayed is based on the estimated value on grant date by multiplying the Company’s average opening and closing share price as of February 28, 2011 by the number of shares awarded as described in the CD&A. | |
| (4) | Target Direct Compensation is adjusted to recognize the first year PSU award represents one-third of the standard PSU value. |
Post-Employment
Compensation.
In order to alleviate concerns that may arise in the event of an
employee’s separation from service with us and enable
employees to focus on Company duties while employed by us, the
Company has a package of post-employment compensation plans and
policies in place that include Company funded benefits as well
as employee-contribution benefits. Our post-employment
compensation plans and policies provide for broad range of
post-employment benefits to our employees, including Officers,
and create strong incentives for employees to remain with the
Company. The Company’s decisions regarding post-employment
compensation take into account the industry sector and general
business comparisons to ensure post-employment compensation is
aligned with the broader market.
Retirement. On
a regular basis, usually every three years, the Company reviews
its retirement benefits. The purpose of the review is to assess
the level of replacement income that the Company’s
retirement plans provide for a full career Newmont employee. The
Company attempts to maintain a competitive suite of retirement
benefits that accomplishes income replacement post retirement.
The level of income replacement varies depending on the income
level of the employee. Those employees at lower-income levels
enjoy much higher levels of income replacement with the Company
retirement benefits package, compared to higher-income level
employees. The
42
Table of Contents
benefits included in the analysis are the pension plan, pension
equalization plan, 401(k) matching contribution and social
security benefits. The Company retirement benefits are important
hiring and retention tools for all levels of employees within
the Company.
The Company offers two tax-qualified retirement plans, the
Pension Plan, which is a defined benefit plan and the Savings
Plan, which is a defined contribution plan (401(k)). Both of
these plans are available to a broad range of Company employees,
generally including all salaried U.S. based employees.
Because of the qualified status of the Pension Plan and Savings
Plan, the Internal Revenue Code limits the benefits available to
highly-compensated employees. As a result, the Company provides
a non-qualified defined benefit plan (Pension Equalization Plan)
and a non-qualified savings plan (Savings Equalization Plan) for
highly-compensated employees who are subject to the Internal
Revenue Code limitations in the qualified plans. The two
equalization plans are in place to give employees the full
benefit intended under the qualified plans by making them whole
for benefits otherwise lost as a result of Internal Revenue Code
annual compensation limits.
See the Pension 2010 Benefits Table and 2010 Non-Qualified
Deferred Compensation Table for a description of benefits
payable to the Officers under the Pension Plan, Pension
Equalization Plan and the Savings Equalization Plan.
Change of
Control. The Company recognizes that the
potential for a change of control can create uncertainty for its
employees that may result in loss or distraction of executives
during a critical period. As a result, the Company adopted the
Executive Change of Control Plan of Newmont (“Change of
Control Plan”) to retain executives and their critical
capabilities to enhance and protect the best interests of the
Company and its stockholders during an actual or threatened
change of control. When the Company adopted the original Change
of Control Plan in 1998, the Compensation Committee at the time
determined that the level of benefits in the plan were
competitive within the mining industry. The levels of benefits
provided in the Change of Control Plan are intended to motivate
and retain key executives during an actual or threatened change
of control.
In the event of a Change of Control, as defined in the Plan, and
a qualifying termination of employment, the Officers receive
three times annual pay and other benefits. See the Potential
Payments Upon Termination or Change of Control section for
potential amounts payable to the Officers under the Change of
Control Plan. These benefits, paid upon termination of
employment following a change of control on what is sometimes
referred to as a “double-trigger” basis, provide
incentive for executives to remain employed to complete the
transaction and provide compensation for any loss of employment
thereafter.
The Company’s 2005 Stock Incentive Plan generally provides
for vesting of unvested restricted stock and stock options upon
a change of control of the Company. This provision does not
apply to Performance Leveraged Stock Units or
Mr. O’Brien’s October 31, 2008 grant of
restricted stock units and stock options. The cash bonus plan
provides for payment of pro-rated target Corporate Performance
Bonuses and Strategic Objectives Bonuses upon a change of
control. These single trigger events upon a change of control of
the Company provide immediate compensation to executives in the
forms of cash (Corporate Performance Bonus/Strategic Objectives
Bonus) and vesting of outstanding equity (Financial Performance
Shares/options). In the case of cash bonuses, the amounts
represent a pro-rated target amount commensurate with the
portion of the year that the Officer worked prior to the change
of control. In the case of equity, the outstanding equity
represents equity that the Officer already earned, but was not
yet vested (Financial Performance Shares/options). These
benefits, paid on what is sometimes referred to as a
“single-trigger” basis, align compensation directly
with stockholder interests at the time of acquisition to
complete the transaction on favorable terms and recognize the
decreased probability that the executives will retain the
ability to impact share price after the change of control.
Severance. The
Severance Plan of Newmont (“Severance Plan”) provides
a certain number of weeks of salary and pro-rated annual cash
bonus (at target levels) to U.S. domestic salaried
employees of the Company following involuntary termination.
Officers O’Brien, Ball, Hill, Engel, and Lansdown are all
salaried employees of the Company and thus eligible to
participate in the Severance Plan. The purpose of the Severance
Plan is to provide basic income and benefit replacement for a
period of weeks following employment termination, where
termination is not due to an employee’s poor performance or
misconduct. The Severance Plan allows the terminated employee
time and resources to seek future employment.
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Table of Contents
See the Potential Payments Upon Termination or Change of Control
section for potential amounts payable to the Officers under the
Severance Plan.
Officer’s
Death Benefit. The Company maintains group
life insurance for the benefit of all salaried employees of the
Company. In addition, for highly-compensated executives,
including the Officers, the Company provides a supplemental
Officer Death Benefit Plan. The purpose of the Officer Death
Benefit Plan is to provide benefits to Officers of the Company
beyond the maximum established in the Company’s group life
insurance, as appropriate to their higher income levels.
See the Potential Payments Upon Termination or Change of Control
section for potential amounts payable to the Officers under the
Officer Death Benefit Plan.
Executive
Agreements.
All of the Officers are at-will employees of the Company,
without employment agreements.
Other Policies
and Considerations.
Executive
Compensation Risk Assessment.
We believe that Newmont’s compensation program for the
Chief Executive Officer and Officers is structured in a way that
balances risk and reward, yet mitigates the incentive for
excessive risk taking. Through a thoughtful balance of
performance vehicles, such as performance-based equity
denominated in restricted stock units, there is a meaningful
level of performance incentives without excessive leverage.
Additionally, through discussions with the Company’s Chief
Executive Officer and Chief Financial Officer, as well as
reviewing planning projections, the Compensation Committee gains
valuable insight regarding the reasonable range of future
performance expectations, which is considered in determining the
funding structures of incentive plans.
Beyond prudent plan design and compensation policies, in 2009,
the Compensation Committee conducted a comprehensive risk
assessment of the Company’s executive compensation program.
The Company has a global Enterprise Risk Management
(“ERM”) team, led by the Company’s Vice President
and Treasurer. One of the ERM team’s objectives is to
conduct the compensation risk assessment and report on the
process and findings to the Compensation Committee and the Audit
Committee, as well as the full Board of Directors. In 2009, the
ERM team reviewed the executive compensation program, identified
risk factors in compensation plans that may lead to excessive
risk taking (meaning risks that are reasonably likely to have a
material adverse effect on the Company) by executives, made an
initial assessment as to whether the Company’s compensation
program includes risk factors that may lead to excessive risk
taking, and assessed the design features in the compensation
program that moderate the potential for excessive risk-taking in
the short and long-term.
In November 2009, the team reported to the Compensation
Committee that the current analysis of the Company’s
compensation program did not uncover risk factors that are
reasonably likely to have a material adverse effect on the
Company. The Compensation Committee agreed with the conclusions
of the risk assessment. This analysis was revalidated in 2010
upon review of the ERM team. The risk assessment of the
compensation program will be an ongoing process for the ERM team.
Accelerated
Vesting of Stock Awards.
Change of
Control. A change of control will have
certain immediate effects on stock awards granted to Officers.
Immediately prior to a change of control, among other things:
| • | Financial Performance Stock Bonuses: all restrictions applicable to outstanding Financial Performance Stock Bonuses will lapse; | |
| • | Stock Options: all outstanding options will become fully exercisable and those options will remain exercisable until at least the first anniversary of any termination of the holder’s employment or service within one year after the change of control, subject to any earlier expiration date of those options; and |
44
Table of Contents
| • | PSUs: PSU performance will be measured using the change of control price of the Company stock. The pro-rata percentage of the actual payout of PSUs correlating to the period of time that elapsed prior to the change of control shall be granted in common stock. For the remainder of the actual PSUs correlating to the performance period that did not elapse prior to the change of control, the Company will issue restricted stock units that will vest at the end of the performance period. In the event that the acquiring company will not issue equity, the acquiring company may issue cash equivalent awards. |
The restricted stock and stock option awards to Richard
O’Brien on October 31, 2008 do not vest upon a change
of control, but do vest upon any involuntary termination of
employment, excluding termination for cause as defined in the
Executive Change of Control Plan.
Death/Long-Term
Disability/Retirement/Severance.
| • | Financial Performance Stock Bonus: Termination of employment due to death, long-term disability or retirement under the Pension Plan (entitling the executive to immediate pension benefits) or severance (following approval by the Executive Vice President of Human Resources and execution of a release) triggers the immediate vesting of all Financial Performance Stock Bonuses granted to the executive. | |
| • | Stock Options: In the event of employment termination due to death, severance (after execution of release) or long-term disability, a pro-rata portion of the executive’s stock options (such pro-rata portion is based on days of service from the date of grant until the date of termination of employment in relation to the full vesting period) will immediately vest and all previously vested and accelerated vested options will be exercisable for a period beyond termination. If an executive retires and is entitled to an immediate pension under the Pension Plan, the executive’s unvested stock options will vest and all previously vested and accelerated vested options will remain exercisable beyond termination for a certain period. Despite the extension of time to exercise options after termination in the event of death, long-term disability, retirement or severance, no option remains exercisable beyond 10 years from the date of grant. | |
| • | PSUs: In the event of death or disability during the performance period, payout is pro-rated at target and common stock is issued as soon as practicable. In the event of severance during the first year of the performance period, all PSUs are forfeited. In the event of severance after the first year of the performance period, payout is pro-rated at the lesser of target or actual performance and paid at the end of the performance period. In the event of retirement under the Pension Plan (entitling the executive to immediate pension benefits), the Company will issue a pro-rata award at the end of the performance period based upon actual performance. |
The restricted stock and option awards to Mr. O’Brien
on October 31, 2008 vest on a pro-rated basis upon the
death or disability of Mr. O’Brien.
Granting Stock
Options. The Company, at the direction of
the Compensation Committee, has examined its policies and
procedures relating to the grant of stock options. The Company:
| • | does not have a program, plan or practice to time stock option grants to its executives in coordination with the release of material nonpublic information; | |
| • | does not set the date of its stock option grants to newly-hired executives in coordination with the release of material nonpublic information; | |
| • | does not plan to time, nor has it timed, the release of material nonpublic information for the purpose of affecting the value of executive compensation; and | |
| • | does not have a program, plan or practice related to setting stock option prices based on the value of the Company’s stock on a date other than the stock option’s actual grant date. |
The Company has a written policy governing the grant of stock
options. The policy applies equally to grants of stock options
to executives and other employees. The policy provides, among
other things, that:
| • | the Company will not time release of material nonpublic information for the purpose of affecting the value of executive compensation; |
45
Table of Contents
| • | stock options will be granted only by the Board of Directors or the Compensation Committee designated under the applicable stock plan, and authority to grant options will not be delegated to management; | |
| • | stock options will be priced at fair market value on the day of the grant (as defined in the Company’s stock plan); and, | |
| • | stock options will generally be granted annually, at least three days after announcement of financial and operations results for the first quarter of the year. In deviating from this policy, the Compensation Committee may consider all relevant facts and circumstances, including the desirability of granting options for new employees or granting stock options at meetings held at other times of the year. |
The Company’s 2005 Stock Incentive Plan defines fair market
value of the stock as the average of the high and low sales
price on the date of the grant. The Company selected, and the
Compensation Committee approved, this formula to mitigate the
effect of the volatility of the Company’s stock price,
often a direct result of
day-to-day
changes in the gold price and not factors related to Company
performance. The formula does not increase the likelihood that
recipients will be granted
in-the-money
stock options.
Stock
Ownership Guidelines. The Company’s
stock ownership guidelines require that all employees designated
as “executives” for purposes of this policy
(approximately 85 individuals) own shares of the Company’s
stock, the value of which is a multiple of base salary. For the
Officers, the stock ownership guidelines are as follows:
Stock
Ownership Guidelines
|
Multiple of |
||||
|
Name
|
Base Salary | |||
|
Richard O’Brien
|
5 | |||
|
Russell Ball
|
2 | |||
|
Randy Engel
|
2 | |||
|
Brian Hill
|
2 | |||
|
Guy Lansdown
|
2 | |||
Stock ownership guidelines were put in place to increase the
alignment of interests between executives and stockholders by
encouraging executives to act as equity owners of the Company.
The Compensation Committee sets the ownership guidelines by
considering the size of stock awards. Based upon the historic
conservative levels of stock awards to Company executives, the
Compensation Committee sets the ownership guidelines at
corresponding levels. Unvested shares of restricted stock,
restricted stock units and shares held in retirement accounts
are considered owned for purposes of the guidelines. The
Compensation Committee reviews compliance with the guidelines
annually. Executives who are new to their positions have three
years to comply with the guidelines. All of the executives
identified above are in compliance with the stock ownership
guidelines.
Restrictions
on Trading Stock. The Company has adopted a
stock trading policy for its employees, including the Officers.
The policy prohibits certain employees from trading during
specific periods at the end of each quarter until after the
Company’s public disclosure of financial and operating
results for that quarter, unless they have received the approval
of the Company’s General Counsel. The Company may impose
additional restricted trading periods at any time if it believes
trading by employees would not be appropriate because of
developments at the Company that are, or could be, material. In
addition, the Company requires pre-clearance of trades in
Company securities for its Officers, and prohibits buying shares
on margin or using shares as collateral for loans.
