Newmont Mining Corporation DEF 14A 2007
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
Newmont Mining Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notice of 2007 Annual Meeting of Stockholders
To the Holders of Newmont Mining Corporation Common Stock:
To the Holders of Newmont Mining Corporation of Canada Limited Exchangeable Shares:
To the Holders of Newmont Mining Corporation CHESS Depository Interests:
Notice is hereby given that the Annual Meeting of Stockholders of Newmont Mining Corporation will be held at 11:00 a.m., local time, on Tuesday, April 24, 2007, in the Knowles Room at the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware, USA, to:
All stockholders are cordially invited to attend the meeting in person. If you are unable to attend the meeting in person, please mark, sign and date the enclosed proxy card or voting instruction form and return it promptly in the enclosed envelope. In certain instances, you can vote over the telephone or Internet as described on the enclosed proxy card or voting instruction form. 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
SHARON E. THOMAS
Vice President and Secretary
March 5, 2007
Please note that we are requiring an admission ticket to attend the Annual Meeting. For more information, please refer to the back page of the Proxy Statement for an admission ticket.
Table of Contents
This proxy statement is furnished to holders of Newmont Mining Corporation common stock, Newmont Mining Corporation of Canada Limited exchangeable shares, and Newmont Mining Corporation CHESS Depository Interests in connection with the solicitation of proxies on behalf of the Board of Directors of Newmont Mining Corporation (Newmont or the Company) to be voted at the Annual Meeting of Stockholders of Newmont on April 24, 2007. Stockholders of record at the close of business on February 27, 2007 are entitled to notice of and to vote at the meeting and at all adjournments.
Stockholders Entitled to Vote.
The holders of record of the following securities at the close of business on February 27, 2007 (the Record Date) are entitled to vote at Newmonts 2007 Annual Meeting of Stockholders (the Annual Meeting) to be held on Tuesday, April 24, 2007:
Voting Your Shares.
Newmont Common Stock. Each share of Newmont Common Stock that you own entitles you to one vote. Your proxy card shows the number of shares of Newmont Common Stock that you own.
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 those of shares of Newmont Common Stock. Holders of Newmont Exchangeable Shares have a right through a Voting and Exchange Trust Agreement (the Voting Agreement) to vote at stockholders meetings of the Company. The Newmont 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 shareholder of Newmont Canada. The Newmont Exchangeable Shares are exchangeable at the option of the holders into Newmont Common Stock on a one-for-one basis.
There are two ways to vote your Newmont Exchangeable Shares.
Newmont CDIs. The Newmont CDIs are units of beneficial ownership in Newmont Common Stock held by CHESS Depository Nominees Pty Ltd (ACN 071 346 506) (CDN), a wholly-owned subsidiary of the Australian Stock Exchange Limited (ACN 008 624 691). References to Newmont Mining Corporation for purposes of Australian equity holders are to Newmont Mining Corporation ARBN 099 065 997, organized in Delaware with limited liability, and principally regulated in accordance with the laws and rules of Delaware. Since July 1, 2002, Newmont CDIs have traded on the Australian Stock Exchange (ASX) as a Foreign Exempt Listing granted by the ASX, which provides an ancillary trading facility to the Companys primary listing on the New York Stock Exchange. Newmont CDIs entitle holders to dividends and other rights economically equivalent to Newmont Common Stock on a ten-for-one basis. CDN, as the stockholder of record (or its proxy or substitute), will vote the underlying shares of Newmont Common Stock in accordance with the directions of the CDI holders. Your CDI Voting Instruction Form shows the number of Newmont CDIs that you own.
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 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). Written notice revoking a proxy should be sent to the attention of the Secretary, 1700 Lincoln Street, Denver, Colorado 80203. A stockholder may substitute another person in place of those persons presently named as proxies.
Revocation of 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 23, 2007.
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.
Revocation of Newmont CDI Voting Instruction Form. A holder of Newmont CDIs who has completed and returned a CDI Voting Instruction Form (in the manner described above) may revoke the directions to CDN contained therein by delivering to National Shareholder Services, 100 Hutt Street, Adelaide 5000, South Australia, Australia, no later than April 19, 2007, a written notice of revocation bearing a later date than the CDI Voting Instruction Form previously sent.
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 Newmont Common Stock (including shares represented by Newmont CDIs) and the maximum number of shares of Newmont Common Stock that the Trustee of the Newmont Exchangeable Shares is entitled to vote at the Annual Meeting.
Tabulating Votes. 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 proposals presented to stockholders. A 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.
Election of Directors. Directors will be elected by a favorable vote of a plurality (meaning the largest number of votes cast) of those shares of capital stock present and entitled to vote, in person or by proxy, at the Annual Meeting. A stockholder may withhold votes from any or all nominees.
Ratify PricewaterhouseCoopers LLP as the Companys Independent Auditors for 2007. 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 Committees appointment of PricewaterhouseCoopers LLP as the Companys independent auditors for 2007.
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.
The enclosed proxy and/or Voting Instruction Form is solicited by the Board of Directors of the Company. This proxy material will be mailed to the holders of Newmont Common Stock, Newmont CDIs and Newmont Exchangeable Shares on or about March 14, 2007. In addition to solicitation by mail, 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 Shareholder Communications Inc. to aid in the solicitation of brokers, banks, intermediaries and other institutional holders in the United States and Canada for a fee of $14,000. All costs of the solicitation of proxies 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 Newmont Common Stock, Newmont CDIs and Newmont Exchangeable Shares.
Notes to Participants in 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 (the Retirement Savings Plans) and hold Newmont Common Stock in the Retirement Savings Plans, shares of Newmont Common Stock which are held for you under the Retirement Savings Plans, as applicable, may be voted through the proxy card accompanying this mailing. The Retirement Savings Plans are administered by The Vanguard Group, as trustee. The trustee, as the stockholder of record of the Newmont Common Stock held in the Retirement Savings Plans, will vote the shares held for you in accordance with the directions you give on the enclosed proxy card, provided that you return the proxy card duly signed and dated to the address indicated on the enclosed envelope. If the proxy cards representing shares of Newmont Common Stock held under the Retirement Savings Plans are not returned duly signed and dated, the Trustee will vote the shares in the same proportion as it votes shares as to which directions have been received.
Participants in the Canadian Employee Share Savings Program. If you are a participant in the Employee Share Savings Program, a non-registered Canadian Savings Plan (Savings Plan), shares of Newmont Common Stock that are held for you under this Savings Plan may be voted through the proxy card accompanying this mailing. The Savings Plan is administered by Sun Life Financial (Sun Life). Sun Life, as the stockholder of record of the Newmont Common Stock held in the Savings Plan, will vote the shares held for you in accordance with the directions you give on the enclosed proxy card, provided that you return the proxy card duly signed and dated to the address indicated on the enclosed envelope. If a proxy card representing shares of Newmont Common Stock held under the Savings Plan is not returned duly signed and dated, your shares will not be voted.
Stockholder Proposals for 2008 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 2008 Annual Meeting, the proposal must have been received by us at our principal executive offices no later than November 8, 2007. Proposals should be sent to the attention of the Secretary of the Company at 1700 Lincoln Street, Denver, Colorado 80203 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 otherwise fails to meet the requirements for stockholder proposals established by regulations of the United States Securities and Exchange Commission.
In addition, under our bylaws, stockholders must give advance notice of nominations for a director or other business to be addressed at the 2008 Annual Meeting no later than the close of business on February 25, 2008. The advance notice must have been delivered to the attention of the Secretary of the Company at 1700 Lincoln Street, Denver, Colorado 80203 USA.
Each of the 12 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 nominee 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.
The following table sets forth information as to each nominee for election, including his or her age (as of the Record Date), background and principal occupations, including public company directorships:
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ALL OF THE FOREGOING NOMINEES AND, UNLESS A STOCKHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE CONTRARY, THE PROXIES NAMED THEREON INTEND SO TO VOTE.
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 Corporation 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 Corporation if the annual sales to the Corporation 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 Corporation if the total amount of the Corporations indebtedness is less than one percent of the total consolidated assets of the lender; (iii) a charitable organization if the total amount of the Corporations total annual charitable contributions to the organization are less than $1
million or two percent of that organizations total annual gross receipts (excluding any amounts received through the Corporations 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 that $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. This relationship meets categorical independence standard (i) above.
Two subsidiaries of the Company made contributions totaling $20,000 to Mr. Millers son, who was elected the Secretary of State of Nevada in November 2006. The Company made these contributions in light of its significant assets in and interests in the affairs of the State of Nevada. This relationship meets the categorical independence standard (iv) above.
Dr. Taranik is the director of the Mackay School of Earth Sciences and Engineering at University of Nevada, Reno. The Company donated $500,000 to the University of Nevada Foundation in 2006, for the benefit of mining education at the Mackay School of Earth Sciences and Engineering. Dr. Taranik is not a director, trustee or employee of the University of Nevada Foundation, and the Companys donation to the Foundation constituted less than 2% of the Foundations charitable receipts in 2006. The Companys donation reflects its strong interest in promoting mining education in Nevada, one of its core operating regions. The Board of Directors has considered these circumstances and determined that the donation does not constitute a material relationship with the Company that would affect independence.
