chief financial officer and a deferred compensation
structure for the CEO. The total executive directors’
remuneration for the year ended 31 December 2005
was US$3 847 225 (year ended 31 December 2004:
US$5 350 664). Full details are provided in a table on
Basic salary
Each executive director receives a basic salary as
determined by the committee in accordance with the
remuneration policy and subject to agreed annual
performance criteria. The service contracts do not
provide for any retirement payments, nor does the
company have any such retirement liability. The company
does, however, provide a defined contribution fund into
which employees, including directors, may contribute.
Share options
Share options are no longer awarded to non-executive
directors or the CEO. In respect of the non-executive
directors, the last options awarded were in 1998. Awards
of share options are determined by the remuneration
committee which is guided by industry and international
standards. Currently options are not subject to any
performance criteria. The use of performance criteria
was not a standard used at the time the present scheme
was adopted. However, the board acknowledges that
any future scheme would be performance related. Any
options awarded to an employee are subject to an upper
limit of two per cent of the company’s issued share
capital. No share options can be awarded at a discount
because the scheme rules provide that the exercise
price is determined as the closing price of the shares
on the trading day preceding that on which a person is
granted the option. It is not the policy of the company
to grant annual awards of share options to employees,
nor has there been an award to the chief financial officer
in 2005.
The scheme provides that all options may be exercised
early in the event of an acquisition of the company that
would require an offer to be made to all shareholders.
Details of options held by directors are contained in a
table on page
39 of this annual report.
Annual bonus
Executive directors’ service contracts provide for the
payment of an annual bonus. The bonus is determined
on a notional shareholding and is measured according
to the performance of the price of the ordinary shares
of the company over a 12 month period ending 31 March.
The calculation of the annual bonus for Dr DM Bristow
is based on a notional shareholding of 300 000 ordinary
shares, while for Mr Williams the figure is 100 000 ordinary
shares. Under the terms of a termination agreement
signed with the company’s former chairman,
Mr RAR Kebble, a bonus will be paid to him in the event
of the company meeting agreed criteria similar to the
CEO. The last such bonus to Mr RAR Kebble will be for
the year ended 31 December 2005 and will be payable
in April 2006.
Service contracts
Service contracts have been concluded with the two
executive directors and Mr RA Williams’ current
agreement runs until 31 May 2006. The remuneration
committee is reviewing the service contract and will
conclude negotiations with Mr RA Williams before the
end of his current contract. Given the size of the company
and its small management team, the board considers
periods of employment in excess of one year appropriate.
The board has agreed to a rolling three year contract
for Dr DM Bristow which has been approved based on
the importance attributed to his contribution to the
company’s overall strategic direction and performance.
In the event of unilateral termination, the company would
be required to compensate the director concerned for
any outstanding amounts due in terms of the contract.
Share grants
Under the terms of the service contract entered into with
Dr DM Bristow, the board awarded the CEO restricted
stock amounting to 150 000 shares. At the beginning
of 2004, certain performance criteria were agreed by
the board and the CEO. At year end an appraisal was
undertaken and it was agreed that the criteria had been
met. In the circumstances, an award of 150 000 shares
was made to the CEO. The award entitled the CEO to
50 000 shares at the end of each year of a three year
period commencing 1 January 2005. To date, 100 000
shares have been issued to the CEO with the final third
accruing on 1 January 2007. Such an award is not
made annually, but the board reserves the right on the
recommendation of the remuneration committee to re-
consider this when it is deemed appropriate.
The company’s performance has been measured against
the HSBC Global Mining Index. The HSBC Global Mining
Index is a capitalisation-weighted index calculated in
dollars (US$). The series represents the mining industries
of 21 countries for securities with a market capitalisation
generally in excess of US$50 million. The series has a
base of 100 on 31 December 1985, with the exception
of two Latin American indices which are based at 100
at 31 December 1989. A copy of the graph is included
on the inside back cover of this annual report.
NON-EXECUTIVE DIRECTORS
Following a detailed review of non-executive directors’
remuneration by the remuneration committee and based
on the recommendations of the independent external
consultant, the following remuneration was approved
at the annual general meeting held on 25 April 2005:
A general
annual retainer to all non-executive
directors
of US$45 000;
An annual
committee assignment fee of US$25 000,
with an
additional premium for membership of the
audit committee
of US$10 000;
The chairman
of a board committee to receive a
committee
assignment fee of US$40 000;
The senior
independent director, in addition to the
Randgold
Resources Annual Report 2005 37