Perquisites. The
Company’s philosophy is to provide a minimum of
personal-use perquisites to its executives. The Company seeks to
provide perquisites that involve a significant business purpose.
In 2010, such business related perquisites for the Officers
were: (a) country club membership for the President and
Chief Executive Officer, Richard O’Brien; and
(b) personal use of administrative assistant services for
Richard O’Brien.
Richard O’Brien uses the country club for substantial
business purposes, including business entertainment, meetings
and dinners. In recognition of the fact that some portion of the
membership is used for personal purposes, the entire amount
reimbursed is considered a perquisite, is fully taxable to
Richard O’Brien, not grossed up, and reported in the All
Other Compensation column of the Summary Compensation Table.
46
Table of Contents
Tax
Deductibility of
Compensation. Section 162(m) of the
Internal Revenue Code of 1986, as amended, limits the amount of
compensation in excess of $1,000,000 that the Company may deduct
in any one year with respect to its Chief Executive Officer and
three other most highly compensated officers (excluding the
chief financial officer) whose compensation must be included in
this proxy statement because they are the most highly
compensated executive officers. There are exceptions to the
$1,000,000 limitation for performance-based compensation meeting
certain requirements. The Company has not adopted a formal
policy requiring all compensation to meet the exception
requirements under Section 162(m) and therefore not be
subject to the $1,000,000 deductibility limitation. The Company
has decided not to implement a formal policy so that the Company
can maintain flexibility in compensating Officers in a manner
designed to promote various corporate goals.
In 2010, Messrs. O’Brien, Engel, Hill and Lansdown earned
amounts greater than $1,000,000, and a portion of their
salaries, bonuses, stock awards, and other compensation items
are not deductible by the Company. Stock option awards pursuant
to stockholder approved plans are performance-based and are
fully deductible, regardless of the $1,000,000 limit in
Section 162(m). Corporate Performance Bonuses, Strategic
Objectives Bonuses and Financial Performance Stock Bonuses do
not meet the performance-based exception under
Section 162(m) and are therefore subject to the $1,000,000
deduction limit. To date, the Company has deemed the additional
tax benefits that it could receive from a Section 162(m)
executive compensation plan as immaterial to the Company.
However, the Company continually assesses the materiality of
additional Section 162(m) tax benefits that it could
receive from a Section 162(m) executive compensation plan
as executive compensation evolves.
47
Table of Contents
Executive
Compensation Tables
2010 Summary
Compensation Table
|
Change in |
||||||||||||||||||||||||||||||||||||
|
Pension |
||||||||||||||||||||||||||||||||||||
|
Non-Equity |
Value and |
|||||||||||||||||||||||||||||||||||
|
Incentive |
Non-Qualified |
|||||||||||||||||||||||||||||||||||
|
Plan |
Deferred |
All Other |
||||||||||||||||||||||||||||||||||
|
Stock |
Option |
Compen- |
Compensation |
Compen- |
||||||||||||||||||||||||||||||||
|
Name and |
Bonus(1) |
Awards(2) |
Awards(3) |
sation(4) |
Earnings(5) |
sation(6) |
Total |
|||||||||||||||||||||||||||||
|
Principal Position
|
Year | Salary ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
|
Richard T. O’Brien
|
2010 | $ | 1,065,000 | (7) | $ | 779,100 | $ | 7,103,249 | (8) | $ | 1,600,000 | $ | 988,185 | $ | 905,919 | $ | 64,678 | $ | 12,506,131 | |||||||||||||||||
|
President and Chief
|
2009 | $ | 1,025,000 | $ | 1,153,125 | $ | 1,529,919 | $ | 1,552,490 | $ | 996,300 | $ | 746,612 | $ | 64,474 | $ | 7,067,920 | |||||||||||||||||||
|
Executive Officer
|
2008 | $ | 1,000,000 | $ | 1,093,750 | $ | 3,430,179 | $ | 3,897,375 | $ | 800,625 | $ | 307,277 | $ | 88,023 | $ | 10,617,229 | |||||||||||||||||||
|
Russell Ball
|
2010 | $ | 565,000 | $ | 300,000 | $ | 2,505,291 | (9) | $ | 699,990 | $ | 298,475 | $ | 825,560 | $ | 37,261 | $ | 5,231,577 | ||||||||||||||||||
|
Executive Vice
|
2009 | $ | 544,667 | $ | 350,000 | $ | 441,359 | $ | 611,014 | $ | 300,002 | $ | 679,431 | $ | 29,996 | $ | 2,956,469 | |||||||||||||||||||
|
President and Chief
|
2008 | $ | 493,750 | $ | 225,796 | $ | 176,240 | $ | 324,750 | $ | 177,997 | $ | 245,444 | $ | 51,454 | $ | 1,695,431 | |||||||||||||||||||
|
Financial Officer
|
||||||||||||||||||||||||||||||||||||
|
Randy Engel
|
2010 | $ | 545,000 | $ | 300,000 | $ | 2,340,681 | (10) | $ | 699,990 | $ | 287,910 | $ | 795,086 | $ | 35,248 | $ | 5,003,915 | ||||||||||||||||||
|
Executive Vice President,
|
2009 | $ | 486,917 | $ | 310,000 | $ | 383,657 | $ | 539,206 | $ | 268,194 | $ | 547,471 | $ | 28,919 | $ | 2,564,364 | |||||||||||||||||||
|
Strategic Development
|
2008 | $ | 426,250 | $ | 209,922 | $ | 138,411 | $ | 324,750 | $ | 153,663 | $ | 245,863 | $ | 48,773 | $ | 1,547,632 | |||||||||||||||||||
|
Brian Hill
|
2010 | $ | 605,000 | $ | 325,000 | $ | 2,766,402 | (11) | $ | 749,995 | $ | 319,606 | $ | 103,963 | $ | 140,979 | $ | 5,010,945 | ||||||||||||||||||
|
Executive Vice President,
|
2009 | $ | 625,660 | $ | 400,000 | $ | 407,627 | $ | 557,214 | $ | 344,580 | — | $ | 12,781 | $ | 2,347,862 | ||||||||||||||||||||
|
Operations
|
||||||||||||||||||||||||||||||||||||
|
Guy Lansdown
|
2010 | $ | 605,000 | $ | 300,000 | $ | 2,664,342 | (12) | $ | 749,995 | $ | 319,606 | $ | 876,471 | $ | 39,127 | $ | 5,554,541 | ||||||||||||||||||
|
Executive Vice President,
|
2009 | $ | 574,000 | $ | 365,000 | $ | 452,286 | $ | 635,654 | $ | 316,159 | $ | 665,057 | $ | 32,935 | $ | 3,041,091 | |||||||||||||||||||
|
Development
|
2008 | $ | 502,500 | $ | 247,474 | $ | 165,855 | $ | 324,750 | $ | 181,151 | $ | 231,695 | $ | 72,172 | $ | 1,725,597 | |||||||||||||||||||
| (1) | Amounts shown represent the Strategic Objective Bonuses paid in cash. | |
| (2) | Amounts shown represent the aggregate grant date fair value computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718. For the financial performance stock bonus, the grant date fair value is the number of shares granted multiplied by the fair market value on the date of grant. The Company’s 2005 Stock Incentive Plan defines fair market value of the stock as the average of the high and low sales price on the date of the grant, which is the grant date fair value for the financial performance stock bonus. The fair market values are $49.45 (February 2008), $43.19 (February 2009) and $49.64 (March 2010). Mr. O’Brien received an additional stock grant in October 2008 with a fair market value of $26.91 per share. See 2010 Outstanding Equity Awards at Fiscal Year-End Table for the number of shares granted in each award. In 2010, the Company added the Performance Leveraged Stock Unit bonus program, including a 3-year feather-in of the grants, as described in the CD&A. As a result, the stock awards for 2010, appear large due to the one-time feathering-in process for the Performance Leveraged Stock Unit bonus program. Pursuant to FASB 718, the aggregate grant date fair value of Performance Leveraged Stock Units is determined by a Monte Carlo simulation method, which determined a grant date fair value of $64.55 for the 2010 grant, $67.50 for the 2010-2011 grant and $70.25 for the 2010-2012 grant. | |
| (3) | Amounts shown represent the aggregate grant date fair value computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718, which is the number of options granted multiplied by the Black Scholes value. The Black Scholes values are $12.99 (April 2008), $12.88 (May 2009) and $20.01 (April 2010). Mr. O’Brien received an additional option grant in October 2008 with a Black Scholes value of $8.12 per share. See 2010 Outstanding Equity Awards at Fiscal Year-End Table for the number of options granted in each award. | |
| (4) | Amounts shown represent Corporate Performance Bonuses paid in cash. | |
| (5) | Amounts shown represent the increase in the actuarial present value under the Company’s qualified and non-qualified defined benefit pension plans. The change in pension value for the non-qualified pension plan increased significantly in 2010 due to the Pension Benefit Guaranty Corporation (“PBGC”) rate change, decrease in interest rates (both Pension Benefit Guaranty Corporation (“PBGC”) rates and FASB rates) as well as increase in pay. The non-qualified pension plan (Pension Equalization Plan “PEP”) present values are based on both the Financial Accounting Standards Board and PEP interest rates. The PEP interest rate is based upon the PBGC interest rate. At December 31, 2010 the PBGC lump sum interest rate was 2.25%, at December 31, 2009 the PBGC lump sum interest rate was 2.50% and at December 31, 2008 the PBGC lump sum rate is 4.75%. The PBGC rate change increased the present values of the PEP. At December 31, 2010 the FASB rate was 5.75%, at December 31, 2009 the FASB rate was 6.1% and at December 31, 2008 the FASB rate was 6.05%. | |
| (6) | Amounts shown are described in the All Other Compensation Table below. | |
| (7) | Amount includes $5,000 for salary correction from 2009, when Mr. O’Brien was underpaid $5,000 in salary due to administrative error. | |
| (8) | Figure includes target performance leveraged stock units of $4,617,725 calculated utilizing the Monte Carlo simulation method and values discussed in footnote 2 to the Summary Compensation Table. The maximum number of performance leveraged stock units are shown in the Grants of Plan Based Awards Table. | |
| (9) | Figure includes target performance leveraged stock units of $1,429,145 calculated utilizing the Monte Carlo simulation method and values discussed in footnote 2 to the Summary Compensation Table. The maximum number of performance leveraged stock units are shown in the Grants of Plan Based Awards Table. | |
| (10) | Figure includes target performance leveraged stock units of $1,378,608 calculated utilizing the Monte Carlo simulation method and values discussed in footnote 2 to the Summary Compensation Table. The maximum number of performance leveraged stock units are shown in the Grants of Plan Based Awards Table. |
48
Table of Contents
| (11) | Figure includes target performance leveraged stock units of $1,530,217 calculated utilizing the Monte Carlo simulation method and values discussed in footnote 2 to the Summary Compensation Table. The maximum number of performance leveraged stock units are shown in the Grants of Plan Based Awards Table. | |
| (12) | Figure includes target performance leveraged stock units of $1,530,217 calculated utilizing the Monte Carlo simulation method and values discussed in footnote 2 to the Summary Compensation Table. The maximum number of performance leveraged stock units are shown in the Grants of Plan Based Awards Table. |
Refer to the Compensation Discussion and Analysis section for a
description of the components of compensation, along with a
description of all material terms and conditions of each
component. In 2010, salary and bonus payments accounted for 15%
of Mr. O’Brien’s total compensation as reflected
in the Summary Compensation Table. Salary and bonus accounted
for 17%, 17%, 19% and 16% of Messrs. Ball’s,
Engel’s, Hill’s and Lansdown’s total
compensation, respectively, as reflected in the Summary
Compensation Table.