Based on the foregoing analysis, the Board determined that the following directors are independent:
In addition, based on these standards, the Board has affirmatively determined that (a) Mr. Murdy is not independent because he serves as the Chief Executive Officer, (b) Mr. Lassonde is not independent because he served as President until December 31, 2006, (c) Mr. Schulich, who will serve on the Board of Directors until April 24, 2007, is not independent because he serves as an officer of and a consultant for a subsidiary of the Company, and (d) Mr. Leo I. Higdon, Jr., who served on the Board until April 2006, was independent during his tenure.
Stock Ownership of Directors and Executive Officers.
As of February 27, 2007, the directors and executive officers of the Company as a group beneficially owned, in the aggregate, the following:
Except as set forth below, no director or executive officer beneficially owned (a) more than 1% of the outstanding shares of Newmont Common Stock or Newmont Exchangeable Shares, or (b) shares with 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.
Messrs. Lassonde and Schulich beneficially owned 2,429,931 and 3,731,243 shares, respectively, of Newmont Exchangeable Shares, constituting 9.15% and 14.04%, respectively, of the outstanding Newmont Exchangeable Shares.
The following table sets forth the beneficial ownership of Newmont Common Stock, including shares in the form of Newmont CDIs and Newmont Exchangeable Shares, as of February 27, 2007 held by (a) each current director and nominee; (b) the Chief Executive Officer, the Chief Financial Officer and each of the other three most highly compensated executive officers and Bruce D. Hansen, who resigned as an executive officer during 2006 (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, 1700 Lincoln Street, Denver, Colorado 80203.
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 Companys voting securities. The share information contained herein is based on filings with the Securities and Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of 1934.
The annual compensation for non-employee directors for their service on the board of directors is set forth in the following table. Messrs. Murdy and Lassonde do not receive compensation for their service as directors.
The following table shows the compensation paid to the Companys non-employee directors for the year ended December 31, 2006:
2006 Directors Compensation
Outstanding Awards. The following table shows outstanding equity compensation for all non-employee directors of the Company:
Retirement. The Company has no current retirement plan for non-employee directors, but certain non-employee directors serving on the Board have been grandfathered under the previous plan. 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 of the Company is entitled to be paid an annual sum of $50,000 for life.
Agreements. As a director of the Company during 2006, Mr. Schulich was entitled to receive the annual cash retainer and attendance fees described above and to participate in the charitable gift program. Mr. Schulich also receives; (a) $75,000 in cash per year for serving as the non-executive chairman of Newmont Capital Limited, a wholly-owned subsidiary of the Company (Newmont Capital), and (b) $250,000 in cash per year pursuant to a Consulting Agreement with Newmont Capital, entered into on April 1, 2002, as amended in 2004 and 2005 and expiring on March 31, 2008, under which he provides general merchant banking advice and guidance. Mr. Schulich is entitled to a payment of $750,000 upon termination of the Consulting Agreement by either party. Mr. Schulich does not participate in the 2005 Stock Incentive Plan.
Wayne W. Murdy, Chairman and Chief Executive Officer, is a party to agreements described in the Executive Agreements section on page 33.
Pierre Lassonde, former President of the Company and a director, is a party to agreements described in the Executive Agreements section on page 33.
Annual Review of Director Compensation. The Board reviews director compensation on an annual basis, considering time commitments, comparison data and advice of compensation consultants. This compensation program has been in place since November 2005. In October 2006, the Board decided to make no additional changes to director compensation for 2007.
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 common stock of the Corporation having a market value of three times the annual cash retainer payable under the Corporations director compensation policy. All directors meet the share ownership guidelines.
Committees of the Board of Directors and Attendance.
Attendance at Meetings. During 2006, 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 but one of the 14 nominees for election to the board attended the 2006 Annual Meeting of Stockholders held on April 25, 2006.
Board Committees. The Board of Directors has, in addition to other committees, Audit, Compensation and Management Development, Corporate Governance and Nominating and Environmental, Health and Safety Committees. All members of these four committees are independent, as defined in the listing standards of the New York Stock Exchange and the Companys Corporate Governance Guidelines. The current members of these committees are:
Audit Committee. The Audit Committee, consisting entirely of independent directors, assists the Board of Directors in its oversight of the integrity of the Companys financial statements and the Companys compliance with legal and regulatory requirements and corporate policies and controls. The Audit Committee has the sole authority to retain and terminate the Companys independent auditors, approve all auditing services and related fees and the terms thereof, and pre-approve any non-audit services to be rendered by the Companys independent auditors. The Audit Committee is responsible for confirming the independence and objectivity of the independent auditors. The Audit Committee is also responsible for preparation of the annual report of the audit committee for public disclosure in the Companys proxy statement. Unrestricted access to the Audit Committee is given to the Companys independent auditors, the Vice President and Controller and the Group Executive of Internal Audit. During 2006, the Audit Committee held eight meetings.
The Board of Directors has determined that each of the members of the Audit Committee is an Audit Committee Financial Expert, as a result of their knowledge, abilities, education and experience.
Compensation and Management Development Committee. The Compensation and Management Development Committee (the Compensation Committee), consisting entirely of independent directors, is responsible for discharging the responsibilities of the Board of Directors relating to management development and compensation of the Companys directors, Chief Executive Officer and other executive officers. The Compensation Committee is also responsible for overseeing the preparation of the Compensation Discussion and Analysis and preparing the report on executive compensation for public disclosure in the Companys proxy statement. During 2006, the Compensation Committee held three meetings.
The Chairman and Chief Executive Officer, the Senior Vice President, Human Resources and the General Counsel or Corporate Secretary generally attend for part of each meeting. Compensation consultants are invited to attend from time-to-time to address specific topics. An executive session is generally held at the end of each meeting. The Chairman sets the agenda for each meeting, in consultation with management representatives and other Compensation Committee members. The Chairman of the Committee provides regular reports to the Board of Directors regarding actions and discussion at Committee meetings.
The Compensation Committee has a Charter, which is reviewed annually. The Compensation Committee has full authority to determine the components and amounts of executive compensation. Awards of stock-based
compensation (stock options, restricted stock or restricted stock units) are subject to ratification by the full Board of Directors. The Compensation Committee considers and recommends actions regarding director compensation to the full Board.
The Compensation Committee has the authority to retain at the Companys expense experts with special competencies, including legal, accounting and compensation. The Compensation Committee has the sole authority to terminate the engagement of such experts and to approve the fees and other terms of retention of such experts.
The Compensation Committee may form and delegate authority to subcommittees when appropriate. Under the policies of the Board of Directors, the Compensation Committee may not delegate authority to grant stock options.
The Compensation Committee is supported by compensation experts in the Companys Human Resources Department. In addition, the Compensation Committee consults with external compensation experts from time to time in setting executive and director compensation. During 2006, the Compensation Committee and/or the Company considered information and recommendations of three compensation consultants: the Hay Group, Mercer Human Resources Consulting and Frederic W. Cook and Co., Inc. The Hay Group and Mercer are retained by management but provide data, input and recommendations that are considered by the Compensation Committee in its deliberations. The Hay Group and Mercer also provide services that are unrelated to Compensation Committee actions. Mr. Cook is engaged solely by the Compensation Committee, and provides no services or advice directly to management.
In 2005, management and the Compensation Committee requested that Mercer conduct a comprehensive review of executive compensation programs, considering benchmark data from comparable companies, best practices in plan design, industry-specific factors and alignment of interests with the stockholders. Mercer continues to be consulted from time-to-time on plan design and other compensation issues.
The Hay Group provides competitive data on an on-going basis regarding executive salaries and total compensation, using benchmark information compiled from public and proprietary sources.
During 2006, both Mercer and the Hay Group were requested to review benchmark information regarding director compensation and provide a report and recommendations to the Compensation Committee regarding the amounts and design of director compensation. The Compensation Committee reviewed the recommendations and determined to make no additional changes at this time.
Mr. Cook is consulted from time to time directly by the Compensation Committee for advice regarding trends in executive and director compensation, and for independent review of the reasonableness of the decisions made by the Compensation Committee. In particular, Mr. Cook reviewed and advised the Compensation Committee regarding Mr. Murdys salary and benefits and compliance with compensation disclosure requirements.
Compensation Committee Interlocks and Insider Participation. The Compensation and Management Development Committee is composed entirely of independent directors. None of the members of the Compensation Committee was or is an employee of the Company.
Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee, consisting entirely of independent directors, proposes to the Board of Directors slates of directors to be recommended for election at the Annual Meeting of Stockholders (and any directors to be elected by the Board of Directors to fill vacancies) and slates of officers to be elected by the Companys Board of Directors. It also advises the Board of Directors on various corporate governance issues, and leads the Board of Directors in its annual review of the Boards performance. During 2006, the Corporate Governance and Nominating Committee held four meetings.
