Anglo American Annual Report 2012

GOVERNANCE DIRECTORS’ REMUNERATION REPORT2.4 Service agreementsand termination2.4.1 Executive directorsCynthia Carroll and René Médori areemployed by Anglo American Services(UK) Ltd. The service agreements forboth can be terminated at 12 months’notice by either party, in line with theCompany’s policy that the period ofnotice for executive directors shouldnot exceed 12 months, except onappointment, when the Committeemay agree an extended Companynotice period only for the first yearfollowing appointment.Figure 4 sets out key provisionsrelating to termination of employmentfrom the executive directors’ serviceagreements and from the incentiveplan rules. It also sets out keyprovisions relating to change ofcontrol, where there is no termination.There are no provisions for enhancedpayments in the event of a change ofcontrol of the Company.2.4.2 Non-executive directorsAll non-executive directors haveletters of appointment with theCompany for an initial period ofthree years, subject to annualre-appointment at the AGM. TheChairman’s appointment may beterminated by the Company withsix months’ notice. The appointmentletters for the Chairman andnon-executive directors providethat no compensation is payableon termination, other than accruedfees and expenses.Figure 4: Executive director contractual provisions relating to termination of employmentand change of controlServiceagreementprovisionsrelating toterminationIncentive planprovisionsrelating toterminationSalary and benefitsThe period of notice for both executive directors is 12 months. Should CynthiaCarroll not be required to work her full notice, Anglo American Services is ableto discharge its liability for the unexpired portion of her notice period by makinga payment in lieu of her salary and other contractual benefits; in the case ofRené Médori, whose contract dates from 2005, the payment would also includea pro-rated bonusThe contracts of executive directors do not provide for liquidated damagesAnnual bonusFor the BSP, if an executive director ceases to be employed before the endof the year in respect of which the annual performance targets apply, then noaward will be made unless the Committee determines otherwise (taking intoaccount the proportion of the year for which the director was an employee ofthe Group and of performance to date against the annual performance targetsat the date of cessation)Bonus Shares and Enhancement SharesIf an executive director resigns voluntarily before the end of the three-yearvesting period:• Bonus Shares lapse• Enhancement Share awards are foregoneIf an executive director retires with the consent of the Committee, is maderedundant or is considered by the Committee to be a Good Leaver:• Bonus Shares already awarded will be transferred as soon as practicableafter the date of leaving• Enhancement Shares will vest only to the extent that the performancecondition has been met and will be pro-rated for the proportion of theperformance period for which the director servedLTIP awardsFor outstanding LTIP awards, the Committee would normally exercise itsdiscretion when an executive director’s employment ceases as follows:• If the director resigns voluntarily, then his/her interests lapse• If he/she retires with the consent of the Committee, is made redundant or isconsidered by the Committee to be a Good Leaver, vesting is based on thenormal performance criteria at the end of the normal performance period andthen pro-rated for the proportion of the performance period for which thedirector has served• The Committee retains flexibility to accelerate the vesting of outstandingawards on termination. In such circumstances vesting is based on the normalperformance criteria at the time of leaving and then pro-rated for theproportion of the performance period servedIncentive planprovisionsrelating tochange ofcontrol (withouttermination)Bonus Shares and Enhancement SharesThe Bonus Shares awarded under the BSP will be releasedThe Enhancement Shares awarded under the BSP will only vest to theextent that the performance condition has been met at the time of thechange of controlLTIP awardsThe number of shares that vest under the LTIP will be calculated by referenceto the extent to which the applicable performance conditions have been metat the time of the change of control114 Anglo American plc Annual Report 2012