2010 All Other
Compensation Table
|
Change in |
||||||||||||||||||||
|
Company |
Value of |
|||||||||||||||||||
|
Contributions |
Post- |
Relocation |
||||||||||||||||||
|
to Defined |
Retirement |
Reimbursement |
||||||||||||||||||
|
Contribution |
Medical |
and Tax Gross- |
||||||||||||||||||
|
Plans |
and Life |
Perquisites(1) |
Ups(2) |
|||||||||||||||||
|
Name
|
($) | Insurance | ($) | ($) | Total ($) | |||||||||||||||
|
Richard T. O’Brien
|
$ | 12,000 | $ | 41,731 | $ | 10,947 | (3) | — | $ | 64,678 | ||||||||||
|
Russell Ball
|
$ | 12,000 | $ | 25,261 | — | — | $ | 37,261 | ||||||||||||
|
Randy Engel
|
$ | 12,000 | $ | 23,248 | — | — | $ | 35,248 | ||||||||||||
|
Brian Hill
|
$ | 12,000 | $ | 16,366 | — | $ | 112,613 | $ | 140,979 | |||||||||||
|
Guy Lansdown
|
$ | 12,000 | $ | 27,127 | — | — | $ | 39,127 | ||||||||||||
| (1) | The Company provides a limited number of perquisites to its executive officers. See the Compensation Discussion and Analysis section for a description of perquisites. | |
| (2) | Amount includes $94,737.44 in paid time off payout for move from Australian employment to U.S. employment, $15,260 in salary adjustments not processed in 2009, $1,640.07 FICA tax gross up on the payments for move to U.S. payroll, $672 in moving costs and $303.04 in tax gross-ups on moving expenses, all in accordance with the Company’s standard relocation policies. | |
| (3) | Amount shown represents amounts paid for golf club membership ($5,035) and personal use of administrative assistant services ($5,912). |
49
Table of Contents
2010
Grants of Plan-Based Awards Table
|
All Other |
All Other |
|||||||||||||||||||||||||||||||||||||||||||||||
|
Stock |
Option |
Grant Date |
||||||||||||||||||||||||||||||||||||||||||||||
|
Estimated Possible Payouts |
Awards |
Awards: |
Exercise |
Closing |
Fair Value |
|||||||||||||||||||||||||||||||||||||||||||
|
Under |
Number of |
Number of |
or Base |
Price |
of |
|||||||||||||||||||||||||||||||||||||||||||
|
Non-Equity Incentive Plan |
Estimated Future Payouts Under |
Shares of |
Securities |
Price of |
on |
Stock and |
||||||||||||||||||||||||||||||||||||||||||
| Awards(1) | Equity Incentive Plan Awards(2) |
Stock or |
Underlying |
Option |
Grant |
Option |
||||||||||||||||||||||||||||||||||||||||||
|
Grant |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
Units(3) |
Options(4) |
Awards(5) |
Date |
Awards(6) |
|||||||||||||||||||||||||||||||||||||
|
Name
|
Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) | (#) | ($ /Sh) | ($ /Sh) | ($) | ||||||||||||||||||||||||||||||||||||
|
Richard T. O’Brien
|
$ | 397,500 | $ | 795,000 | $ | 1,590,000 | ||||||||||||||||||||||||||||||||||||||||||
|
2010 PSU
|
5,627 | 11,254 | 22,508 | |||||||||||||||||||||||||||||||||||||||||||||
|
2010-2011 PSU
|
11,253 | 22,509 | 45,018 | |||||||||||||||||||||||||||||||||||||||||||||
|
2010-2012PSU
|
16,882 | 33,764 | 67,528 | |||||||||||||||||||||||||||||||||||||||||||||
|
FPS
|
3/1/2010 | 50,071 | $ | 2,485,524 | ||||||||||||||||||||||||||||||||||||||||||||
|
Options
|
4/29/2010 | 79,960 | $ | 55.675 | $ | 55.80 | $ | 1,600,000 | ||||||||||||||||||||||||||||||||||||||||
|
Russell Ball
|
$ | 120,063 | $ | 240,125 | $480,250 | |||||||||||||||||||||||||||||||||||||||||||
|
2010 PSU
|
1,742 | 3,483 | 6,966 | |||||||||||||||||||||||||||||||||||||||||||||
|
2010-2011 PSU
|
3,483 | 6,966 | 13,932 | |||||||||||||||||||||||||||||||||||||||||||||
|
2010-2012 PSU
|
5,225 | 10,450 | 20,900 | |||||||||||||||||||||||||||||||||||||||||||||
|
FPS
|
3/1/2010 | 21,679 | $ | 1,076,146 | ||||||||||||||||||||||||||||||||||||||||||||
|
Options
|
4/29/2010 | 34,982 | $ | 55.675 | $ | 55.80 | $ | 699,990 | ||||||||||||||||||||||||||||||||||||||||
|
Randy Engel
|
$ | 115,813 | $ | 231,625 | $463,250 | |||||||||||||||||||||||||||||||||||||||||||
|
2010 PSU
|
1,680 | 3,360 | 6,720 | |||||||||||||||||||||||||||||||||||||||||||||
|
2010-2011 PSU
|
3,360 | 6,720 | 13,440 | |||||||||||||||||||||||||||||||||||||||||||||
|
2010-2012 PSU
|
5,040 | 10,080 | 20,160 | |||||||||||||||||||||||||||||||||||||||||||||
|
FPS
|
3/1/2010 | 19,381 | $ | 962,073 | ||||||||||||||||||||||||||||||||||||||||||||
|
Options
|
4/29/2010 | 34,982 | $ | 55.675 | $ | 55.80 | $ | 699,990 | ||||||||||||||||||||||||||||||||||||||||
|
Brian Hill
|
$ | 128,563 | $ | 257,125 | $514,250 | |||||||||||||||||||||||||||||||||||||||||||
|
2010 PSU
|
1,865 | 3,729 | 7,458 | |||||||||||||||||||||||||||||||||||||||||||||
|
2010-2011 PSU
|
3,730 | 7,459 | 14,918 | |||||||||||||||||||||||||||||||||||||||||||||
|
2010-2012 PSU
|
5,595 | 11,189 | 22,378 | |||||||||||||||||||||||||||||||||||||||||||||
|
FPS
|
3/1/2010 | 24,903 | $ | 1,236,185 | ||||||||||||||||||||||||||||||||||||||||||||
|
Options
|
4/29/2010 | 37,481 | $ | 55.675 | $ | 55.80 | $ | 749,995 | ||||||||||||||||||||||||||||||||||||||||
|
Guy Lansdown
|
$ | 128,563 | $ | 257,125 | $514,250 | |||||||||||||||||||||||||||||||||||||||||||
|
2010 PSU
|
1,865 | 3,729 | 7,458 | |||||||||||||||||||||||||||||||||||||||||||||
|
2010-2011 PSU
|
3,730 | 7,459 | 14,918 | |||||||||||||||||||||||||||||||||||||||||||||
|
2010-2012 PSU
|
5,595 | 11,189 | 22,378 | |||||||||||||||||||||||||||||||||||||||||||||
|
FPS
|
3/1/2010 | 22,847 | $ | 1,134,125 | ||||||||||||||||||||||||||||||||||||||||||||
|
Options
|
4/29/2010 | 37,481 | $ | 55.675 | $ | 55.80 | $ | 749,995 | ||||||||||||||||||||||||||||||||||||||||
| (1) | Amounts shown represent threshold, target and maximum amounts for 2010 Corporate Performance Bonuses. The Compensation Committee established the target for corporate metrics on April 28, 2010. Payments of Corporate Performance Bonuses for 2010 performance are shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. Refer to the Compensation Discussion and Analysis for a description of the criteria for payment of Corporate Performance Bonuses. | |
| (2) | Amounts shown represent the threshold, target and maximum number of shares of the Performance Leveraged Share Unit Bonuses potentially awardable for all three awards in 2010, which represent the one-time feather- in process for the new Performance Leveraged Stock Unit Bonus. Refer to the Compensation Discussion and Analysis for a description of the terms of and criteria for making these awards, the feather-in process and the payouts for the 2010 performance year on March 1, 2011. | |
| (3) | Refer to the Compensation Discussion and Analysis section on Financial Performance Stock Bonus for a description of the terms of and criteria for making these awards. | |
| (4) | Refer to the Compensation Discussion and Analysis for a description of the terms of and criteria for making these awards. | |
| (5) | Exercise or base price is determined by the average of the high and low sales price of Common Stock on the New York Stock Exchange on grant date, as reported by Bloomberg Professional, the independent commercial reporting service selected by the Compensation Committee. | |
| (6) | Amounts shown represent Financial Performance Stock Bonuses awarded on March 1, 2010 for 2009 performance and stock option awards made on April 29, 2010. For Financial Performance Stock Bonuses, fair value is calculated using the average of the high and low stock price on the date of grant of $49.64. For stock options, fair value is calculated using the Black Scholes value on the grant date of $20.01. |
50
Table of Contents
2010
Outstanding Equity Awards at Fiscal Year-End Table
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
|
Equity |
||||||||||||||||||||||||||||||||||||
|
Equity |
Incentive |
|||||||||||||||||||||||||||||||||||
|
Incentive |
Plan Awards: |
|||||||||||||||||||||||||||||||||||
|
Plan Awards: |
Market or |
|||||||||||||||||||||||||||||||||||
|
Market |
Number of |
Payout Value |
||||||||||||||||||||||||||||||||||
|
Number of |
Number of |
Value of |
Unearned |
of Unearned |
||||||||||||||||||||||||||||||||
|
Securities |
Number of |
Shares or |
Shares or |
Shares, |
Shares, Units |
|||||||||||||||||||||||||||||||
|
Underlying |
Securities |
Units of |
Units of |
Units or |
or Other |
|||||||||||||||||||||||||||||||
|
Unexercised |
Underlying |
Option |
Stock That |
Stock that |
other Rights |
Rights that |
||||||||||||||||||||||||||||||
|
Options(1) |
Unexercised |
Exercise |
Option |
Option |
Have |
Have Not |
that Have |
Have Not |
||||||||||||||||||||||||||||
| (#) | Options(2)(#) |
Price |
Grant |
Expiration |
Not Vested |
Vested |
Not Vested |
Vested |
||||||||||||||||||||||||||||
|
Name
|
Exercisable | Unexercisable | ($) | Date | Date | (#) | ($)(3) | (#)(12) | ($)(13) | |||||||||||||||||||||||||||
|
Richard T.O’Brien
|
20,000 | $ | 45.16 | 10/26/05 | 10/26/15 | |||||||||||||||||||||||||||||||
| 45,000 | $ | 57.71 | 4/26/06 | 4/26/16 | ||||||||||||||||||||||||||||||||
| 65,000 | $ | 42.06 | 4/30/07 | 4/30/17 | ||||||||||||||||||||||||||||||||
| 74,998 | 37,502 | (4) | $ | 44.49 | 4/28/08 | 4/28/18 | ||||||||||||||||||||||||||||||
| 300,000 | (5) | $ | 26.91 | 10/31/08 | 10/31/18 | |||||||||||||||||||||||||||||||
| 40,178 | 80,357 | (6) | $ | 39.95 | 5/4/09 | 5/4/19 | ||||||||||||||||||||||||||||||
| 79,960 | (7) | $ | 55.675 | 4/29/10 | 4/29/20 | |||||||||||||||||||||||||||||||
| 4,984 | (8) | $ | 306,167 | |||||||||||||||||||||||||||||||||
| 100,000 | (5) | $ | 6,143,000 | |||||||||||||||||||||||||||||||||
| 11,808 | (9) | $ | 725,365 | |||||||||||||||||||||||||||||||||
| 33,381 | (10) | $ | 2,050,595 | |||||||||||||||||||||||||||||||||
|
2010 PSU
|
22,508 | $ | 1,382,666 | |||||||||||||||||||||||||||||||||
|
2010-2011 PSU
|
45,018 | $ | 2,765,456 | |||||||||||||||||||||||||||||||||
|
2010-2012 PSU
|
67,528 | $ | 4,148,245 | |||||||||||||||||||||||||||||||||
|
Russell Ball
|
7,500 | $ | 49.725 | 12/2/03 | 12/2/13 | |||||||||||||||||||||||||||||||
| 3,750 | $ | 40.43 | 4/27/04 | 4/27/14 | ||||||||||||||||||||||||||||||||
| 6,250 | $ | 45.74 | 12/7/04 | 12/7/14 | ||||||||||||||||||||||||||||||||
| 6,250 | $ | 45.16 | 10/26/05 | 10/26/15 | ||||||||||||||||||||||||||||||||
| 15,000 | $ | 57.71 | 4/26/06 | 4/26/16 | ||||||||||||||||||||||||||||||||
| 15,000 | $ | 42.06 | 4/30/07 | 4/30/17 | ||||||||||||||||||||||||||||||||
| 16,666 | 8,334 | (4) | $ | 44.49 | 4/28/08 | 4/28/18 | ||||||||||||||||||||||||||||||
| 15,813 | 31,626 | (6) | $ | 39.95 | 5/4/09 | 5/4/19 | ||||||||||||||||||||||||||||||
| 34,982 | (7) | $ | 55.675 | 4/29/10 | 4/29/20 | |||||||||||||||||||||||||||||||
| 1,190 | (8) | $ | 73,102 | |||||||||||||||||||||||||||||||||
| 3,407 | (9) | $ | 209,292 | |||||||||||||||||||||||||||||||||
| 14,453 | (10) | $ | 887,848 | |||||||||||||||||||||||||||||||||
|
2010 PSU
|
6,966 | $ | 427,921 | |||||||||||||||||||||||||||||||||
|
2010-2011 PSU
|
13,932 | $ | 855,843 | |||||||||||||||||||||||||||||||||
|
2010-2012 PSU
|
20,900 | $ | 1,283,887 | |||||||||||||||||||||||||||||||||
|
Randy Engel
|
2,250 | $ | 49.725 | 12/2/03 | 12/2/13 | |||||||||||||||||||||||||||||||
| 3,750 | $ | 45.74 | 12/7/04 | 12/7/14 | ||||||||||||||||||||||||||||||||
| 3,750 | $ | 45.16 | 10/26/05 | 10/26/15 | ||||||||||||||||||||||||||||||||
| 8,500 | $ | 57.71 | 4/26/06 | 4/26/16 | ||||||||||||||||||||||||||||||||
| 16,666 | 8,334 | (4) | $ | 44.49 | 4/28/08 | 4/28/18 | ||||||||||||||||||||||||||||||
| 13,954 | 27,909 | (6) | $ | 39.95 | 5/4/09 | 5/4/19 | ||||||||||||||||||||||||||||||
| 34,982 | (7) | $ | 55.675 | 4/29/10 | 4/29/20 | |||||||||||||||||||||||||||||||
| 935 | (8) | $ | 57,437 | |||||||||||||||||||||||||||||||||
| 2,961 | (9) | $ | 181,894 | |||||||||||||||||||||||||||||||||
| 12,921 | (10) | $ | 793,737 | |||||||||||||||||||||||||||||||||
|
2010 PSU
|
6,720 | $ | 412,810 | |||||||||||||||||||||||||||||||||
|
2010-2011 PSU
|
13,440 | $ | 825,620 | |||||||||||||||||||||||||||||||||
|
2010-2012 PSU
|
20,160 | $ | 1,238,429 | |||||||||||||||||||||||||||||||||
|
Brian Hill
|
13,332 | 6,668 | (4) | $ | 44.49 | 4/28/08 | 4/28/18 | |||||||||||||||||||||||||||||
| 14,420 | 28,842 | (6) | $ | 39.95 | 5/4/09 | 5/4/19 | ||||||||||||||||||||||||||||||
| 37,481 | (7) | $ | 55.675 | 4/29/10 | 4/29/20 | |||||||||||||||||||||||||||||||
| 2,478 | (11) | $ | 152,224 | |||||||||||||||||||||||||||||||||
| 3,147 | (9) | $ | 193,320 | |||||||||||||||||||||||||||||||||
| 16,602 | (10) | $ | 1,019,861 | |||||||||||||||||||||||||||||||||
|
2010 PSU
|
7,458 | $ | 458,145 | |||||||||||||||||||||||||||||||||
|
2010-2011 PSU
|
14,918 | $ | 916,413 | |||||||||||||||||||||||||||||||||
|
2010-2012 PSU
|
22,378 | $ | 1,374,681 | |||||||||||||||||||||||||||||||||
|
Guy Lansdown
|
12,500 | $ | 57.71 | 4/26/06 | 4/26/16 | |||||||||||||||||||||||||||||||
| 20,000 | $ | 42.06 | 4/30/07 | 4/30/17 | ||||||||||||||||||||||||||||||||
| 8,333 | 8,334 | (4) | $ | 44.49 | 4/28/08 | 4/28/18 | ||||||||||||||||||||||||||||||
| 16,450 | 32,902 | (6) | $ | 39.95 | 5/4/09 | 5/4/19 | ||||||||||||||||||||||||||||||
| 37,481 | (7) | $ | 55.675 | 4/29/10 | 4/29/20 | |||||||||||||||||||||||||||||||
| 1,120 | (8) | $ | 68,802 | |||||||||||||||||||||||||||||||||
| 3,491 | (9) | $ | 214,452 | |||||||||||||||||||||||||||||||||
| 15,232 | (10) | $ | 935,702 | |||||||||||||||||||||||||||||||||