Environmental, Health and Safety Committee. The Environmental, Health and Safety Committee, consisting entirely of independent directors, assists the Board of Directors in its oversight of environmental, health and safety issues, the Companys policies, processes, standards and procedures designed to accomplish the Companys goals and objectives relating to environmental, health and safety issues and management of risk related to environmental, health and safety issues. During 2006, the Environmental, Health and Safety Committee held two meetings.
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 Audit, Compensation and Management Development, and Corporate Governance and Nominating Committees has adopted a charter outlining responsibilities and operations. The Corporate Governance Guidelines and the charters are available at www.newmont.com under the Investor Information section and are available in print upon request to the Investor Relations Department, Newmont Mining Corporation, 1700 Lincoln Street, Denver, Colorado 80203.
Lead Director. The Board of Directors has elected a lead, independent director who presides over non-management directors sessions scheduled at each regular Board meeting. The lead director serves as liaison between the Chairman and other independent directors, approves meeting agendas and schedules and notifies other members of the Board of Directors regarding any legitimate concerns of stockholders or interested parties of which he or she becomes aware. On April 26, 2006, the Board of Directors re-elected Glen A. Barton to serve as lead director until his successor is approved.
Communications with Stockholders or Interested Parties. Any stockholder or interested party who desires to contact the Companys lead director, 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, 1700 Lincoln Street, Denver, Colorado 80203 USA. Any such communication should state the number of shares owned, if applicable. The Secretary will forward to the lead director 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.
Director Nomination Process. Newmont has 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 Chairman and 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 Newmonts stockholders. During 2006, the Board engaged a search firm, Spencer Stuart, to assist in identifying and evaluating potential new directors.
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 candidates name, along with a curriculum vitae or other summary of qualifications, experience and skills to the Secretary, Newmont Mining Corporation, 1700 Lincoln Street, Denver, Colorado 80203 USA.
Majority Voting Policy. If a nominee for director does not receive the vote of at least a majority of votes cast at an Annual Meeting of Stockholders, it is the policy of the Board of Directors that the director will 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, and the Board will determine, 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.
Retirement Age. The Companys retirement policy for non-employee directors provides that, except at the request of the Board of Directors, no non-employee director may stand for reelection to the Board after reaching age 72. In 2006, the Board invited Mr. Plumbridge to stand for re-election to the Board at the 2007 Annual Meeting of Stockholders, even though he has achieved retirement age, in light of his significant and valuable experience in the gold mining industry. Unless otherwise agreed in advance, employee directors retire from the Board of Directors when they retire from employment with the Company. Mr. Lassonde will retire from employment with the Company in 2007, but will stand for re-election to the Board at the invitation of the Board.
Code of Business Ethics and Conduct. Newmont has adopted a Code of Business Ethics and Conduct applicable to all of its directors, officers and employees, including the Chief Executive Officer, the Chief Financial Officer, the Controller and other persons performing financial reporting functions. The Code is available through the Investor Information section of the Companys web site at www.newmont.com and is available in print upon request to the Investor Relations Department, Newmont Mining Corporation, 1700 Lincoln Street, Denver, Colorado 80203 USA. 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 timely disclose on its web site amendments to, or waivers from, certain provisions of the Code that apply to the Companys directors or executive officers.
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.
The following transactions with related persons have been approved in accordance with this policy: (a) the donation for the benefit of the Mackay School of Earth Sciences and Engineering, Dr. Taraniks employer, described on page 7, (b) the employment and consulting arrangement with Mr. Lassonde, described on page 33, (c) the consulting arrangement with Mr. Schulich, described on page 11, and (d) all executive compensation matters.
Report of the Compensation and Management Development Committee on Executive Compensation
The Compensation and Management Development 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 Companys 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 Boards responsibilities relating to compensation of the Companys key employees, including the Chief Executive Officer, the Chief Financial Officer and the other executive officers. Additional information about the Compensation Committees role in corporate governance can be found in the Compensation Committees Charter, available on the Companys web site at www.newmont.com under the Investor Relations section.
The Compensation Committee has reviewed and discussed with management the Companys Compensation Discussion and Analysis section of this Proxy Statement. Based on such review and discussions, the Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. The Compensation Discussion and Analysis is incorporated by reference into the Companys Annual Report on Form 10-K for the year ended December 31, 2006.
Submitted by the following members of the Compensation Committee of the Board of Directors:
Glen A. Barton, Chairman
John B. Prescott
Donald C. Roth
Introduction. The Company is one of the worlds largest gold producers and the only gold company included in the Standard & Poors 500 Index. Given its size and philosophy to avoid gold price hedging, the Companys share price is heavily influenced by gold prices and other commodity prices. Therefore, the Companys executive compensation plans are designed to create a balance between results within the control of the Companys management and absolute share price performance in the short term and over time.
The Compensation and Management Development Committee of the Companys Board of Directors (the Compensation Committee) sets total compensation for the Companys executive officers, including the Chief Executive Officer, Chief Financial Officer and other executive officers specified below (the Named Executive Officers) by evaluating all of the elements of compensation on an annual basis. This evaluation includes:
Based on this evaluation, the Compensation Committee has concluded that the total compensation package is reasonable, competitive and appropriately designed to attract, retain and motivate the Companys executive officers. The Compensation Committee believes that the total compensation package is aligned with the long-term interests of the stockholders.
The Compensation Committee has also reviewed equity grant values and has concluded that the value of the Chief Executive Officers equity compensation package is closely aligned with shareholder returns. The value of Mr. Murdys stock options and unvested restricted stock, taking into account gains from stock option exercises and vesting of restricted stock, declined 21% during 2006.
Compensation Philosophy and Strategy. Newmonts compensation philosophy and strategy is focused on linking the interests of the stockholders and management, ensuring the ability to attract, retain and motivate a highly skilled executive team, and providing a reward system that ties the Company goals to individual and business plan performance. The following are key elements that guide the compensation philosophy and strategy:
Comprehensive Compensation Review. Over the past several years, the Company and the Compensation Committee have conducted a comprehensive review of executive compensation programs to evaluate whether its programs are aligned with the elements of its compensation philosophy and strategy. This review included a detailed evaluation of the Companys business structure and economics, the impact of these factors on potential compensation outcomes and a review of the external market environment for executive compensation. In addition, the Compensation Committee completed an assessment of tally sheets of executive compensation showing: (a) total annual compensation including salary, cash bonus, equity, dividends on stock and any other compensation; (b) intermediate and long-term compensation including fair value of restricted stock and stock option grants; (c) other compensation, including annual Company matching contributions in retirement savings plans, annual increase in qualified and non-qualified retirement plans and annual cost of life insurance; and (d) accrued benefit amounts including qualified and non-qualified defined benefits and total account balance of Company match in deferred compensation plans. The Company and the Compensation Committee also review termination payout reports that include estimated payout and benefit calculation in the event of a change of control, job elimination, early retirement, termination for cause and retirement at the age of 62.
As a result of this review, the Company and Compensation Committee have taken steps to increase alignment with the elements of the Companys compensation philosophy and strategy as follows:
Committee Process. When making compensation decisions for Named Executive Officers, the Compensation Committee takes many factors into account, including the individuals performance, tenure and experience, the performance of the Company overall, any retention concerns and the individuals historical compensation. In addition, the Compensation Committee considers the performance of the Company and the executives contribution to that performance. Finally, the Compensation Committee compares Named Executive Officer compensation against external market data and how the compensation levels of the executives compare to each other. All decisions relating to the Chief Executive Officers compensation are made by the Compensation Committee in executive session, without management present.
Summary. For 2006, the executive compensation program contained five elements designed to achieve the compensation strategy, along with a package of benefit plans designed to complement the compensation components described below.
In setting the amounts for each of the components, the Compensation Committee considered the input from compensation experts in the Companys Human Resources Department, the recommendations from compensation consultants and comparison data. The comparison data, in all cases, were used to gain perspective and context, not to drive decision-making.
In recent years the Hay Group has provided an annual analysis of executive compensation in comparison to general industry and mining industry executive compensation to the Compensation Committee. The Hay Group compiles executive compensation data of more than 440 companies for the general industry comparison and over 152 companies for the mining industry comparison. The Hay Group analysis reviews total compensation and the individual categories of base salary, short-term incentives and long term incentives. The Compensation Committee reviews both general industry data and mining industry data to ensure that the Companys
compensation strategy is reasonable within the larger context of general industry, as well as refined to the specific circumstances of the mining industry to allow the Company to attract and retain necessary talent. The Company also reviews compensation information in the annual proxy statements of the following companies: Barrick Gold Corporation, Anglogold Ashanti, Ltd., Devon Energy Corporation, Anadarko Petroleum Corporation, Freeport-McMoRan Copper & Gold, Inc., Phelps Dodge Corporation (n/k/a Freeport), Apache Corporation, Kinross Gold Corporation, and Transocean Inc. In general, the Company targets total compensation (salary, short-term and long-term) at the 75th percentile of competitive positions in general industry and the mining industry. The combination of competitive base salaries, annual incentives paid in cash, intermediate term incentive compensation paid in the form of restricted stock, and stock options comprises a highly effective and motivational executive compensation program. This works to attract and retain talented executives and strongly aligns the interests of senior management with those of stockholders in seeking to achieve, over time, above-average performance.
