Anglo American Annual Report 2012

5. CHIEF EXECUTIVEARRANGEMENTS5.1 Appointment of newchief executiveMark Cutifani’s remunerationpackage will comprise a basic salaryand variable incentive arrangementswhich are entirely in line withAnglo American’s currentremuneration policy and practice.The key elements of the packageare as follows:• Basic salary – £1.2m per annum.• Bonus Share Plan (BSP) –Mr Cutifani will have the opportunityto participate in Anglo American’sannual incentive arrangements (theBSP) for 2013 in line with the policyset out on page 110.• Long Term Incentive Plan (LTIP) –Mr Cutifani will be eligible for anannual award under the LTIP in linewith the policy set out on page 110.• Compensation for incentivesforfeited – Mr Cutifani will receivean award of restricted shares tocompensate him for the loss ofincentives from his previousemployer AngloGold Ashanti (AGA).The Committee has decided that,so far as possible, the compensatoryawards should be on a comparablebasis to the foregone awards. Assuch, the Company commissioneda third-party valuation to determinethe extent to which the performanceconditions were, at the date ofassessment, likely to be achieved.Based on the AGA share priceand exchange rates at the date ofthis report, the total value of thecompensatory award is c. £2.29m;this figure will be updated at thetime of Mr Cutifani’s joining AngloAmerican, once the value of theshares foregone under the 2013 AGABonus Share Plan award (based onperformance during 2012) is known,using the average share price andexchange rates over the week priorto that event.In order to enhance alignment withthe interests of Anglo Americanshareholders, the Committee hastaken the decision to utilise AngloAmerican shares, rather than cash,as the medium for compensation.These restricted shares will vest overthe next three years, in line with thevesting schedule of the incentivesforegone. They will be subject toclawback in the event of Mr Cutifani’sleaving the Company (exceptas a Good Leaver) or in thecircumstances in which theCompany’s standard clawbackprovisions are triggered.• Shareholding requirements –Mr Cutifani will be required toaccumulate a shareholding inAnglo American to the value oftwo times basic salary within fiveyears of his appointment.• Pension – Anglo American will makean annual contribution of 30% ofbasic salary in respect of Mr Cutifani’spension provision which maybe invested into the Company’spension arrangements or takenas a cash allowance.• Notice Period – The notice period inMr Cutifani’s service contract will be12 months for either party save that,should the Company serve noticebefore the first anniversary of hisappointment, it will be 18 months.5.2 Termination arrangementsfor outgoing chief executiveIn terms of her leaving arrangements,Cynthia Carroll will receive phasedmonthly payments, comprising basicsalary and benefits, for the outstandingnine months of her notice period, in linewith her contractual provisions. Thesepayments will be subject to mitigation.The Committee has determined thatCynthia Carroll will be eligible forconsideration for a BSP award for2013 in respect of the period she willhave served. However, there will be noaward of Enhancement Shares or anyaward under the LTIP in 2013.The Bonus Shares held byCynthia Carroll will be releasedto her on termination.With respect to the EnhancementShare and LTIP awards made in2011 and 2012, the Committee hasdetermined that these awards will veston the normal vesting dates, to theextent that the performance conditionshave been satisfied, and will bepro-rated for the proportion ofeach performance period served.Full details of any amounts paid toCynthia Carroll will be disclosed in the2013 Directors’ Remuneration Report.GovernanceAnglo American plc Annual Report 2012 125