|
2010 PSU
|
7,458 | $ | 458,145 | |||||||||||||||||||||||||||||||||
|
2010-2011 PSU
|
14,918 | $ | 916,413 | |||||||||||||||||||||||||||||||||
|
2010-2012 PSU
|
22,378 | $ | 1,374,681 | |||||||||||||||||||||||||||||||||
51
Table of Contents
| (1) | Stock options are generally granted one time per year. Stock options were granted two times per year prior to 2006. | |
| (2) | Stock options vest at the rate of 331/3% per year, unless accelerated as explained in the Compensation Discussion and Analysis section. | |
| (3) | Assumes stock price of $61.43 the closing price on December 31, 2010. | |
| (4) | Vesting dates are April 28, 2011. | |
| (5) | Vesting date is October 31, 2013. | |
| (6) | Vesting dates are May 4, 2011 and 2012. | |
| (7) | Vesting dates are April 29, 2011, 2012 and 2113. | |
| (8) | Vesting date is February 25, 2011. | |
| (9) | Vesting date is February 23, 2011. | |
| (10) | Vesting dates are March 1, 2011 and 2012. | |
| (11) | Vesting date is October 31, 2011. | |
| (12) | Maximum number of Performance Leveraged Stock Units are shown for all three feather-in grants, which are described in the Compensation Discussion and Analysis. The maximum number represents twice the target number of units. | |
| (13) | Assumes stock price of $61.43, the closing price on December 31, 2010. |
2010
Option Exercises and Stock Vested Table
| Option Awards | Stock Awards | |||||||||||||||
|
Number of Shares |
Value Realized |
Number of Shares |
Value Realized |
|||||||||||||
|
Acquired on Exercise |
on Exercise |
Acquired on Vesting |
on Vesting |
|||||||||||||
|
Name
|
(#) | ($) | (#) | ($) | ||||||||||||
|
Richard T. O’Brien
|
— | — | 47,418 | $ | 2,378,317 | |||||||||||
|
Russell Ball
|
10,000 | $ | 257,931 | 12,702 | $ | 615,239 | ||||||||||
|
Randy Engel
|
15,500 | $ | 268,613 | 10,976 | $ | 532,409 | ||||||||||
|
Brian Hill
|
— | — | 13,925 | $ | 711,160 | |||||||||||
|
Guy Lansdown
|
— | — | 13,032 | $ | 631,872 | |||||||||||
2010
Pension Benefits
Table(1)
|
Number |
Present |
|||||||||||||
|
of Years |
Value of |
Payments |
||||||||||||
|
Credited |
Accumulated |
During Last |
||||||||||||
|
Service |
Benefit |
Fiscal Year |
||||||||||||
|
Name
|
Plan Name | (#) | ($) | ($) | ||||||||||
|
Richard T. O’Brien
|
Pension Plan | 5.3 | $ | 172,848 | — | |||||||||
| Pension Equalization Plan | 5.3 | $ | 2,120,674 | — | ||||||||||
|
Russell Ball
|
Pension Plan | 16.6 | $ | 427,091 | — | |||||||||
| Pension Equalization Plan | 16.6 | $ | 1,978,846 | — | ||||||||||
|
Randy Engel
|
Pension Plan | 17 | $ | 429,549 | — | |||||||||
| Pension Equalization Plan | 17 | $ | 1,479,547 | — | ||||||||||
|
Brian Hill
|
Pension Plan | 1 | $ | 19,694 | — | |||||||||
| Pension Equalization Plan | 1 | $ | 84,269 | — | ||||||||||
|
Guy Lansdown
|
Pension Plan | 17.3 | $ | 438,634 | — | |||||||||
| Pension Equalization Plan | 17.3 | $ | 1,960,619 | — | ||||||||||
| (1) | All calculations in the 2010 Pension Benefits Table were calculated using target Corporate Performance Bonus for 2010, and 50% of maximum Strategic Objectives Bonus. |
The Company provides two tax-qualified retirement plans, a
Pension Plan and a Savings Plan (401(k) plan). In addition, the
Company offers a non-qualified pension plan (the “Pension
Equalization Plan”), and non-qualified savings plan (the
“Savings Equalization Plan”) for highly compensated
employees.
Pension
Plan. Messrs. O’Brien, Ball,
Engel, Hill and Lansdown are participants in the qualified
Pension Plan. The Pension Plan is available to a broad group of
Company employees, which generally includes U.S. domestic
salaried employees of the Company. The plan provides for
post-retirement payments determined by a formula based upon age,
years of service and pension-eligible earnings for employees
hired before January 1, 2007, called the final average pay
calculation. For employees hired after January 1, 2007, the
plan provides for post-retirement payments determined by a
formula based upon years of service.
Final Average
Pay Calculation. Age 62 is the normal
retirement age under the Pension Plan for final average pay
calculation, meaning the age upon which the employee may
terminate employment and collect benefits, or a participant may
retire at age 55 with 10 years of service and collect
reduced benefits immediately. If a Pension Plan participant
terminates employment prior to age 55, but has a vested
benefit by having acquired 5 years of service with the
Company, the participant will begin to collect a benefit at
age 62. If the participant terminates employment prior to
age 55, but has 10 or more years of service with the
Company, the participant may elect to
52
Table of Contents
collect a reduced benefit at age 55. If a participant
attains the age of 48, has 10 years of service, and is
terminated from employment within 3 years of a change of
control, the participant is entitled to commence benefits. The
Pension Plan utilizes the same definition of change of control
as the Executive Change of Control Plan. The formula based upon
age and years of service for benefits provides a strong
incentive for Company employees to remain employed with the
Company, even in times of high demand in the employment
marketplace.
According to the Pension Plan, at the normal retirement age of
62, the Company calculates the monthly pension benefit amount
through the following formula:
1.75% of the average monthly salary minus (−)
1.25% of the participant’s
primary social security benefit times (×) the participant’s years of credited service
primary social security benefit times (×) the participant’s years of credited service
To determine the average monthly salary, the Company calculates
the highest average from 5 consecutive prior years of employment
within the last 10 years of employment of regular pay,
vacation pay, cash bonus and a pro-rated severance or change of
control payment, if applicable. Salary does not include stock
based compensation, foreign assignment premiums, signing
bonuses, fringe benefits, payments from non-qualified plans or
indemnity benefit payments. In the event a vested participant
dies prior to the commencement of benefit payments, the
participant’s legal spouse receives survivor benefits which
are calculated based upon the pension benefit that the
participant would have received upon retirement the day prior to
death with an additional reduction factor applied. If the
participant does not have a legal spouse, there is no benefit
paid.
In the event of early retirement, meaning after reaching the age
of 55 and at least 10 years of service, a participant is
eligible to collect a monthly pension benefit upon retirement
using the formula above with the following reductions:
Early
Retirement Reductions
|
Age at |
Years of |
|||
|
Termination
|
Service | Reduction | ||
|
55
|
At least 30 | no reduction — payable upon termination | ||
|
60
|
At least 10 | lesser of 1/3 of 1% for each month of service less than 30 years of service (4% per year) or 1/3 of 1% for each month by which the date of benefit commencement precedes age 62 (4% per year) payable upon termination | ||
|
At least 55
|
At least 10 | 1/3 of 1% for each month by which the date of benefit commencement precedes age 62 (4% per year) payable upon termination | ||
|
Under 55
|
At least 10 | 1/2 of 1% for each month by which the date of benefit commencement precedes age 62 (6% per year) payable following termination and attainment of age 55 | ||
| At least 30 | No reduction payable at age 55 |
Change
of Control Early Retirement
|
Years of |
||||
| Age | Service | Reduction | ||
|
48 at time of change of control
|
At least 10 | Lower reduction of 2% for each year by which termination precedes age 62, or applicable reduction above |
Stable Value
Calculation
For a participant in the stable value pension, benefits are
determined as follows:
|
Full Years of |
||||||||
|
Services Completed |
Percentage of Salary up |
Percent of Salary |
||||||
|
by the end of the |
to and including Social |
Over the Social |
||||||
|
Plan Year
|
Security Wage Base | Security Wage Base | ||||||
|
0-9
|
13 | % | 21 | % | ||||
|
10-19
|
15 | % | 23 | % | ||||
|
20+
|
17 | % | 25 | % | ||||
The stable value benefit, as of a given date, is the sum of all
of the amounts accrued for each year of service. Salary in the
stable value pension is defined the same as in the final average
pay pension. Normal retirement age under the stable value
pension is 65 and the vesting period is 5 years. If a
stable value participant has 5 years of service and
separates employment with Newmont prior to age 65, the
participant is entitled to a reduced benefit. Under the stable
value pension, participants may take their benefit in lump sum
or an annuity.
53
Table of Contents
Messrs. O’Brien, Ball, Engel and, Lansdown have vested
benefits under the Pension Plan by virtue of five or more years
of service. Mr. Hill participates in the stable value
calculation of the Pension Plan of Newmont based upon his date
of hire and he does not have vested benefits under the Pension
Plan, as he does not have five years of service with the Company.
The Pension Plan contains a cap on eligible earnings as required
by the Internal Revenue Code as well as a cap on benefits as
required by section 415 of the Internal Revenue Code. This
cap limits the pension benefits that executive-grade employees
of the Company can receive under the Pension Plan.
Pension
Equalization Plan. The Pension Equalization
Plan provides for an actuarially determined present value cash
lump sum amount upon retirement at age 62, or upon
termination after 5 years of service with the Company. The
Company determines the lump sum amount by calculating a full
pension benefit under the Pension Plan, utilizing the definition
of Salary from the Pension Equalization Plan, and subtracting
the actual benefit owed under the Pension Plan that is subject
to the cap in benefits. The definition of Salary under the
Pension Equalization Plan excludes bonus amounts in the form of
restricted stock for executives hired or promoted to executive
status after January 1, 2004. In other words, if a Company
executive attained executive status before January 1, 2004,
that executive will have restricted stock bonus amounts included
as eligible earnings in the Pension Equalization Plan until
December 31, 2007. Any bonus amounts in the form of
restricted stock after December 31, 2007 will not be
included for pension equalization benefits calculation purposes.
The Company will calculate Salary for any executive entitled to
include restricted stock in the definition of salary as of
December 31, 2007. When such executive terminates
employment with the Company, the executive shall receive
benefits under the Pension Equalization Plan calculated with the
higher of the salary calculation as of December 31, 2007
that includes restricted stock, or the salary calculation at the
time of termination that excludes restricted stock.
If a participant dies while employed with the Company, or after
retirement but before receipt of benefits under the Pension
Equalization Plan, and the participant was entitled to benefits
under the Pension Plan, the participant’s legal spouse
receives survivor benefits which are calculated based upon the
full Pension Equalization benefit minus the Pension Plan benefit
amount. If the Company terminates a participant for cause, the
participant forfeits all benefits under the Pension Equalization
Plan.
Pension
Calculation Assumptions. The qualified
pension present value uses a discount rate at December 31,
2010 of 5.75% and FASB mortality. The pension equalization value
uses a pension equalization plan lump sum rate of 2.25% as of
December 31, 2010 and mortality as defined in the Pension
Equalization Plan to determine the lump sum payable at an
executive’s earliest unreduced retirement age. The present
value of the qualified and pension equalization pensions are
also discounted from the earliest unreduced retirement age to
current age using the FASB rate of 5.75%.
2010
Nonqualified Deferred Compensation Table
|
Executive |
Registrant |
Aggregate |
Aggregate |
|||||||||||||||||
|
Contributions |
Contributions |
Earnings |
Aggregate |
Balance at |
||||||||||||||||
|
in Last |
in Last |
in Last |
Withdrawals / |
Last Fiscal |
||||||||||||||||
|
Fiscal
Year(1) |
Fiscal Year |
Fiscal Year |
Distributions |
Year-End |
||||||||||||||||
|
Name
|
($) | ($) | ($) | ($) | ($) | |||||||||||||||
|
Richard T. O’Brien
|
— | — | $ | 6,446 | — | $ | 62,995 | |||||||||||||
|
Russell Ball
|
$ | 154,915 | — | $ | 104,011 | — | $ | 781,095 | ||||||||||||
|
Randy Engel
|
— | — | — | — | — | |||||||||||||||
|
Brian Hill
|
— | — | — | — | — | |||||||||||||||
|
Guy Lansdown
|
$ | 93,153 | — | $ | 51,168 | — | $ | 544,418 | ||||||||||||
| (1) | Amounts shown are included in the Salary column of the Summary Compensation Table. |
Amounts shown are part of the Company’s Savings
Equalization Plan. The Company maintains a Savings Plan and a
Savings Equalization Plan for eligible employees.