Base Salary. The Compensation Committee reviews executive base salaries annually. The Company targets base salary for key executives between the median and the 75th percentile of competitive positions in the mining industry and in general industry. The Hay Group analysis of general industry executive compensation and mining industry executive compensation is the source for data. The Compensation Committee believes that setting the salaries at this level provides an appealing baseline for attracting and retaining strong leaders in the current tight market for key talent in the mining industry.
In setting the salary of the Chief Executive Officer for 2006 and 2007, the Compensation Committee reviewed the Hay Group data as well as additional data from Mercer Human Resources Consulting, another external compensation consultant. The Compensation Committee also considered Company and personal performance of the Chief Executive Officer, along with the performance assessment from the other Board members. In February 2007, the Compensation Committee determined that the Chief Executive Officers salary would remain unchanged from its level for 2006. The Companys share price performance was a significant factor in the decision-making process.
In setting salaries of the other Named Executive Officers in late 2006, the Compensation Committee reviewed market data from the Hay Group, again considering both mining and general business comparisons. In addition, the Compensation Committee considered the recommendations of the Chief Executive Officer regarding salaries and the scope of the positions in light of the Companys organization structure. In particular, Messrs. OBrien, Enos and Harquail assumed additional responsibilities in connection with the resignations of Mr. Lassonde and Mr. Hansen as executive officers.
Based on the foregoing review, the Compensation Committee set the following base salaries for the Named Executive Officers as follows:
Named Executive Officer Salaries
Mr. Hansen resigned from the Company in November 2006. Mr. Lassonde resigned as President on December 31, 2006, but will remain as an employee until April 2007, after which he will continue to serve as Vice Chairman of the Board of Directors and consultant to the Company.
Executive Award Program Target Amounts. The Compensation Committee has established target cash and equity incentive awards for its executives, based on level of responsibility and an analysis of total
compensation for comparable positions within general industry and the mining industry. In any year, the Compensation Committee adjusts the actual payments based on the factors described below. During 2006, the target awards were as follows:
Executive Award Program Target Amounts
Corporate Performance Bonuses and the Personal Performance Bonuses are paid under the Companys Annual Incentive Compensation Payroll Practice, a written description of how these Bonuses are calculated and paid. Stock Incentive Bonuses are awarded according to the Companys Employee Performance Incentive Payroll Practice, a written description of how this Bonus is calculated and paid. Both the Stock Incentive Bonus and stock options are awarded under the Companys 2005 Stock Incentive Plan, approved by the stockholders in April 2005. Mr. Hansen resigned as an executive officer in September 2006 and was not eligible for Performance Bonuses or a Stock Incentive Bonus for 2006. Mr. Lassonde is eligible for Performance Bonuses because he continues to be employed by the Company.
Corporate Performance Bonuses, Personal Performance Bonuses and Stock Incentive Bonuses for 2006 were determined as described below and awarded in February 2007 after finalization of the Companys financial statements for the year. Stock options were awarded in April 2006, in accordance with the Companys policy that stock options are generally granted one time per year, at the meeting of the Board of Directors held on the same day as the Annual Meeting of Stockholders. The process and considerations for awarding stock options are described in more detail below.
Corporate Performance Bonus. The Corporate Performance Bonus provides an annual reward based on four publicly-reported metrics designed to balance short-term and long-term factors, business performance and successful investment in and development of Newmont assets. The Compensation Committee and Board of Directors review and set the performance metrics and target level of eligibility annually. The amounts of 2006 Corporate Performance Bonuses earned by the Named Executive Officers are shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table on page 35. The 2006 targets were a mix of demanding financial, production, and reserve growth targets(1):
2006 Corporate Performance Bonus Metrics
Equity Gold Sales Metric: The gold sales metric focuses employees on achieving budgeted amounts of gold sales. The metric also provides incentive to bring various projects into production in a timely manner. These targets are adjusted for acquisitions and divestitures during the year, if any.
Equivalent Costs Applicable to Sales Metric: The cost metric balances the gold production metric by encouraging efficient production of both gold and copper. The cost metric is designed to promote implementation of Company-wide cost control measures. Copper costs are factored into the metric based on a conversion ratio of 0.003 ounces gold equivalent for each pound of copper, based on budgeted prices and volumes for each metal.
Operating Cash Flow Metric: The cash flow metric is designed to promote the Companys cash generating capacities. It is based on budgeted Annual Cash Provided by Operating Activities as shown on the Companys financial statements. The calculation excludes individual payments of more than $10 million for unbudgeted liabilities.
Reserve Additions, Net of Depletion, Metric: The reserve growth metric promotes the discovery of new gold deposits and successful completion of the work needed to report these discoveries as proven and probable reserves. In a business that depletes its reserves every year through production, just maintaining the level of reserves from one year to the next is a substantial challenge. In order to promote growth in reserves, amounts acquired by acquisition are included in reserve increases.
The Company and the Compensation Committee believe that these metrics contribute to a balanced approach of driving both short-term and long-term share price appreciation.
Calculation of Corporate Performance Bonuses: If the Company achieves its targeted performance for each of the metrics, the payout percentage for the Corporate Performance Bonus is paid at 100%. If the maximum amounts for each metric are achieved or exceeded, the payout percentage for the Corporate Performance Bonus is 200%. If the minimum amounts are not achieved for a particular metric, no Corporate Performance Bonus is payable for that metric. For performance between the minimum and maximum for any metric, the amount is prorated to result in a payout percentage between 0% and 200%.
For 2006, the payout percentage for the Corporate Performance Bonus was 92%, calculated as follows. To calculate the Corporate Performance Bonus for each of the executives, the relevant percentage of base salary was multiplied by 92%.
2006 Corporate Performance Bonus Calculation
The Compensation Committee evaluates the mix of metrics, target levels and weightings each year to ensure that the programs reflect the Companys goals of achieving accountability, stockholder alignment and transparency. The Compensation Committee may adjust the payout percentage based on factors unforeseen when the original targets were set. The Compensation Committee recognizes the responsibility for ensuring accountability, stockholder alignment and transparency as to the manner in which it exercises discretion for executive rewards. In the event the Compensation Committee exercises discretion to award bonuses on a basis different than the Corporate Performance Bonus formula set at the beginning of the year, either positively or
negatively, the decision and rationale will be fully disclosed. No adjustments were made for 2006 performance bonuses.
Personal Performance Bonus. Individual performance is measured against specific leadership objectives and the values of the Company. In assessing personal performance, the Compensation Committee reviews the Named Executive Officers progress on leadership objectives and embodiment of Company values and then determines Personal Performance Bonuses for the year. In the cases of the Named Executive Officers other than Mr. Murdy, Mr. Murdy provides recommendations regarding Personal Performance Bonuses. The amounts of Personal Performance Bonuses approved by the Compensation Committee for the Named Executive Officers for 2006 are shown in the Bonus column of the Summary Compensation Table on page 35.
The Compensation Committees determination of the amounts of Personal Performance Bonuses is subjective, not subject to mathematical precision. Accordingly, it is a comparatively small percentage of total compensation for the Named Executive Officers. In determining the amounts of 2006 Personal Performance Bonuses, the Compensation Committee weighed individual contributions to Company goals. In particular, through the efforts of the Named Executive Officers and others, the Company exceeded its goals relating to operating cash flow and replacement of proven and probable gold reserves. Equity gold sales and cost goals were not achieved, although the Company achieved annual gold sales and costs within the range that had been revised during the year to reflect changed circumstances at various operations. The Company generated record earnings of $791 million in 2006 ($1.76 per share) versus $322 million ($0.72 per share) in 2005. The Named Executive Officers also made progress on improving safety records, reducing general and administrative costs and developing an enhanced suite of environmental performance metrics designed to provide tangible measures of success in achieving the Companys goal of industry excellence. Improved financial and operating performance during the fourth quarter of 2006, resulting from changes made in the Companys operations, was also noted. The Compensation Committee also considered the Companys share price performance compared to peer companies and gold price indices. In the case of Mr. Murdys performance, the Compensation Committee noted compound annual returns to shareholders of 17% in the six years since he became Chief Executive Officer in 2001.
