Anglo American Annual Report 2012

GOVERNANCE DIRECTORS’ REMUNERATION REPORTREMUNERATION REPORTOF THE DIRECTORSSir Philip HamptonChairman of theRemunerationCommittee“It is the role of the Company’s RemunerationCommittee to ensure that the remunerationarrangements for executive directors offer everyencouragement to enhance the Company’sperformance and deliver our strategy – responsibly.”IN THIS SECTION108Introductory letter109Policy on directorremuneration116Directorremunerationin 2012120Outstanding shareinterests125Chief executivearrangements126RemunerationCommittee in 2012127Other informationrequired1. INTRODUCTORY LETTERDear Shareholder,It is the role of the Company’sRemuneration Committee to ensurethat the remuneration arrangementsfor executive directors and othermembers of the Executive Committeeoffer every encouragement to enhancethe Company’s performance anddeliver our strategy – responsibly.We also need to ensure that the actualrewards received by the executivedirectors are proportionate to thelevels of performance achievedand the returns received by you asshareholders. As a Committee, wetherefore give full consideration to theCompany’s priorities, its performance,your interests and the interests of thewider communities we touch.To help us clearly explain what ourexecutive remuneration arrangementsare and what rewards have beenreceived over the past year and why,we have decided to adopt many ofthe changes being proposed by theUK Government to the reportingof directors’ remuneration a yearearlier than required. The contentsof our new form of report are set outon the left and the new ‘Single Figure’is shown in Figure 13 on page 119.As the chief executive reported inher introduction to this year’s AnnualReport, the current volatility incommodity prices is affecting theCompany’s short-term earnings butthe Company continues to makeprogress towards sustainable growthover the mid to long-term. Thesechallenges and successes arereflected in the remuneration receivedby executive directors for 2012.• The significant drop in theCompany’s earnings in 2012means that no bonus was payableto executive directors in respectof earnings performance. Thebonus amount that was earnedreflects management action takenin weak market conditions and thesuccessful delivery of key strategicoperational priorities.For more informationgo to section 3.2• The drop in earnings also meansthat, of the Enhancement Sharesinitially awarded in 2010, none vestedat the end of 2012, as the requiredthree-year earnings growth wasnot achieved.For more informationgo to section 3.3• The success over the last three yearsof the Company’s longer-termefficiency programmes means thataround half the LTIP awards initiallygranted to executive directors in2010 are likely to vest. The other halfwill not vest as the full value of thesesavings have yet to be returned to youas shareholders in the form ofsuperior TSR.For more informationgo to section 3.4• With respect to 2012 there aretwo aspects of our remunerationarrangements that I would like tohighlight:• The Committee decided toremove the opportunity forexecutive directors to defer futureadditional amounts of bonus intoshares and to receivecorrespondingly higher awardsof Enhancement Shares; and• The Chairman voluntarily waivedthe increase in his fee level thatwas due to take effect from August2012. There has, therefore, beenno increase to his fees taken sincejoining the Company in 2009.108 Anglo American plc Annual Report 2012