Savings
Plan. The Savings Plan is the Company’s
defined contribution plan that is available to a broad group of
Company employees, which generally includes U.S. domestic
salaried employees of the Company. The Savings Plan provides
that eligible employees may contribute before-tax or after-tax
compensation to a plan account for retirement savings. Under the
Savings Plan, the Company will match 100% of the first 6% of a
participant’s contribution to the Savings Plan up to a
limit of $12,000 annually. The Company contribution vests as
follows:
54
Table of Contents
Savings
Plan Vesting Schedule
|
Percentage of Company |
||||
|
Years of Service
|
Contribution Vested | |||
|
Less than 1 year
|
0 | |||
|
1 year
|
20 | |||
|
2 years
|
40 | |||
|
3 years
|
60 | |||
|
4 or more years
|
100 | |||
In the event of death, disability, retirement, change of control
(same definition as Executive Change of Control Plan explained
in the Potential Payments Upon Termination or Change of Control
section below) or termination of the Savings Plan, a participant
is fully vested in the Company contribution component of the
Savings Plan. In accordance with the Internal Revenue Code, the
Savings Plan limits the before-tax and after-tax contributions
that highly compensated participants may make to the Savings
Plan.
Savings
Equalization Plan. The Savings Equalization
Plan allows eligible participants the opportunity to defer up to
100% of compensation (minus before-tax contributions under the
Savings Plan) beyond the Internal Revenue Code limitations set
forth in the Savings Plan on a pre-tax basis. The Savings
Equalization Plan is a non-qualified deferred compensation plan.
To participate in the Savings Equalization Plan, an employee
must have a base salary over $175,000 and be eligible to
participate in the Savings Plan of Newmont. The purpose of the
Savings Equalization Plan is to allow highly compensated
employees a way to defer additional compensation for
post-employment savings purposes beyond the limits set forth in
the Savings Plan. A participant’s deferred compensation is
contributed at the direction of the participant to various
hypothetical investment alternatives, including a hypothetical
investment in shares of Company stock. Such investments are
selected by a committee of Company representatives, with the
advice of professional investment managers. Company matching
contributions are credited to a participant’s account in
phantom shares of Company stock. The Company contribution in the
Savings Equalization Plan is subject to a cap of $12,000 per
year (in the aggregate with any Company contribution to the
Savings Plan) for each participant. The Savings Equalization
Plan contains a 4 year vesting period for the Company
contribution that is the same as for the Savings Plan.
Upon distribution of Savings Equalization Plan accounts, the
participant receives a cash amount equal to the value of the
contributions if such contributions had been invested in the
Savings Plan, as of the applicable valuation date. A participant
receives distribution of Savings Equalization amounts in
lump-sum form, or at a pre-selected distribution date in the
future according to the provisions of the plan.
In the event a participant of the Savings Equalization Plan
terminates employment with the Company due to retirement, death
or disability, or change of control, the Company contribution
will vest at 100% regardless of years of service, and the
participant receives a single lump sum cash payment for the
value of the accounts and Company match as soon as
administratively possible following the applicable valuation
date. In the event a participant of the Savings Equalization
Plan terminates employment with the Company for any reason other
than retirement, death, change of control or disability, the
participant receives a single lump sum cash payment for the
value of the accounts and the applicable percentage of vested
Company match based upon years of service as provided above, as
soon as administratively possible following the applicable
valuation date. A participant in the Savings Equalization Plan
is subject to the risk of decline in his or her account if the
hypothetical investments chosen decline in value. In the event
the Company terminates the employment of a participant of the
Savings Equalization Plan due to cause, the participant forfeits
all Company contributions under the Savings Equalization Plan.
In early 2010, the Company established a trust for participants
account balances in the Savings Equalization Plan and the
Company funds the participant account balances in the trust. The
assets held in this trust may be subject to claims of the
Company’s creditors in the event the Company were to file
for bankruptcy.
55
Table of Contents
Potential
Payments Upon Termination or Change of Control.
Terms of
Plans: See the Compensation Discussion and
Analysis section and the text following the tables for a
description of the material terms, conditions and assumptions
for any of the Company’s benefit plans.
Retirement
Benefits: None of the currently employed
Named Executive Officers are eligible for retirement as of
December 31, 2010. However, Messrs. O’Brien,
Ball, Engel and Lansdown have vested benefits under the Pension
Plan and Pension Equalization Plan. See the Pension Benefits
Table for the present value of vested benefits under these plans.
Voluntary
Termination: The Named Executive Officers
would receive no payments or other benefits upon voluntary
termination, except for vested benefits under the Pension Plan
and Pension Equalization Plan. See the Pension Benefits Table
for the present value of vested benefits under these plans.
Termination
Not For Cause: The Company’s Severance
Plan provides for benefits in the case of termination not for
cause in the event of job elimination, based on salary and
length of service. Certain positions are not eligible for job
elimination such as the Chief Executive Officer and Chief
Financial Officer positions. However, severance benefits under
the Severance Plan are provided in the potential payments on the
Termination Table below for comparison purposes. According to
the Severance Plan, an involuntary termination is job
elimination, plant abandonment or closing or a reduction in
force. The Severance Plan provides that even if the termination
was the result of one of the circumstances stated in the prior
sentence, it shall not be an involuntary termination if the
Company offers the employee another position within
75 miles of the former position, at the same or higher base
salary, and involving responsibilities of somewhat similar
levels of importance to the Company as the prior position.
Involuntary termination does not include terminations as a
result of poor work performance, failure to follow policy or
direction, or cause.
In the event of an involuntary termination, the eligible
employee is entitled to:
| • | four weeks of salary plus two weeks of additional salary for each year of service with the Company up to a maximum of 104 weeks of salary (The Severance Plan defines salary as the higher of annual base salary or the base salary and annual cash bonus for the year preceding termination.); and | |
| • | pro-rated (based upon percentage of year worked) annual cash bonus paid at target; and | |
| • | Company paid COBRA benefits and life insurance for the number of weeks of severance pay. |
Termination
For Cause: No additional benefits are
payable in any case of termination for cause. The Company’s
plans generally define cause as: (a) willful and continued
failure of participant to perform substantial duties, follow
Company policy or Company code of conduct, after written demand
for substantial performance; (b) illegal conduct, gross
negligence or willful misconduct; or (c) dishonest or
fraudulent conduct or breach of contract.
Change of
Control: The Company’s 2005 Stock
Incentive Plan provides for vesting of unvested restricted stock
and stock options upon a change of control of the Company,
unless otherwise provided in an incentive plan or award
agreement, such as Mr. O’Brien’s October 2008
grant of stock and options and the PSU program that the Company
began in 2010. The cash bonus plan provides for payment of
pro-rated target Corporate Performance Bonus and Strategic
Objectives Bonus upon a change of control. Additionally, the
Savings Plan and Savings Equalization Plan provide for immediate
vesting of the Company matching contributions which is capped at
a cumulative total of $12,000 per year for both plans.
The Company’s Executive Change of Control Plan applies to
executive grade level employees, including the Named Executive
Officers, in the event of a change of control, which is
generally defined as:
| 1) | The acquisition of beneficial ownership of 20% or more of either (a) the then outstanding shares of the Company; or (b) the combined voting power of the then outstanding shares of the Company entitled to vote generally in the election of directors (but not an acquisition by a Company entity or Company benefit plan); or | |
| 2) | The individuals constituting the Company’s Board of Directors on January 1, 2008 cease to constitute at least a majority of the Board, with certain exceptions allowing the Board the ability to vote in new members by a majority; or | |
| 3) | Consummation of a reorganization, merger, consolidation, sale or other disposition of all or substantially all of the assets of the Company or an acquisition of assets of another corporation. The acquisition of assets of another corporation does not constitute a change of control if certain requirements are met to |
56
Table of Contents
| evidence that the Company is the acquiring company and will conduct the business of the combined entity going forward. |
Termination
After Change of Control: The Company’s
Executive Change of Control Plan provides for enhanced benefits
in the case of termination within three years following change
of control of the Company, in most cases based on salary and
bonus payments in previous years. The Pension Plan provides a
retirement option at age 48 with 10 years of service
and a lesser reduction factor in benefits, compared to
circumstances not involving a change of control.
Executives are eligible for benefits under the Executive Change
of Control Plan if terminated within three years of a change of
control or if the executive terminates for good reason within
three years of change of control. The Change of Control Plan
generally defines good reason as any of the following without
the executive’s prior consent: (a) reduction in
salary, bonus, stock-based compensation from the level
immediately preceding the change of control; (b) requiring
the executive to relocate his or her principal place of business
more than 35 miles from the previous principal place of
business; (c) failure by the employer to comply with the
obligations under the Change of Control Plan; or
(d) assigning the executive duties inconsistent with the
executive’s position immediately prior to such assignment
or any action resulting in the diminution of the
executive’s position, authority, duties or responsibilities.
If an executive is eligible for termination benefits under the
Executive Change of Control Plan, the executive is entitled to:
| • | pro-rated bonus determined by percentage of the year worked at target level; | |
| • | 2 times the “annual pay” for most executives and 3 times for individuals specified by the Newmont Board. Annual pay is defined as annual salary, annual cash bonus at the highest amount that the executive received in the three years prior to the change of control, and the highest employer matching contribution made to the Savings Plan on behalf of the executive in the three years prior to the change of control; | |
| • | a cash amount equal to the actuarial equivalent of three years of additional benefits under the Pension Plan, Pension Equalization Plan, Savings Equalization Plan and credit for three additional years under these plans for purposes of actuarial calculations; | |
| • | for a three year period, health, dental, vision, prescription, disability and life insurance benefits for the executive and his or her family; | |
| • | outplacement services consistent with the Company’s practices during the one-year period prior to the change of control; and | |
| • | certain gross-up payments for excise taxes on the change of control payment. |
Messrs. O’Brien, Ball, Engel, Hill and Lansdown
participate in the Executive Change of Control Plan at the three
times annual pay level as of December 31, 2010. These
individuals are designated for the enhanced benefits because
they all hold positions that would require continuity during a
change of control or threatened change of control. In addition,
the positions that the designated individuals hold are at high
risk for change of personnel in the event of a change of control
and the enhanced benefit provides additional incentive for such
executives to stay with the Company despite any concerns
regarding a change of control.
Death: Upon
the death of one of the Named Executive Officers, payment is
made to the estate based on the terms of the Officers Death
Benefit Plan. The Officer’s Death Benefit Plan provides for
a cash payment upon the death of currently employed
executive-level officers of the Company, as well as eligible
retired executive-level officers. The Officer Death Benefit Plan
provides a lump sum cash benefit paid by the Company upon death
as follows:
| • | 3 times final annual base salary for an executive officer who dies while an active employee; | |
| • | 1 times final annual base salary for an eligible executive officer who dies after retiring at or after normal retirement age of 62; and | |
| • | 30% to 90% of final annual base salary for an eligible executive officer for retirement prior to normal retirement age, depending on the number of years remaining to normal retirement age. |
Messrs. O’Brien, Ball, Engel, Hill and Lansdown are
currently employed executive-level officers of the Company, and
thus eligible for the Officer Death Benefit Plan, in the event
of death during employment.
57
Table of Contents
Disability: The
Company has a short-term disability plan that provides for up to
five months of disability absence with base pay depending upon
the employee’s years of service with the Company. In the
event of long-term disability, the Company has an insurance plan
that provides a maximum monthly benefit to executives and
officers of the Company of $13,000 per month. The maximum
benefit period for the long-term disability benefit varies
depending upon the age on date of disability.
Disability
Coverage: The value of disability coverage
is based on the incremental additional cost to the Company for
an additional coverage. The Executive Change of Control Plan
generally provides for 3 years of disability coverage for
the Named Executive Officers.
2010
Performance Bonuses: All amounts shown
for Bonuses include Corporate Performance Bonuses, Performance
Leveraged Stock Bonuses and Financial Performance Stock Bonuses
and are calculated at target level for 2010 performance. The
Strategic Objectives Bonuses are calculated at 50% of the
maximum payout.
Accelerated
Vesting of Restricted Stock and Stock Options:
The amounts shown assume vesting as of December 31,
2010 of restricted stock, restricted stock units or stock
options at the December 31, 2010 closing price of $61.43.
The amounts shown do not include any vested stock awards.
Performance
Leverage Stock Bonus: The amounts shown
for the Performance Leveraged Stock Bonus in the event of a
Change of Control assume target payout and a stock price of
$61.43 the December 31, 2010 closing price, because there
is no change of control price to determine actual payout, as
contemplated by the PSU program.
Incremental
Non-Qualified Pension: The amounts shown
as Incremental Non-Qualified Pension are based on 3 additional
years of service credit following termination of employment in
the case of change of control, and an additional period of
service based on years of service in the case of termination not
for cause. All amounts payable are based upon the same
assumptions and plan provisions used in the Summary Compensation
Table and Pension Benefits Table, except that for the
Termination After Change of Control calculation does not include
a present value discount.
Health Care
Benefits: The value of health care benefits
disclosed below is based on the incremental additional cost to
the Company for the length of coverage specified in the
Severance Plan, the Executive Change of Control Plan or
Disability Plan, except that for Change of Control, the amount
is determined without any present value discount.
Life
Insurance: Life insurance coverage and
proceeds are provided under the terms of the Officers Death
Benefit Plan.
280G Tax
Gross-Up: Upon
a change of control of the Company, the executive may be subject
to certain excise taxes pursuant to Section 280G of the
Internal Revenue Code. The Company has agreed to reimburse the
executive for all excise taxes that are imposed on the executive
under Section 280G and any income taxes and excise taxes
that are payable by the executive as a result of any
reimbursements for Section 280G taxes, if payment to an
individual beneficiary exceeds 110% of the safe harbor under
Section 4999. If the payment to the individual does not
exceed 110% of the safe harbor under Section 4999, the
change of control benefit will be reduced to fall within the
safe harbor, rather than providing an excise tax
gross-up.
Any 280G tax
gross-up
amounts reflected in the tables below assume that the executive
is entitled to a full reimbursement by the Company of any
(a) excise taxes that are imposed on the executive as a
result of the change of control, (b) any income and excise
taxes imposed on the executive as a result of the Company’s
reimbursement of the excise tax amount, and (c) any
additional income taxes and excise taxes that are imposed on the
executive as a result of the Company’s reimbursement of the
executive for any excise or income taxes. The calculation of the
280G
gross-up
amount in the tables below is based upon a 280G excise tax rate
of 20%, a 35% federal income tax rate, a 1.45% Medicare tax rate
and a 4.63% state income tax rate. For purposes of the
Section 280G calculation, it is assumed that no amounts
will be discounted as attributable to reasonable compensation
and no value will be attributed to the executive executing a
non-competition agreement.