Stock Incentive Bonus. To balance short-term performance with the need for sustainable results, the Company awards Stock Incentive Bonuses as an intermediate reward scheme. This reward is delivered in restricted stock or restricted stock units, in the case of Mr. Lassonde, which vest in equal annual increments over three years. The reward is measured on the same corporate performance metrics as used in calculating the Corporate Performance Bonus. Therefore, to calculate the 2006 Stock Incentive Bonus for each of the executives, the target percentage of base salary was multiplied by 92%. The dollar amount is converted to restricted stock or restricted stock units using the fair market value of the Company common stock on the date of grant. The fair market value is the average of the high and low sales price of the Companys 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.
Stock Incentive Bonuses were paid on February 7, 2007 for 2006 performance in the following amounts:
2006 Stock Incentive Bonuses
In 2009 and subsequent years, the payout percentage will be calculated for 2008 performance and thereafter as a three-year average of Corporate Performance Bonus payouts with the following weightings:
The Company is phasing in the three-year weighting for 2008 and 2009 Stock Incentive Bonuses. In 2008, the weighting will be 40% 2006 results and 60% 2007 results. This alignment of incentive rewards ensures clear ties to the business plans and the corporate long-term vision and goals. Payout of this incentive drives multiple year performance.
Dividends are paid on restricted stock and accrued until vesting for restricted stock units. In the case of restricted stock, the stock is issued and outstanding as of the date of grant, so dividends are paid in the ordinary course. Dividend equivalents are paid on restricted stock units at vesting, so that they are economically similar to restricted stock. Dividends are calculated at the same rate as paid to other stockholders, as approved by the Companys Board of Directors.
The Companys business model is designed to provide investors with gold price leverage. Gold price leverage means that Company stockholders should expect to earn returns that are superior to returns that they would earn if they invested in gold bullion directly. To provide executives with upside incentive, if the Companys annual share price achieves more than two times gold price leverage in any one year, executives earn an additional 15% of their restricted stock target level in shares for that year. If the Companys annual share price earns returns of three times the return on gold or more, executives could earn 25% more restricted stock to their target grant. Stock Incentive Bonuses for the Named Executive Officers were not modified under this provision for 2006 performance.
Stock Option Awards. Stock options reward 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, and therefore stock price volatility will have a greater impact on total compensation results as compared to restricted stock.
Each executive, including the Named Executive Officers, is assigned a target amount of stock options to be awarded in any year. This target is established based on the anticipated fair value of the stock options as a portion of total compensation, with consideration given to the proportion of fixed versus variable compensation appropriate to each executive. The actual grants to individual executives may be modified from the targeted amount based on an assessment of individual performance. The Compensation Committee also created an additional pool of stock options, up to 10% above the targeted amount, to be awarded in recognition of exceptional individual performance.
Stock options vest in three equal annual installments from the date of grant and have a term of 10 years. However, in the case of death, disability, retirement, change of control or severance, the Company will accelerate the vesting of stock options and alter the term to exercise vested stock options. See the accelerated vesting section on page 32.
During 2006, each of the Named Executive Officers received at least the targeted amount of stock options. In addition, at the recommendation of the Chief Executive Officer, the Compensation Committee awarded to certain Named Executive Officers stock options above the targeted amounts. The stock options were awarded in recognition of exceptional performance during 2005. Mr. OBrien and Mr. Enos were awarded 5,000 stock options, in addition to the targeted awards. Mr. Harquail was awarded 2,500 stock options, in addition to the targeted award. The numbers and grant date fair values of stock options granted to the Named Executive Officers in 2006 are shown in the 2006 Grants of Plan-Based Awards Table on page 37.
Policies and Process for Granting Stock Options: On an annual basis, the Compensation Committee reviews the rate at which other companies grant stock options and other stock grants in the aggregate for all employees. The Committee reviews data regarding other public companies considered to be in the Materials group of the Standard & Poors 500 Index. The Committee has concluded that the Companys grant rates are significantly lower than the mean grant rates of other companies in the Materials group.
The Company, at the direction of the Compensation Committee, has examined its policies and procedures relating to the grant of stock options. The Company:
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 Companys 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 Companys 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 Companys stock ownership guidelines require that all employees designated as executives for purposes of this policy (approximately 60 individuals) own shares of the Companys stock, the value of which is a multiple of base salary. For the Named Executive Officers, the stock ownership guidelines are as follows:
Stock Ownership Guidelines
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. Unvested shares of restricted stock and shares held in retirement accounts are considered owned for purposes of the guidelines. New employees have three years to comply with the guidelines. The Compensation Committee reviews compliance with the guidelines annually. 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 Named Executive Officers. The policy prohibits employees from trading during certain periods at the end of each quarter until after the Companys public disclosure of financial and operating results for that quarter, unless they have received the approval of the Companys 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. Any limit orders outstanding with respect to any Company security are suspended for the duration of any restricted trading period. In addition, the Company requires pre-clearance of trades in Company securities for its executive officers.
Officers may not purchase or sell options on Company stock, nor engage in short sales with respect to Company stock. Also, trading by officers and directors in puts, calls, straddles, equity swaps or other derivative securities that are directly linked to Company stock is prohibited.
Policy Regarding Financial Restatements. In 2006, the Company revised its Corporate Governance Guidelines to add a policy adopted by the Board of Directors regarding the treatment of bonus payments made to executives based upon financial results of the Company that are later subject to restatement. Specifically, the policy provides that, to the full extent permitted by governing law, the Board will require reimbursement of any portion of a bonus previously paid to an executive (meaning an executive as defined by Section 16 of the Securities Act of 1934) pursuant to the terms of the Companys bonus programs if: (a) the amount of any bonus, including stock awards, was calculated based on the achievement of certain financial results that were subsequently the subject of a restatement; (b) the amount of such bonus that would have been awarded to the executive had the financial results been reported as in the restatement would have been lower than the bonus actually awarded; and (c) in the judgment of the Board of Directors, the circumstances warrant such reimbursement. The policy to seek reimbursement of bonuses is not limited to situations involving fraud and is not limited to those executives directly involved in causing the restatement.
Perquisites. The Companys philosophy is to provide a minimum of perquisites to its executives and generally only when such benefits have a business purpose. In 2006, such benefits for the Named Executive Officers were (a) financial counseling services; (b) country or social club memberships for the Chief Executive Officer and President; (c) limited use of corporate aircraft for travel by family members; (d) preventive medical
examinations; and (e) personal use of administrative assistance services. In addition, Mr. Murdy and Mr. Lassonde are eligible to participate in the Board of Directors Charitable Gift Program, described on page .
The Company offers reimbursement for financial counseling services in the amount of $15,000 per year to the Chief Executive Officer and $6,500 per year to Mr. Lassonde, Mr. OBrien, Mr. Enos, Mr. Hansen and Mr. Harquail. This benefit is granted in recognition of the complexity of the Companys executive compensation program and because the Company considers the provision of such a benefit to be competitive in the marketplace.
Membership fees for private golf clubs are paid for Mr. Murdy and Mr. Lassonde. These clubs are used for substantial business purposes, including business entertainment, meetings and dinners. In recognition of the fact that some portions of the memberships are used for personal purposes, the entire amount reimbursed is considered a perquisite and reported in the All Other Compensation column of the Summary Compensation Table on page 35.
The Company owns fractional shares in corporate aircraft, which are used primarily for senior executives travel on Company business. On occasion, an executives family members may travel on the corporate aircraft with the executive, at no or minimal incremental cost to the Company. If a spouse accompanies an executive to attend a business function at which spouses are generally expected to attend, the Company reimburses the executive for any income taxes due as a result of the spouses travel. The amount reimbursed for these income taxes and the amount, if any, of the incremental cost to the Company of use of the aircraft by family members, are included in the All Other Compensation column of the Summary Compensation Table.
During 2006, the Company paid for preventive medical examination costs for employees at certain grade levels, including all executive grade employees, because the Companys health insurance plans did not cover preventive health care examinations. The Company discontinued this benefit at the end of 2006 because the Companys health insurance plans now cover preventive health care examinations.
The cost to the Company of perquisites to Mr. Murdy, Mr. OBrien and Mr. Lassonde are included in the All Other Compensation column of the Summary Compensation Table on page 35.
The Company has a package of post-employment compensation plans and policies in place that include Company-only funded benefits as well as employee contribution benefits. The combination of plans and policies allow the Company to offer its employees, including the Named Executive Officers, post-employment compensation as well as powerful incentives for employees to remain with the Company, rather than seeking alternative employment. The Companys 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.
Pension Plan. The Pension Plan of Newmont (Pension Plan) is a tax-qualified defined benefit plan available to a broad group of Company employees, which generally includes U.S. domestic salaried employees of the Company. The purpose of the Pension Plan is to provide a vehicle for partial salary and bonus income replacement following retirement. Because the benefits under the Pension Plan enlarge with years of service with the Company, the Pension Plan is also an important tool for the Company to retain employees beyond the shorter-term retention vehicles such as stock awards.
Messrs. Murdy, OBrien, Enos, Hansen and Harquail are participants in the Pension Plan. The Pension Plan provides for post-retirement payments determined by a formula based upon age, years of service and pension- eligible earnings. Age 62 is the normal retirement age under the Pension Plan, 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 will begin to 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.
See the Pension Benefits Table on page 40 for a description of benefits payable to the Named Executive Officers under the Pension Plan.
Pension Equalization Plan. The Pension Equalization Plan of Newmont (Pension Equalization Plan) is a non-qualified defined benefit plan available to eligible participants, which generally includes U.S. domestic executive-grade employees of the Company. The purpose of the Pension Equalization Plan is to provide benefits to executives beyond the benefit limits in the tax-qualified Pension Plan. Because the benefit limits in the Pension Plan could minimize the effectiveness of the retention aspect of the Pension Plan for executives with the Company, the Pension Equalization Plan provides additional post-employment benefits to executives after they reach the limit in the Pension Plan. Like the Pension Plan, the Pension Equalization Plan provides a benefit based upon age and years of service, which provides a long-term incentive to executives to remain employed with Newmont, versus seeking alternative employment.
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.
In March 2001, the Company entered into an agreement with Mr. Murdy to provide an enhanced benefit under the Pension Equalization Plan to Mr. Murdy as a retention incentive. The agreement provides that in the event of the termination of Mr. Murdys employment from the Company after Mr. Murdy attains the age of 62, or prior to the attainment of age 62 in limited circumstances, Mr. Murdy is entitled to 1.5 times his actual credited service under the terms of the Pension Equalization Plan. Mr. Murdy attained the age of 62 during 2006, substantially increasing the change in pension value shown in the Summary Compensation Table on page 35. The extra years of credited service under the Pension Equalization Plan resulted in a one-time increase of $6,472,126 in Mr. Murdys 2006 compensation shown in the Summary Compensation Table.
See the Pension Benefits Table on page 40 for a description of benefits payable to the Named Executive Officers under the Pension Equalization Plan.
International Retirement Plan. Mr. Lassonde is a participant in the International Retirement Plan of Newmont (International Plan), rather than the Pension Plan or Pension Equalization Plan of Newmont. Mr. Lassonde is eligible to participate in the International Plan because he is a non-U.S. citizen, employed by a non-U.S. Newmont entity and he is working outside of his home country of Canada. The purpose of the International Plan is to provide for basic income replacement post-employment to eligible international employees.
There is a discussion of the International Retirement Plan and Mr. Lassondes benefits following the Pension Benefits Table on page 42.
Retirement Savings Plan of Newmont. The Retirement Savings Plan of Newmont (Savings Plan) is a 401(k) tax-qualified savings plan generally available to United States based salaried and non-union hourly employees of the Company. The purpose of the Savings Plan is to provide a retirement savings vehicle for eligible employees.
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 participants contribution to the Savings Plan up to a limit of $12,000 annually. The Company contribution vests as follows:
Savings Plan Vesting Schedule
Savings Plan contributions can be invested into one or more funds selected by a committee of Company representatives, with the advice of professional investment managers. New funds may be added and funds currently available may be changed or withdrawn. Contributions can only be invested in funds offered by the Savings Plan.
Company matching contributions are initially invested in Newmont Mining Company Stock Fund, which can be immediately re-invested into any other funds offered by the plan (subject to trading restrictions described above). As beneficial owner of the shares of Company stock, participants may exercise their voting rights and receive dividends, which are reinvested to buy additional shares. The objective of the Newmont Stock Fund is to provide participants with an opportunity to participate in the future growth of the Company.
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 of Change in Control section below) or termination of the Savings Plan, a participant is fully vested in the Company contribution component of the Savings Plan.
The Savings Plan limits the before-tax and after-tax contributions that highly compensated participants may make to the Savings Plan. The Savings Plan defines highly compensated employees as generally the top-paid group, meaning 20% of employees paid the highest amount, inclusive of a wide-range of compensation such as cash bonus, salary, premium pay, overtime, severance, insurance payments, other benefits, disability payments, amounts deferred under non-qualified plans, foreign assignment premiums, stock based compensation and stock based bonus. The highly compensated employees cannot contribute more to the plan than allowed by the Internal Revenue Code, and the Savings Plan incorporates such limitations. Messrs. Murdy, OBrien, Enos, Hansen and Harquail are participants in the Savings Plan.
Amounts contributed by the Company to the Savings Plan for the Named Executive Officers are included in the All Other Compensation column of the Summary Compensation Table on page 35.
Savings Equalization Plan. The Savings Equalization Plan of Newmont (Savings Equalization Plan) is a non-qualified deferred compensation plan. Messrs. Murdy, OBrien, Enos and Harquail are currently eligible to participate in the Savings Equalization Plan. To participate in the Savings Equalization Plan, an employee must have a base salary over $100,000 and be eligible to participate in the Savings Plan of Newmont.
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. The Savings Equalization Plan uses the same definition of compensation as the Savings Plan. 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 participants 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 participants 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.
See the 2006 Nonqualified Deferred Compensation Table on page 43 for a description of benefits under the Savings Equalization Plan.
Change of Control. The Company recognizes that 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) as a mechanism to retain executives and their critical capabilities to enhance and protect the best interests of the Company and its stockholders during a change of control environment, or threatened change of control. Additionally, the Company believes that it is in the best interests of the Company and its stockholders to provide certain benefits to executives whose employment terminates in connection with a change of control. The original plan was adopted in 1998.
The 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 defined in the Change of Control Plan.
To be eligible for benefits under the Change of Control Plan the following must happen:
If an executive is eligible for termination benefits under the Change of Control Plan, the executive is entitled to:
Messrs. Murdy, OBrien, Enos and Harquail participate in the Change of Control Plan at the three times annual pay level. 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. Mr. Lassonde participated in the Change of Control Plan at three times his annual pay in 2006 and does not participate in the Executive Change of Control Plan after December 31, 2006. See the description of Mr. Lassondes employment agreement on page 33.
In 2006, the Company and Mr. Murdy agreed to terminate Mr. Murdys executive change of control contract in exchange for Mr. Murdy participating in the Executive Change of Control Plan. Mr. Murdys individual contract provided for cash benefits to Mr. Murdy upon a change of control, without the additional trigger of termination of Mr. Murdys employment. The Company and Mr. Murdy agreed that the double trigger of a change of control and employment termination is consistent with the Companys goal of gaining leadership continuity during a change of control period.
See the Potential Payments Upon Termination or Change in Control section starting at page 44 for potential amounts payable to the Named Executive Officers under the Change of Control Plan.
Severance Plan of Newmont. 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. Messrs. Murdy, OBrien, Enos and Harquail are all salaried employees of the Company and thus eligible to participate in the Severance Plan. Mr. Lassonde does not participate in the Severance Plan after December 31, 2006 according to his employment agreement described on page .
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:
The purpose of the Severance Plan is to provide basic income and benefit replacement for a period of weeks following employment termination that is not due to an employees poor performance, misconduct or a change of control. The Severance Plan allows the terminated employee some time and resources to seek future employment.
Mr. Murdys offer letter of employment from the Company, dated May 6, 1993, provides that if his employment is terminated other than for cause, or if he terminates employment after a reduction in base salary or a significant reduction in duties and responsibilities (as determined by independent members of the Board of Directors of the Company), he will be entitled to receive 24 months of his salary as defined in the Severance Plan
plus other severance benefits available under the Severance Plan. Any benefits to which Mr. Murdy may be entitled under the Companys Severance Plan reduce the benefits due under this arrangement.
See the Potential Payments Upon Termination or Change in Control section on starting page 44 for potential amounts payable to the Named Executive Officers under the Severance Plan.
Officers Death Benefit. The Officers Death Benefit Plan of Newmont (Officer 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:
The Company maintains group life insurance for the benefit of all salaried employees of the Company and any amount paid out of such group life insurance reduces the amount of the benefit payable under the Officer Death Benefit Plan.
Messrs. Murdy, OBrien, Enos and Harquail 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. Mr. Lassondes benefit is reduced as a result of his resignation as President of the Company on December 31, 2006.
See the Potential Payments Upon Termination or Change in Control section starting on page 44 for potential amounts payable to the Named Executive Officers under the Officer Death Benefit Plan.
Accelerated Vesting of Stock Awards.
Change of Control: In order to promote stability, retain executives and further align the interests of management and stockholders during the critical period of a change of control, a change of control will have certain immediate effects on stock awards granted to Named Executive Officers. Immediately prior to a change of control, among other things:
Death/Long-Term Disability/Retirement/Severance: 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 SVP of Human Resources and execution of a release) also triggers the immediate vesting of all restricted stock and restricted stock units granted to the executive.
In the event of employment termination due to death, severance (after execution of release) or long-term disability, a pro-rata portion of the executives 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 executives unvested stock options will vest and all previously vested and accelerated vested options will remain exercisable beyond termination for a certain period.(1) 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. In all cases, trading in Company securities is subject to the restrictions described in the section Restrictions on Trading Stock, above.