58
Table of Contents
The following tables describe the estimated potential payments
upon termination or change of control of the Company for the
Named Executive Officers. The amounts shown assume that the
termination or change of control occurred on December 31,
2010. The actual amounts to be paid can only be determined at
the time of such executive’s separation from the Company.
Potential
Payments on Termination
|
Termination |
||||||||||||||||||||
|
After |
||||||||||||||||||||
|
Termination |
Change of |
Change of |
||||||||||||||||||
|
Not For Cause |
Control |
Control |
Death |
Disability |
||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ||||||||||||||||
|
Richard T. O’Brien
|
||||||||||||||||||||
|
Base Benefit
|
$ | 785,986 | — | — | — | — | ||||||||||||||
|
Bonus (Corporate and Strategic Objectives)
|
$ | 1,590,000 | $ | 1,590,000 | — | $ | 1,590,000 | $ | 1,590,000 | |||||||||||
|
Financial Performance Stock Bonus
|
— | — | — | $ | 2,011,014 | $ | 2,011,014 | |||||||||||||
|
Performance Leveraged Stock Unit Bonus
|
— | $ | 1,728,394 | $ | 1,728,394 | $ | 2,074,000 | $ | 2,074,000 | |||||||||||
|
Change of Control Payment
|
— | — | $ | 9,664,275 | — | — | ||||||||||||||
|
Accelerated Vesting of Restricted Stock
|
$ | 9,225,127 | $ | 3,082,127 | $ | 6,143,000 | $ | 5,744,626 | $ | 5,744,626 | ||||||||||
|
Accelerated Vesting of Stock Options
|
$ | 11,467,170 | $ | 2,821,522 | $ | 10,356,000 | $ | 7,310,054 | $ | 7,310,054 | ||||||||||
|
Incremental Non-Qualified Pension
|
$ | 115,363 | — | $ | 4,991,147 | — | — | |||||||||||||
|
Health Care Benefits
|
$ | 2,514 | — | $ | 30,719 | — | — | |||||||||||||
|
Life Insurance Coverage
|
$ | 3,754 | — | $ | 44,528 | — | — | |||||||||||||
|
Life Insurance Proceeds
|
— | — | — | $ | 3,180,000 | — | ||||||||||||||
|
Disability Coverage
|
— | — | $ | 2,124 | — | — | ||||||||||||||
|
Outplacement Services
|
$ | 25,000 | — | $ | 25,000 | — | — | |||||||||||||
|
280G Tax
Gross-Up
|
— | — | $ | 10,946,414 | — | — | ||||||||||||||
|
Total
|
$ | 23,214,914 | $ | 9,222,043 | $ | 43,931,601 | $ | 21,909,694 | $ | 18,729,694 | ||||||||||
|
Russell Ball
|
||||||||||||||||||||
|
Base Benefit
|
$ | 693,105 | — | — | — | — | ||||||||||||||
|
Bonus (Corporate and Strategic Objectives)
|
$ | 480,250 | $ | 480,250 | — | $ | 480,250 | $ | 480,250 | |||||||||||
|
Financial Performance Stock Bonus
|
— | — | — | $ | 622,369 | $ | 622,369 | |||||||||||||
|
Performance Leveraged Stock Unit Bonus
|
— | $ | 641,882 | $ | 641,944 | $ | 641,882 | $ | 641,882 | |||||||||||
|
Change of Control Payment
|
— | — | $ | 3,681,006 | — | — | ||||||||||||||
|
Accelerated Vesting of Restricted Stock
|
$ | 1,170,242 | $ | 1,170,242 | — | $ | 1,170,242 | $ | 1,170,242 | |||||||||||
|
Accelerated Vesting of Stock Options
|
$ | 367,642 | $ | 1,021,826 | — | $ | 1,021,826 | $ | 1,021,826 | |||||||||||
|
Incremental Non-Qualified Pension
|
$ | 135,731 | — | $ | 4,206,809 | — | — | |||||||||||||
|
Health Care Benefits
|
$ | 15,711 | — | $ | 70,720 | — | — | |||||||||||||
|
Life Insurance Coverage
|
$ | 1,885 | — | $ | 8,443 | — | — | |||||||||||||
|
Life Insurance Proceeds
|
— | — | — | $ | 1,695,000 | — | ||||||||||||||
|
Disability Coverage
|
— | — | $ | 2,124 | — | — | ||||||||||||||
|
Outplacement Services
|
$ | 25,000 | — | $ | 25,000 | — | — | |||||||||||||
|
280G Tax
Gross-Up
|
— | — | $ | 4,188,713 | — | — | ||||||||||||||
|
Total
|
$ | 2,889,566 | $ | 3,314,200 | $ | 12,824,759 | $ | 5,631,569 | $ | 3,936,569 | ||||||||||
59
Table of Contents
Potential
Payments on Termination, continued.
|
Termination |
||||||||||||||||||||
|
After |
||||||||||||||||||||
|
Termination |
Change of |
Change of |
||||||||||||||||||
|
Not For Cause |
Control |
Control |
Death |
Disability |
||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ||||||||||||||||
|
Randy Engel
|
||||||||||||||||||||
|
Base Benefit
|
$ | 621,521 | — | — | — | — | ||||||||||||||
|
Bonus (Corporate and Strategic Objectives)
|
$ | 463,250 | $ | 463,250 | — | $ | 463,250 | $ | 463,250 | |||||||||||
|
Financial Performance Stock Bonus
|
— | — | — | $ | 600,319 | $ | 600,319 | |||||||||||||
|
Performance Leveraged Stock Unit Bonus
|
— | $ | 619,214 | $ | 619,214 | $ | 619,214 | $ | 619,214 | |||||||||||
|
Change of Control Payment
|
— | — | $ | 3,405,582 | — | — | ||||||||||||||
|
Accelerated Vesting of Restricted Stock
|
$ | 1,033,068 | $ | 1,033,068 | — | $ | 1,033,068 | $ | 1,033,068 | |||||||||||
|
Accelerated Vesting of Stock Options
|
$ | 341,093 | $ | 941,985 | — | $ | 941,985 | $ | 941,985 | |||||||||||
|
Incremental Non-Qualified Pension
|
$ | 193,179 | — | $ | 4,269,081 | — | — | |||||||||||||
|
Health Care Benefits
|
$ | 15,711 | — | $ | 70,720 | — | — | |||||||||||||
|
Life Insurance Coverage
|
$ | 1,970 | — | $ | 8,761 | — | — | |||||||||||||
|
Life Insurance Proceeds
|
— | — | — | $ | 1,635,000 | — | ||||||||||||||
|
Disability Coverage
|
— | — | $ | 2,124 | — | — | ||||||||||||||
|
Outplacement Services
|
$ | 25,000 | — | $ | 25,000 | — | — | |||||||||||||
|
280G Tax
Gross-Up
|
— | — | $ | 4,066,944 | — | — | ||||||||||||||
|
Total
|
$ | 2,694,792 | $ | 3,057,517 | $ | 12,467,426 | $ | 5,292,836 | $ | 3,657,836 | ||||||||||
|
Brian Hill
|
||||||||||||||||||||
|
Base Benefit
|
$ | 182,986 | — | — | — | — | ||||||||||||||
|
Bonus (Corporate and Strategic Objectives)
|
$ | 514,250 | $ | 514,250 | — | $ | 514,250 | $ | 514,250 | |||||||||||
|
Financial Performance Stock Bonus
|
— | — | — | $ | 666,407 | $ | 666,407 | |||||||||||||
|
Performance Leveraged Stock Unit Bonus
|
— | $ | 687,340 | $ | 687,279 | $ | 687,340 | $ | 687,340 | |||||||||||
|
Change of Control Payment
|
— | — | $ | 2,983,574 | — | — | ||||||||||||||
|
Accelerated Vesting of Restricted Stock
|
$ | 1,365,405 | $ | 1,365,405 | — | $ | 1,365,405 | $ | 1,365,405 | |||||||||||
|
Accelerated Vesting of Stock Options
|
$ | 331,781 | $ | 948,185 | — | $ | 948,185 | $ | 948,185 | |||||||||||
|
Incremental Non-Qualified Pension
|
— | — | $ | 637,458 | — | — | ||||||||||||||
|
Health Care Benefits
|
$ | 1,349 | — | $ | 23,089 | — | — | |||||||||||||
|
Life Insurance Coverage
|
$ | 900 | — | $ | 14,298 | — | — | |||||||||||||
|
Life Insurance Proceeds
|
— | — | — | $ | 1,815,000 | — | ||||||||||||||
|
Disability Coverage
|
— | — | $ | 2,124 | — | — | ||||||||||||||
|
Outplacement Services
|
$ | 25,000 | — | $ | 25,000 | — | — | |||||||||||||
|
280G Tax
Gross-Up
|
— | — | $ | 1,948,124 | — | — | ||||||||||||||
|
Total
|
$ | 2,421,671 | $ | 3,515,180 | $ | 6,320,946 | $ | 5,996,587 | $ | 4,181,587 | ||||||||||
60
Table of Contents
Potential
Payments on Termination, continued.
|
Termination |
||||||||||||||||||||
|
After |
||||||||||||||||||||
|
Termination |
Change of |
Change of |
||||||||||||||||||
|
Not For Cause |
Control |
Control |
Death |
Disability |
||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ||||||||||||||||
|
Guy Lansdown
|
||||||||||||||||||||
|
Base Benefit
|
$ | 732,688 | — | — | — | — | ||||||||||||||
|
Bonus (Corporate and Strategic Objectives)
|
$ | 514,250 | $ | 514,250 | — | $ | 514,250 | $ | 514,250 | |||||||||||
|
Financial Performance Stock Bonus
|
— | — | — | $ | 666,407 | $ | 666,407 | |||||||||||||
|
Performance Leveraged Stock Unit Bonus
|
— | $ | 687,340 | $ | 687,279 | $ | 687,340 | $ | 687,340 | |||||||||||
|
Change of Control Payment
|
— | — | $ | 3,894,477 | — | — | ||||||||||||||
|
Accelerated Vesting of Restricted Stock
|
$ | 1,218,955 | $ | 1,218,955 | — | $ | 1,218,955 | $ | 1,218,955 | |||||||||||
|
Accelerated Vesting of Stock Options
|
$ | 380,023 | $ | 1,063,616 | — | $ | 1,063,616 | $ | 1,063,616 | |||||||||||
|
Incremental Non-Qualified Pension
|
$ | 341,975 | — | $ | 4,829,425 | — | — | |||||||||||||
|
Health Care Benefits
|
$ | 18,878 | — | $ | 85,010 | — | — | |||||||||||||
|
Life Insurance Coverage
|
$ | 2,914 | — | $ | 13,181 | — | — | |||||||||||||
|
Life Insurance Proceeds
|
— | — | — | $ | 1,815,000 | — | ||||||||||||||
|
Disability Coverage
|
— | — | $ | 2,124 | — | — | ||||||||||||||
|
Outplacement Services
|
$ | 25,000 | — | $ | 25,000 | — | — | |||||||||||||
|
280G Tax
Gross-Up
|
— | — | $ | 4,464,479 | — | — | ||||||||||||||
|
Total
|
$ | 3,234,683 | $ | 3,484,161 | $ | 14,000,975 | $ | 5,965,568 | $ | 4,150,568 | ||||||||||
61
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Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Company’s executive officers and directors and
holders of greater than 10% of the Company’s outstanding
common stock to file initial reports of their ownership of the
Company’s equity securities and reports of changes in
ownership with the Securities and Exchange Commission and the
New York Stock Exchange. Based solely on a review of the copies
of such reports furnished to the Company and written
representations from the Company’s executive officers and
directors, the Company believes that all Section 16(a)
filing requirements were complied with in 2010, except for
Thomas R. Kerr, Senior Vice President, North American
Operations, who inadvertently failed to report on a timely basis
a sale of Company shares in the Retirement Savings Plan of
Newmont (401(k) plan), and Roger Johnson, Vice President and
Chief Accounting Officer, and Thomas P. Mahoney, Vice President
and Treasurer, who each inadvertently failed to report on a
timely basis a distribution from the Company’s Savings
Equalization Plan. The transactions described above were
subsequently filed on a late Form 4 for each officer.
62
Table of Contents
Proposal No. 2 —
Ratify Appointment of Auditors
Proposal.
The Audit Committee has selected PricewaterhouseCoopers LLP
(“PwC”) as the independent auditors for Newmont and
its subsidiaries for 2011, after evaluation of audit quality,
fees, independence and other relevant factors. PwC has served as
Newmont’s independent auditors since 2002.
The Board is asking that stockholders ratify the appointment of
PwC as independent auditors. If stockholders fail to ratify the
appointment of PwC, the Audit Committee may reconsider this
appointment. Representatives of PwC are expected to be present
at the Annual Meeting and will be allowed to make a statement if
they wish. Additionally, they will be available to respond to
appropriate questions from stockholders during the meeting.
Board
Recommendation.
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF PwC
AS NEWMONT’S INDEPENDENT AUDITORS FOR 2011.
Independent
Auditors Fees.
PwC billed the following fees in 2010 and 2009 for professional
services rendered to Newmont:
| 2010 | 2009 | |||||||
|
Audit Fees
|
$ | 4,919,556 | $ | 4,671,969 | ||||
|
Audit-Related Fees
|
$ | 79,928 | $ | 35,126 | ||||
|
Tax Fees
|
$ | 271,000 | $ | 0 | ||||
|
All Other
Fees(1)
|
$ | 41,614 | $ | 25,998 | ||||
|
Total
|
$ | 5,312,098 | $ | 4,733,093 | ||||
| (1) | Represents training and software licensing fees. |
The Audit Committee has established procedures for engagement of
PwC to perform services other than audit, review and attest
services. In order to safeguard the independence of PwC, for
each engagement to perform such non-audit service,
(a) management and PwC affirm to the Audit Committee that
the proposed non-audit service is not prohibited by applicable
laws, rules or regulations; (b) management describes the
reasons for hiring PwC to perform the services; and (c) PwC
affirms to the Audit Committee that it is qualified to perform
the services. The Audit Committee has delegated to its Chair its
authority to pre-approve such services in limited circumstances,
and any such pre-approvals are reported to the Audit Committee
at its next regular meeting. All services provided by PwC in
2010 were permissible under applicable laws, rules and
regulations and were pre-approved by the Audit Committee in
accordance with its procedures. The Audit Committee considered
the amount of non-audit services provided by PwC in assessing
its independence.
63
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Report
of the Audit Committee
The Audit Committee of the Board of Directors is composed
entirely of directors who are not officers or employees of the
Company or any of its subsidiaries, and are independent, as
defined in the listing standards of the New York Stock Exchange
and the Company’s Corporate Governance Guidelines. The
Committee has adopted a Charter that describes its
responsibilities in detail. The Charter is available on the
Company’s web site at
http://www.newmont.com
under the Investor Relations section.
The primary responsibility for financial and other reporting,
internal controls, compliance with laws and regulations, and
ethics rests with the management of the Company. The
Committee’s primary purpose is to oversee the integrity of
the Company’s financial statements, the Company’s
compliance with legal and regulatory requirements and corporate
policies and controls, the independent auditor’s selection,
retention, qualifications, objectivity and independence, and the
performance of the Company’s internal audit function. The
Committee reviews the financial information that will be
provided to the stockholders and others, the systems of internal
controls that management and the Board have established, and the
audit process. Additional information about the Committee’s
role in corporate governance can be found in the
Committee’s charter.
The Audit Committee has reviewed and discussed with management
and PricewaterhouseCoopers (“PwC”), the Company’s
independent auditors, the audited financial statements of the
Company for the fiscal year ended December 31, 2010.
Management has affirmed to the Audit Committee that the
financial statements were prepared in accordance with accounting
principles generally accepted in the United States. The Audit
Committee has also reviewed and discussed the Company’s
compliance with Section 404 of the Sarbanes-Oxley Act of
2002.
The Audit Committee has discussed with PwC the matters required
to be discussed by Statement on Auditing Standards No. 61
(Codification of Statements on Auditing Standards, AU 380). The
Audit Committee has received the disclosure and letter required
by the applicable requirements of the Public Company Accounting
Oversight Board regarding the independent accountant’s
communications with the audit committee concerning independence,
and has discussed PwC’s independence with them.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in the Company’s Annual
Report on
Form 10-K
for the year ended December 31, 2010 for filing with the
Securities and Exchange Commission.
Submitted by the following members of the Audit Committee of the
Board of Directors:
Noreen Doyle, Chair
Vincent A. Calarco
Michael S. Hamson
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Table of Contents
Proposal No. 3 —
Advisory Vote on
the Compensation of the Named Executive Officers
the Compensation of the Named Executive Officers
In accordance with the recently enacted Dodd-Frank Wall Street
Reform and Consumer Protection Act (the “Dodd-Frank
Act”), we are asking stockholders to approve an advisory
resolution on compensation of our named executive officers as
described in the “Compensation Discussion and
Analysis,” the compensation tables and related narrative
discussion included in this Proxy Statement. This proposal,
commonly known as a “Say on Pay” proposal, gives
stockholders the opportunity to approve, reject or abstain from
voting with respect to our fiscal 2010 executive compensation
programs and policies and the compensation paid to the named
executive officers. This vote is not intended to address any
specific item of compensation, but rather the overall
compensation of our named executive officers as described in
this Proxy Statement.
This proposal allows our stockholders to express their opinions
regarding the decisions of the Compensation Committee on the
prior year’s annual compensation to the named executive
officers. Because your vote on this proposal is advisory, it
will not be binding on us, the Board or the Compensation
Committee. However, your advisory vote will serve as an
additional tool to guide the Board and the Compensation
Committee in continuing to improve the alignment of the
Company’s executive compensation programs with the
interests of the Company and its stockholders, and is consistent
with our commitment to high standards of corporate governance.
Proposed
Resolution
RESOLVED, that the compensation
paid to the Company’s named executive officers, as
disclosed pursuant to Item 402 of
Regulation S-K
of the Securities Act of 1933, as amended, including the
“Compensation Discussion and Analysis,” compensation
tables and related-narrative discussion in this 2011 Proxy
Statement, is hereby APPROVED.
Approval of this proposal requires the affirmative vote of the
holders of a majority of the shares entitled to vote on, and who
vote for and against, the proposal.
Board of
Directors Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR” THE FOREGOING
RESOLUTION FOR THE REASONS OUTLINED BELOW.
Our executive compensation program is composed of salary,
short-term incentives and long-term incentives and is designed
to:
| • | motivate executives to achieve business goals that drive value for our shareholders; | |
| • | provide competitive compensation opportunities to attract and retain highly qualified executives; | |
| • | offer performance-based compensation that emphasizes Newmont’s long-term performance, including our high safety and social responsibility standards; | |
| • | provide a mix of cash and equity compensation based on financial and non-financial performance; and | |
| • | provide incentives to improve performance without taking excessive risks. |
Our compensation program for our named executive officers
includes the following elements:
| • | Long-term equity compensation has multi-year performance-based vesting. Long-term equity compensation is designed to align the interests of our executive officers with those of our stockholders by rewarding management for long-term operational, financial and stock price performance — with performance-leverage share units, financial performance stock bonus awards and stock option awards vesting over multi-year periods; | |
| • | Total cash compensation is tied to performance. Cash awards for the corporate performance bonus component are based upon defined performance metrics, including production, costs applicable to sales, capital expenditures, and reserves and non-reserve mineralization additions, in order to support annual operating and financial performance, and cash awards for the strategic objective bonus component are based upon measures and objectives approved in advance by the Compensation Committee, which are designed to reward achievement of group and individual strategic objectives in support of both current initiatives and long-term sustainability and performance of the Company; and | |
| • | Excluding base salary, all compensation components are at-risk. The Compensation Committee and management believe that the proportion of at-risk, performance-based compensation should rise as an |
65
Table of Contents
| employee’s level of responsibility increases. As such, for our executive officers, all compensation components (excluding base salary) are at-risk, expressed as a percentage of base salary, and designed to drive performance within the control of management, and/or align management with long-term performance rather than simply rewarding shorter-term performance and payout periods. We believe that the mix and structure of compensation strikes the appropriate balance to promote long-term returns without motivating or rewarding excessive risk taking. |
We encourage you to read the “Compensation Discussion and
Analysis” for additional details about our executive
compensation programs, including information about the fiscal
year 2010 compensation of our named executive officers.
Proposal No. 4 —
Advisory Vote on
the Frequency of Stockholders Votes on Executive Compensation
the Frequency of Stockholders Votes on Executive Compensation
Background of the
Proposal
In accordance with the recently enacted Dodd-Frank Act,
companies are required to provide a separate non-binding
stockholder advisory vote on the compensation of our named
executive officers once every six years to determine whether the
stockholders’
say-on-pay
vote should occur every year, every two years or every three
years. In connection with this, we are seeking an advisory
stockholder vote on whether an advisory “Say on Pay”
vote (such as Proposal No. 3) should be held
every year, every two years or every three years. This proposal
is commonly known as a “Say When on Pay” or
“Frequency” proposal. The Dodd-Frank Act requires
that, after this initial Say When on Pay vote is held, we submit
to our stockholders another Say-When-on-Pay vote at least every
six years thereafter.
Frequency Vote on
Say on Pay
We believe that it is important that our executive compensation
program directly links executive compensation to our financial
performance and align the interests of our executive officers
with those of our stockholders. The Board of Directors believes
that giving our stockholders the right to cast an advisory Say
on Pay vote is a good corporate governance practice and provides
the Company with valuable stockholder input on our compensation
philosophy, policies and practices.
The Board of Directors and the Compensation Committee value the
opinion of our stockholders and will take into account the
outcome of the vote when considering the frequency of the
advisory vote. Because this Frequency vote is advisory, however,
it is non-binding on the Company and the Board of Directors may
decide it is in the best interests of the Company and the
stockholders to hold an advisory Say on Pay vote on executive
compensation more or less frequently than the option approved by
our stockholders.
The recommendation of the Board of Directors appears below.
Stockholders may specify one of four choices for this
Proposal No. 4 on the proxy card: three years, two
years, one year or abstain. Stockholders are not voting to
approve or disapprove the Board of Director’s
recommendation.
Board of
Directors Recommendation
THE BOARD RECOMMENDS THAT
STOCKHOLDERS VOTE TO HOLD A VOTE FOR A ONE-YEAR FREQUENCY FOR
THE NON-BINDING ADVISORY STOCKHOLDERS VOTE TO APPROVE THE
COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE
OFFICERS.
Other
Matters
The Board of Directors does not intend to bring other matters
before the Company’s Annual Meeting of Stockholders, except
items incident to the conduct of the meeting. However, on all
matters properly brought before the meeting by the Board of
Directors or by others, the persons named as proxies in the
accompanying proxy, or their substitutes, will vote in
accordance with their best judgment. Additional information
about Newmont, including its Annual Report on
Form 10-K,
is available through the Company’s web site, at
www.newmont.com.
66
Table of Contents
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time the day prior to annual meeting day.
Newmont Mining Corporation
INTERNET
http://www.proxyvoting.com/nem
Use the
Internet to vote your proxy. Have your
proxy card in hand when you access the web
site.
OR
TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your
proxy.
Have your proxy card in hand when you
call.
If you vote your proxy by Internet or by
telephone,
you do NOT need to mail back your
proxy card.
To vote by mail, mark, sign and date your proxy
card and
return it in the enclosed
postage-paid envelope.
Your Internet or telephone vote authorizes the
named proxies to vote your shares in the same
manner as if you marked, signed and returned
your proxy card.
WO#
|
Fulfillment# | |||
93858
|
93862 | |||
▼ FOLD AND DETACH HERE ▼
| THE BOARD OF DIRECTORS’ RECOMMENDS A VOTE “FOR” ITEMS 1, 2 and 3, and for 1 year frequency on Item 4. | NAME AND ADDRESS PRINTS HERE |
|||||||||||||||||
1. ELECTION OF DIRECTORS
|
||||||||||||||||||
| FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | |||||||||||||
1.1 G.A. Barton
|
o | o | o | Item 2. Ratify
Appointment of
Independent
Auditors for 2011. |
o | o | o | |||||||||||
The undersigned hereby authorizes
the proxies, in their discretion,
to vote on any other business
which may properly be brought
before the meeting or any
adjournment thereof. |
||||||||||||||||||
1.2 V.A. Calarco |
o | o | o | |||||||||||||||
1.3 J.A. Carrabba
|
o | o | o | Item 3. Proposal to
Approve the Advisory Resolution Relating to Executive Compensation. |
o | o | o | |||||||||||
By execution of the Proxy, the
undersigned hereby authorizes such
proxies or their substitutes to
vote in their discretion on such
other business as may properly
come before the Annual Meeting. |
||||||||||||||||||
1.4 N. Doyle |
o | o | o | |||||||||||||||
| 1 Year | 2 Years | 3 Years | Abstain | |||||||||||||||
1.5 V.M. Hagen
|
o | o | o | Item 4. Advisory
Vote on the
Frequency of
Stockholders Votes
on Executive
Compensation.
|
o |
o |
o |
o |
Proxies can only be given by Newmont Mining common stockholders of record on the Record Date. Please sign your name below exactly as it appears on your stock certificate(s) on the Record Date or on the label affixed hereto. When the shares of Newmont Mining common stock are held of record by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or authorized officer. If a partnership, please sign in partnership name by authorized person. |
|||||||||
1.6 M.S. Hamson |
o | o | o | |||||||||||||||
1.7 R.T. O’Brien |
o | o | o | |||||||||||||||
1.8 J.B. Prescott |
o | o | o | |||||||||||||||
1.9 D.C. Roth 1.10 S. Thompson |
o o |
o o |
o o |
If you plan to
attend the meeting, please mark this box. |
o | |||||||||||||
The undersigned acknowledges
receipt of the Notice of Annual
Meeting of Stockholders and the
Proxy Statement. |
||||||||||||||||||
RESTRICTED AREA - SCAN LINE |
Please mark your votes as indicated in this example | x | ||||||||||
| NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian. Please give full title as such. | ||||||||||||
| Signature | Name/Title | Date | ||||||||||
Table of Contents
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
| 1. | Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
or
| 2. | Call toll free 1-866-540-5760 on a touch tone telephone and follow the instructions on the reverse side. There is NO CHARGE to you for this call. |
or
| 3. | Vote by Internet at our Internet Address: http://www.proxyvoting.com/nem |
PLEASE VOTE
Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy
materials, investment plan statements, tax documents and more. Simply log on to Investor
ServiceDirect®
at www.bnymellon.com/shareowner/equityaccess where step-by-step
instructions will prompt you through enrollment.
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of
shareholders. The Proxy Statement and the 2010 Annual Report to Shareholders are available at:
http://www.proxyvoting.com/nem
▼ FOLD AND DETACH HERE ▼
PROXY
NEWMONT MINING CORPORATION
NEWMONT MINING CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 19, 2011
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF NEWMONT MINING CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF NEWMONT MINING CORPORATION
The undersigned, a holder of record shares of common stock, par value $1.60 per share of
Newmont Mining Corporation at the close of business on February 18, 2011 (the “Record Date”),
hereby appoints Russell Ball, Stephen P. Gottesfeld and Jeffrey K. Reeser, and each or any of them,
the proxy or proxies of the undersigned, with full power of substitution and revocation, to
represent the undersigned and to vote all shares of the common stock of Newmont Mining Corporation
that the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Corporation
to be held at 11:00 a.m. local time on Tuesday, April 19, 2011 at the Hotel du Pont, 11th and
Market Streets, Wilmington, Delaware USA, and any adjournments thereof, upon the matters listed on
the reverse side hereof. The proxies appointed hereby may act by a majority of said proxies present
at the meeting (or if only one is present, by that one).