Mr. Murdy. Mr. Murdy entered into an agreement with the Company for enhanced severance benefits as explained in the section above describing the Severance Plan. This agreement was entered in May 1993 in connection with Mr. Murdys hiring as Chief Financial Officer. In addition, Mr. Murdy has an agreement with the Company for an enhanced benefit under the Pension Equalization Plan, as described in the section above regarding the Pension Equalization Plan. This agreement was entered in March 2001 in connection with Mr. Murdys promotion to Chief Executive Officer.
During 2006, Mr. Murdy voluntarily terminated a change in control employment agreement, originally entered in February 1999, in exchange for his participation in the Executive Change of Control Plan described on page 30. Mr. Murdys individual agreement provided for cash benefits upon a change of control, without the additional trigger of termination of employment.
Mr. Lassonde. As of January 1, 2007, Mr. Lassonde entered into an employment agreement (2007 Employment Agreement) that terminated all prior employment agreements. The 2007 Employment Agreement is for a term of January 1, 2007 until April 30, 2007 and Mr. Lassonde will receive a base monthly salary of $20,834 to serve as the Vice Chairman of the Company. The Company and Mr. Lassonde entered into this agreement to define the unique terms of Mr. Lassondes employment until April 30, 2007, namely that he will not participate in all employee benefit plans. Mr. Lassonde will not participate in: (a) stock or bonus pay practices; (b) executive change of control plans; (c) severance plans; or (d) tax preparation service benefits. During the term of employment in the 2007 Employment Agreement, Mr. Lassonde will participate in: (1) Company health and welfare plans; (2) Officers Death Benefit Plan; and (3) International Retirement Plan. Upon termination of the 2007 Employment Agreement, Mr. Lassonde retains his position as director of the Company pursuant to the normal terms and conditions of that directorship.
The Company and Mr. Lassonde entered into a Consulting Agreement (Consulting Agreement) to begin May 1, 2007 and extend to April 30, 2008, with automatic one-year renewals of the agreement, unless either party terminates the Consulting Agreement. Mr. Lassonde will provide general merchant banking advice and guidance to the Company during the term of the Consulting Agreement for a monthly payment of $20,834. Mr. Lassonde will receive vested benefits accrued during employment, but, as a consultant, Mr. Lassonde will not participate in any employee benefit plans or pay practices. The Company or Mr. Lassonde can terminate the Consulting Agreement at any time and for any reason. Upon termination of the Consulting Agreement, Mr. Lassonde is entitled to a one-time lump sum payment from the Company in the amount of $750,000. This provision was carried over from Mr. Lassondes original employment agreement with the Company, dated February 16, 2002.
Mr. Hansen. Mr. Hansen resigned from the Company on November 20, 2006 and received the benefits discussed on page 48. The Company and Mr. Hansen entered into a consulting agreement for services during 2007 for a lump sum payment of $458,627.
Tax Deductibility of Compensation.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the amount of compensation that the Company may deduct in any one year with respect to each of its five most highly paid executive officers to $1,000,000. 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 executive officers in a manner designed to promote various corporate goals.
In 2006, Mr. Murdys and Mr. Lassondes compensation amounts are greater than $1,000,000. As a result, 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, Personal Performance Bonuses and Stock Incentive 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 162(m) executive compensation plan as immaterial to the Company. However, the Company continually assesses the materiality of additional 162(m) tax benefits that it could receive from a 162(m) executive compensation plan as executive compensation evolves.
2006 Summary Compensation Table
Refer to the Compensation Discussion and Analysis section for a complete description of the components of compensation, along with a description of all material terms and conditions of each component. Salary and bonus payments accounted for approximately 11% of Mr. Murdys total compensation. Salary and bonus accounted for approximately 44%, 22%, 15%, and 35% for Messrs. OBrien, Lassonde, Enos and Harquail, respectively.
2006 All Other Compensation Table
2006 Grants of Plan-Based Awards Table
2006 Outstanding Equity Awards at Fiscal Year-End Table
2006 Option Exercises and Stock Vested Table
2006 Pension Benefits Table
Mr. Murdy is eligible for full retirement and Mr. Enos is eligible for early retirement under the Pension Plan and Pension Equalization Plan. Mr. Lassonde has vested benefits under the International Retirement Plan and Mr. Harquail has vested benefits under the Pension Plan and the Pension Equalization Plan because, for vesting purposes, they have earned service credit for periods of employment with an acquired company. Mr. OBrien has 1.3 years of service with the Company and, therefore, has no vested benefits.
The pension and pension equalization calculations above are based upon actual cash and restricted stock bonus for 2006. The pension present value uses a discount rate at December 31, 2006 of 5.9% and FASB mortality. The pension equalization value uses a pension equalization plan lump sum rate of 3% as of December 31, 2006 and mortality as defined in the Pension Equalization Plan. The present values of both plans are also discounted from the earliest unreduced retirement age to current age using the FASB rate of 5.9%. However, because Mr. Murdy and Mr. Enos are presently eligible for unreduced retirement benefits, the additional FASB rate of 5.9% discount is not applicable to their present values.
According to the Pension Plan, at the normal retirement age of 62, the Company arrives at a monthly pension benefit amount through the following formula:
1.75% of the average monthly salary minus (-) 1.25% of the participants primary social security benefit times (x) the participants 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 participants 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.
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
Change of Control Early Retirement
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.
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 participants 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.
Mr. Lassonde is a participant in the International Retirement Plan that contains three accounts; 1) basic account, 2) supplemental account and 3) savings account.
Basic Account: In the basic account, a participant receives a contribution based upon age and a percentage of compensation. The International Plan defines compensation as base pay and cash bonus. Following is the table of basic account contribution amounts:
Pursuant to Mr. Lassondes employment agreement in effect until December 31, 2006, the Company contributed 18% of Mr. Lassondes annual compensation for 2006 ($275,760) to his basic account. The employment agreement provides an enhanced benefit beyond the table in the International Plan because the Company needed to attract and retain the services of Mr. Lassonde to provide critical guidance and leadership to the Companys merchant banking, exploration and business development functions following the acquisition of Franco-Nevada Mining Corporation Limited in 2002.
Supplemental Account: In the supplemental account, a participant receives a contribution based upon age and a percentage of compensation. The International Plan defines compensation for the supplemental account the same as for the basic account. Following is the table of supplemental account contribution amounts:
Pursuant to Mr. Lassondes employment agreement, the Company contributed 6% of Mr. Lassondes annual compensation for 2006 ($91,920) to his supplemental account. The employment agreement provides an enhanced benefit beyond the table in the International Plan because the Company needed to attract and retain the services of Mr. Lassonde, as described above.
Savings Account: In the savings account, each participant receives a contribution equal to 6% of compensation for the year, not to exceed $12,000 for any plan year. For purposes of the savings account, the definition of compensation is the same as the basic and supplemental accounts, except cash bonus is excluded in
the definition for saving account compensation. Mr. Lassonde participates in the savings account provision of the International Plan at the same rate as any other participant and he received a contribution of $12,000 for 2006.
Upon a participants termination of employment for any reason, including death, retirement, disability or other termination of employment by the Company, the participant receives a cash lump-sum distribution for the vested value of the accounts as soon as administratively possible.
2006 Nonqualified Deferred Compensation Table
Amounts shown are part of the Companys Savings Equalization 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.
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. 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.
Potential Payments Upon Termination or Change in Control
The following tables describe the estimated potential payments upon termination or change in control of the Company for the Named Executive Officers. The amounts shown assume that the termination or change in control occurred on December 31, 2006. The actual amounts to be paid can only be determined at the time of such executives separation from the Company.
Terms of Plans: See the Compensation Discussion and Analysis starting at page 17 for a description of the material terms, conditions and assumptions for any of the Companys benefit plans or, in the case of Mr. Murdy or Mr. Lassonde, their employment agreements.
Retirement Benefits: Mr. Murdy is eligible for retirement and Mr. Enos is eligible for early retirement under the Companys Pension Plan and Pension Equalization Plan. Mr. Lassonde is eligible for retirement under the Companys International Retirement Plan. Messrs. OBrien and Harquail are not eligible for retirement. However, Mr. Harquail has vested benefits under these plans. See the Pension Benefits Table on page 40 for the present value of vested benefits under these plans.
Termination Not For Cause: The Companys 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. In addition, Mr. Murdy has an agreement, dated May 6, 1993, providing for a minimum of 24 months of base benefits in the case of termination not for cause.
Termination For Cause: No additional benefits are payable in any case of termination for cause. The Companys 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 in Control: The Companys 2005 Stock Incentive Plan provides for vesting of unvested restricted stock and stock options in the case of change in control of the Company. Additionally, the Savings Plan and Savings Equalization Plan provide for immediate vesting of the Company match which is capped at a cumulative total of $12,000 per year for both plans.