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOX, SEE REVERSE SIDE,
BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS
RECOMMENDATION. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU VOTE ONE OF THE THREE WAYS DESCRIBED
BELOW.
| Address Change/Comments (Mark the corresponding box on the reverse side) |
||
| BNY MELLON SHAREOWNER SERVICES P.O. BOX 3550 SOUTH HACKENSACK, NJ 07606-9250 |
RESTRICTED AREA - SCAN LINE
| WO# | Fulfillment# | |||||||
(Continued and to be signed on reverse side)
|
93858 | 93862 | ||||||
RESTRICTED AREA - SIGNATURE LINE
PRINT AUTHORIZATION
To commence printing on this proxy card please sign, date and fax this card to: 201-369-9711
SIGNATURE:
|
DATE: |
(THIS BOXED AREA DOES NOT PRINT)
Table of Contents
VOTING INSTRUCTION FORM
DIRECTION GIVEN BY REGISTERED HOLDERS OF
EXCHANGEABLE SHARES OF NEWMONT MINING CORPORATION
OF CANADA LIMITED FOR THE APRIL 19, 2011 ANNUAL
MEETING OF STOCKHOLDERS OF NEWMONT MINING CORPORATION
EXCHANGEABLE SHARES OF NEWMONT MINING CORPORATION
OF CANADA LIMITED FOR THE APRIL 19, 2011 ANNUAL
MEETING OF STOCKHOLDERS OF NEWMONT MINING CORPORATION
The undersigned, having read the Notice of Annual Meeting (the “Annual Meeting”) of
stockholders of Newmont Mining Corporation (the “Company”) to be held at the Hotel du Pont, 11th
and Market Streets, Wilmington, Delaware, USA, on Tuesday, April 19, 2011, at 11:00 a.m. local
time, the Proxy Statement, and the accompanying Notice to Exchangeable Shareholders, receipt of
each of which is hereby acknowledged, does hereby instruct and direct Computershare Trust Company
of Canada (the “Trustee”), pursuant to the provisions of the Voting and Exchange Trust Agreement
(the “Agreement”) dated as of February 16, 2002, among the Company, Newmont Mining Corporation of
Canada Limited and the Trustee, as follows:
PLEASE NOTE: IF NO DIRECTION IS MADE AND YOU SIGN BELOW, THE TRUSTEE IS HEREBY AUTHORIZED AND
DIRECTED TO VOTE “FOR” ITEMS 1, 2 AND 3, AND FOR 1 YEAR FREQUENCY ON ITEM 4 BELOW, AND AS TO ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING, TO VOTE IN ITS DISCRETION.
(Please select one of A, B or C)
A.
|
o | Exercise or cause to be exercised, whether by proxy given by the Trustee to a
representative of the Company or otherwise, the undersigned’s voting rights at the Annual
Meeting, or any postponement or adjournment thereof, as follows: |
(Please complete the following only if you have selected Alternative A)
| 1. | ELECTION OF DIRECTORS | Nominees: 01 G.A. Barton, 02 V.A. Calarco, 03 J.A. Carrabba, 04 N. Doyle, 05 V. M. Hagen, |
||||||
| 06 M.S. Hamson, 07 R.T. O’Brien, 08 J.B. Prescott, 9 D.C. Roth, and 10 S. Thompson |
| FOR | WITHHELD | |||||||
| ALL | FOR ALL | |||||||
| o | o |
| FOR ALL EXCEPT NOMINEES WRITTEN IN THE SPACE PROVIDED BELOW |
| 2. | Ratify appointment of PricewaterhouseCoopers LLP as Newmont’s independent auditors for 2011. |
| FOR | AGAINST | ABSTAIN | ||||||
| o | o | o |
| 3. | Proposal to approve an advisory vote (non-binding) resolution relating to executive compensation. |
| FOR | AGAINST | ABSTAIN | ||||||
| o | o | o |
| 4. | Executive compensation frequency stockholder vote. |
| 1 YEAR | 2 YEARS | 3 YEARS | ABSTAIN | |||||
| o | o | o | o |
| 5. | To vote, in its discretion, on any other business which may properly be brought before the meeting or any adjournment thereof. |
| FOR | AGAINST | |||||||
| o | o |
Table of Contents
(If you have selected Alternative A, please go directly to the signature line on this page)
B.
|
o | Deliver a proxy card to the undersigned at the Annual Meeting with respect to all the
Exchangeable Shares of Newmont Mining Corporation of Canada Limited held by the undersigned on
the record date for the Annual Meeting so that the undersigned, or its duly appointed proxy,
may exercise personally the undersigned’s voting rights at the Annual Meeting or any
postponement or adjournment thereof. |
(If you have selected Alternative B, please go directly to the signature line on this page)
C.
|
o | Deliver a proxy card to attend and act for and on behalf of the undersigned at the
Annual Meeting with respect to all the Exchangeable Shares of Newmont Mining Corporation of
Canada Limited held by the undersigned on the record date for the Annual Meeting with all the
powers that the undersigned would possess if personally present and acting thereat including
the power to exercise the undersigned’s voting rights at the Annual Meeting or any
postponement or adjournment thereof. |
Executed on the day of , 2011.
| Signature: | ||||||
| Print Name: | ||||||
NOTES:
| (1) | A shareholder has the right to appoint a person to represent him/her at the Annual Meeting in the proxy card delivered under Alternative B by inserting in the space provided the name of the person the shareholder wishes to appoint. Such person need not be a shareholder. | |
| (2) | To be valid, this Voting Instruction Form must be signed and deposited with Computershare
Trust Company of Canada, 100 University Avenue, 9th Floor, Toronto, Ontario M5J 2Y1 in the
enclosed return envelope or by fax to (416) 263-9524 prior to 5:00 p.m., Toronto time, on
April 18, 2011 or, if the Annual Meeting is adjourned, 48 hours (excluding Saturdays and
holidays) before any adjourned Annual Meeting. |
|
| (3) | If an individual, please sign exactly as your Exchangeable Shares are registered. |
|
| (4) | If the shareholder is a corporation, this Voting Instruction Form must be executed by a duly
authorized officer or attorney of the shareholder and, if the corporation has a corporate
seal, its corporate seal should be affixed. |
|
| (5) | If Exchangeable Shares are registered in the name of an executor, administrator or trustee,
please sign exactly as the Exchangeable Shares are registered. If the Exchangeable Shares are
registered in the name of the deceased or other shareholder, the shareholder’s name must be
printed in the space provided. This Voting Instruction Form must be signed by the legal
representative with his/her name printed below his/her signature and evidence of authority to
sign on behalf of the shareholder must be attached to this Voting Instruction Form. |
|
| (6) | In many cases, Exchangeable Shares beneficially owned by a holder (a “Non-Registered Holder”)
are registered in the name of a securities dealer or broker or other intermediary, or a
clearing agency. Non-Registered Holders should, in particular, review the section entitled
“Non-Registered Holders” in the accompanying Notice to Exchangeable Shareholders and carefully
follow the instructions of their intermediaries. |
|
| (7) | If a share is held by two or more persons, each should sign this Voting Instruction Form. |
|
| (8) | If this Voting Instruction Form is not dated in the space provided, it is deemed to bear the
date on which it is mailed to the shareholder. |
NEWMONT MINING CORPORATION
Notice to Exchangeable Shareholders
Our records show that you hold Exchangeable Shares of Newmont Mining Corporation of Canada
Limited (“Newmont Canada”), a Canadian company. The Exchangeable Shares provide you with economic
and voting rights that are, as nearly as practicable,
2
Table of Contents
equivalent to those of holders of shares of common stock of Newmont Mining Corporation (the
“Company”), the U.S. parent of Newmont Canada, including the right to attend and vote at meetings
of the common stockholders of the Company. The Company will be holding an annual meeting (the
“Annual Meeting”) of its common stockholders on April 19, 2011 to
| • | Elect directors; | ||
| • | Ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as Newmont’s
independent auditors for 2011; |
||
| • | Conduct an advisory vote (non-binding) on the compensation of the named executive
officers; |
||
| • | Conduct an advisory vote on the frequency of stockholders votes on executive
compensation; and |
||
| • | Transact such other business that may properly come before the meeting. |
At such Annual Meeting you will have voting rights, based on the number of Exchangeable Shares
you hold. You are permitted to instruct Computershare Trust Company of Canada, the Trustee under a
Voting and Exchange Trust Agreement as to how the Trustee is to vote your Exchangeable Shares at
the Annual Meeting of the Company. If you do not give voting instructions, the Trustee will not be
entitled to exercise the voting rights attached to your Exchangeable Shares. Alternatively, you may
instruct the Trustee to give you or a person designated by you a proxy to exercise personally the
voting rights attached to your Exchangeable Shares. To instruct the Trustee as to how you wish to
exercise your voting rights, you must complete, sign, date and return the enclosed Voting
Instruction Form to the Trustee by 5:00 p.m., Toronto time, on April 18, 2011. The Trustee will not
be obligated to act on any instructions received after that time.
You have the right to revoke any instructions to the Trustee by giving written notice of
revocation to the Trustee or by executing and delivering to the Trustee a later-dated Voting
Instruction Form. No notice of revocation or later-dated Voting Instruction Form, however, will be
effective unless received by the Trustee prior to 5:00 p.m., Toronto time, on April 18, 2011.
Whether or not you plan to attend the Annual Meeting, please sign, date and return the Voting
Instruction Form in the envelope provided in order to ensure that your Exchangeable Shares will be
represented at the Annual Meeting.
Non-Registered Holders
Only registered holders of Exchangeable Shares of Newmont Canada are permitted to instruct the
Trustee as to how to vote their Exchangeable Shares at the Annual Meeting or to attend and vote at
the Annual Meeting in person or by proxy as described above. You may be a beneficial owner of
Exchangeable Shares (a “Non-Registered Holder”) if your Exchangeable Shares are registered either:
| (i) | in the name of an intermediary (an “Intermediary”) with whom you deal in respect of the
Exchangeable Shares, such as, among others, banks, trust companies, securities dealers or
brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar
plans; or |
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| (ii) | in the name of a clearing agency (such as The Canadian Depository for Securities Limited)
of which the Intermediary is a participant. |
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Table of Contents
Newmont Canada has distributed copies of the Notice of Meeting, the Proxy Statement and this
Notice to Exchangeable Shareholders (collectively, the “meeting materials”) to Intermediaries who
are required to forward these meeting materials to Non-Registered Holders unless a Non-Registered
Holder has waived the right to receive them. If you are a Non-Registered Holder who has not waived
the right to receive meeting materials you will be given either:
| (i) | a voting instruction form, which has already been signed by the Intermediary (typically
by a facsimile, stamped signature) which specifies the number of Exchangeable Shares
beneficially owned by you but which is otherwise uncompleted. This voting
instruction form need not be signed by you. In this case, if you wish to direct the voting of
the Exchangeable Shares held by you or attend and vote at the Annual Meeting (or have another
person attend and vote on your behalf) you should properly complete the voting instruction form
and deposit it with Computershare Trust Company of Canada, 100 University Avenue, 9th Floor,
Toronto, Ontario M5J 2Y1 or by fax to (416) 263-9524 prior to 5:00 p.m., Toronto time, on April
18, 2011; or |
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| (ii) | a voting instruction form, which must be completed and signed by you in accordance with
the directions on the voting instruction form (which may in some cases permit the completion
of the voting instruction form by telephone). |
The purpose of these procedures is to permit you, as a Non-Registered Holder, to direct the
voting of the Exchangeable Shares you beneficially own or to attend and vote at the Annual Meeting,
in person or by proxy. A Non-Registered Holder generally may revoke a voting instruction form given
to an Intermediary by providing written notice to the Intermediary in a reasonable time period
prior to the Annual Meeting. Non-Registered Holders should carefully follow the instructions of
their Intermediaries and their service companies and contact their Intermediaries promptly if they
need assistance.
Information Relating to Newmont Mining Corporation
Exchangeable Shares are exchangeable on a one-for-one basis for shares of common stock of the
Company and you, as a holder of Exchangeable Shares, are entitled to receive dividends from the
Company payable at the same time as and equivalent to, on a per-share basis, any dividends paid by
the Company to holders of its shares of common stock. As a result of the economic equivalency and
voting rights between the Exchangeable Shares and shares of common stock of the Company you, as a
holder of Exchangeable Shares, will have a participating interest determined by reference to the
Company and not Newmont Canada. Accordingly, it is information related to the Company that is
relevant to you and enclosed in this package is the Company’s Proxy Statement which we urge you to
read carefully.
4
TABLE OF CONTENTS
General InformationprintNotice of Internet Availability of Proxy MaterialsprintStockholders Entitled to VoteprintVoting Your SharesprintQuorum, Tabulation and Broker Non-Votes and AbstentionsprintVotes Required to Approve the ProposalsprintRevocation of Proxy or Voting Instruction FormprintSolicitation CostsprintNotes to Participants in Newmont Employee Retirement Savings PlansprintStockholder Proposals for the 2011 Annual MeetingprintVoting ResultsprintProposal No. 1 Election of DirectorsprintVoting For DirectorsprintMajority Vote Standard for the Election of DirectorsprintDirector Skills and QualificationsprintBoard RecommendationprintNomineesprintDirector Nomination Process and Review of Director NomineesprintIndependence of DirectorsprintStock Ownership of Directors and Executive OfficersprintStock Ownership of Certain Beneficial OwnersprintDirectors CompensationprintCommittees of the Board of Directors and AttendanceprintCorporate GovernanceprintReport of the Compensation Committee on Executive CompensationprintCompensation Discussion and AnalysisprintExecutive SummaryprintPhilosophy and ObjectivesprintComponents of Total Compensationprint2010 CompensationprintOther Policies and ConsiderationsprintExecutive Compensation TablesprintSection 16(a) Beneficial Ownership Reporting ComplianceprintProposal No. 2 Ratify Appointment of AuditorsprintReport of the Audit CommitteeprintProposal No. 3 Advisory Vote on the Compensation of the Named Executive OfficersprintProposal No. 4 Advisory Vote on the Frequency of Stockholders votes on Executive Compensation BoardprintOther Mattersprint