The Companys 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:
Termination After Change in Control: The Companys Executive Change of Control Plan provides for enhanced benefits in the case of termination within three years following change in 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 if terminated within 3 years of a change of control or if the executive terminates for good reason within 3 years of change of control. The Change of Control Plan generally defines good reason as any of the following without the executives 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 executives position immediately prior to such assignment or any action resulting in the diminution of the executives position, authority, duties or responsibilities.
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.
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 employees 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.
2006 Performance Bonuses: All amounts shown for Corporate Performance Bonuses, Personal Performance Bonuses and Stock Incentive Bonuses are cash payments made at target level for 2006 performance.
Accelerated Vesting of Restricted Stock and Stock Options: The amounts shown assume vesting as of December 31, 2006 of restricted stock, restricted stock units or stock options at the year-end closing price of $45.15. The amounts shown do not include any vested stock awards.
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 in 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 Change in Control the amount is determined without any present value discount.
Health Care Benefits: Messrs. Murdy, Lassonde and Enos are eligible for retiree medical health care coverage on the same terms as any other employee, as they each meet the Rule of 75 (age plus years of service). The value of health care benefits is based on the incremental additional cost to the Company of the length of coverage specified in the Severance Plan, the Executive Change of Control Plan or Disability Plan.
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 in 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. The 280G tax gross-up amounts reflected in the tables below assumes 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 in control, (b) any income and excise taxes imposed on the executive as a result of the Companys 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 Companys 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 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.
Wayne W. Murdy
Richard T. OBrien
Thomas L. Enos
Bruce D. Hansen. In 2006, Mr. Hansen received benefits under the Severance Plan of Newmont, as follows:
Mr. Hansen also accrued cash payments from the Savings Equalization Plan and Pension Equalization Plans following termination of employment in 2006, in the amounts of:
The Company will also vest 14,027 shares of restricted stock pursuant to grant awards following separation under the Severance Plan of Newmont. The Company has discretion to vest all restricted stock awards upon severance. Such restricted stock will vest in May 2007.
Finally, the Company entered into a Consulting Agreement with Mr. Hansen for services in 2007 under which the Company paid Mr. Hansen $458,627 in 2007.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Companys executive officers and directors and holders of greater than 10% of the Companys outstanding common stock to file initial reports of their ownership of the Companys 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 Companys executive officers and directors, the Company believes that all Section 16(a) filing requirements were complied with in 2006, except that Mr. Glen A. Barton, a director, inadvertently failed to report on a timely basis three transactions, which were subsequently filed on a late Form 4.
The Audit Committee has selected PricewaterhouseCoopers LLP (PwC) as the independent auditors for Newmont and its subsidiaries for the fiscal year 2007, after evaluation of audit quality, fees, independence and other relevant factors. PwC has served as Newmonts 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.
Independent Auditors Fees.
PwC billed the following fees in 2006 and 2005 for professional services rendered to Newmont:
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 Chairman 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 2006 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF PwC AS NEWMONTS INDEPENDENT AUDITORS FOR 2007.
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 Companys Corporate Governance Guidelines. The Committee has adopted a Charter that describes its responsibilities in detail. The Charter is available on the Companys web site at 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 Committees primary purpose is to oversee the integrity of the Companys financial statements, the Companys compliance with legal and regulatory requirements and corporate policies and controls, the independent auditors selection, retention, qualifications, objectivity and independence, and the performance of the Companys 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 Committees role in corporate governance can be found in the Committees charter.
The Audit Committee has reviewed and discussed with management and PricewaterhouseCoopers (PwC), the Companys independent auditors, the audited financial statements of the Company for the fiscal year ended December 31, 2006. 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 Companys 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 written disclosures and the letter from PwC required by Independence Standards Board Standard No. 1, and has discussed PwCs 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 Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2006 for filing with the Securities and Exchange Commission.
Submitted by the following members of the Audit Committee of the Board of Directors:
Regarding Newmonts Indonesian Operations
The Company has been advised that the following resolution and statement in support thereof may be presented by or on behalf of a beneficial owner of shares of the Companys common stock at the Annual Meeting of Stockholders. The name and address of such beneficial owner, together with the number of shares of common stock held by such beneficial owner, will be furnished by the Company, to any person, orally or in writing as required, promptly upon the receipt of such request.
Submitted by William C. Thompson, Comptroller, City of New York, on behalf of the Boards of Trustees of the New York City Pension Funds
WHEREAS, we believe that transnational corporations operating in countries with repressive governments, ethnic conflict, weak rule of law, endemic corruption, or poor labor and environmental standards face serious
risks to their reputation and share value if they are seen to be responsible for, or complicit in, degradation of the environment or human rights violations; and,
WHEREAS, Newmont Mining has had extensive mining operations on the islands of Sulawesi and Sumbawa in Indonesia; and,
WHEREAS, in August, 2004, the Indonesian government accused Newmont Mining had illegally disposed of toxic waste containing arsenic and mercury into the waters off Sulawesi,
WHEREAS, there have been numerous reports of serious health problems among the indigenous population allegedly arising from toxic waste disposal operations conducted by the company in these areas; and,
WHEREAS, there are a number of lawsuits pending against Newmont Mining by Indonesian citizens whose health has reportedly been negatively impacted by these operations,
WHEREAS, on September 8, 2004, the New York Times reported that Newmont employed methods of waste disposal in Indonesia, which had effectively been banned in the United States under provisions of the Clean Air Act,
WHEREAS, in August, 2005, the Indonesian government filed criminal charges against the company on the grounds that Newmonts Sulawesi operations violated Indonesias toxic dumping laws, and that the marine environment adjacent to those operations was contaminated with unnatural levels of arsenic and mercury that posed significant health risks to the local population;
THEREFORE, BE IT RESOLVED, that shareholders request management to review and report to shareholders on the potential environmental and public health damage resulting from the companys mining and waste disposal operations in Indonesia.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Company recognizes the importance of environmental and public health issues. Consideration of these issues is fundamental to our operations on a day-to-day basis. The Companys methods of operations, including waste disposal, are based on many years of ongoing scientific analyses and consideration of complex circumstances relating to geographic and technical issues, legal regulations and social issues.
As a result of the particular circumstances surrounding the Companys former Minahasa operation in Indonesia, the Company has issued a report to the stockholders entitled Buyat Bay, History and Status, available at www.newmont.com (click on Shareholder Update: Buyat Bay, on the home page). A copy of this report is also available, without charge, by written request to Investor Relations, Newmont Mining Corporation, 1700 Lincoln Street, Denver, CO 80203. In addition, the Company has conducted extensive monitoring and analyses of conditions at Buyat Bay, and has commissioned multiple independent studies relating to water quality, marine life, and the health of local residents. These data and reports are available at www.buyatbayfacts.com, a website maintained by the Company. Finally, pursuant to a Goodwill Agreement between the Companys Minahasa subsidiary and the Indonesian government, entered into on February 16, 2006, a 10-year program of scientific investigation, monitoring and analysis will be undertaken by an independent panel of six scientists, to confirm that the Minahasa operation has not caused any adverse environmental impacts to Buyat Bay or adverse health impacts to area residents. The Company will continue to update its shareholders and the general public on the results and conclusions of this 10-year study.
With respect to the Batu Hijau operation in Indonesia, the Companys submarine tailings disposal system was the subject of an extensive environmental impact study prior to the issuance of its initial operating permits in
October 1996, and is the subject of a continual and extensive monitoring program. In addition, the Companys Batu Hijau subsidiary engaged the Indonesian Center for Oceanographic Research to conduct a Deep Sea Research Study at Batu Hijau in 2003, and then engaged the Commonwealth Scientific & Industrial Research Organization (CSIRO) of Australia, and a team of Indonesian scientists, to conduct a due-diligence monitoring study on the Batu Hijau tailings placement system in 2004.
The Company publishes, on a regular basis, reports entitled Now and Beyond, which are corporate responsibility reports addressing health and safety, community relations, human resources, ethics and environmental issues. These reports are available on www.newmont.com or by written request as described above.
We believe that our efforts to promote sustainable development are the best ways to guarantee our success in developing nations. The Company has undertaken efforts to promote sustainable development and support the creation of health and education programs, improved and new infrastructure, and local business enterprises at its operations. Reports regarding these efforts are available on www.newmont.com.
The Board believes that it is not necessary to produce the additional report requested by this proposal, as such an effort would be duplicative to the studies described above and add little to the Companys efforts to address the issues raised in the proposal.
Regarding Newmonts Community Policies and Practices
The Company has been advised that the following resolution and statement in support thereof may be presented by or on behalf of a beneficial owner of shares of the Companys common stock at the Annual Meeting of Stockholders. The name and address of such beneficial owner, together with the number of shares of common stock held by such beneficial owner, will be furnished by the Company, to any person, orally or in writing as required, promptly upon the receipt of such request.
NEWMONT MINING 2007
Several Newmont projects in developing countries have been undermined by community protests over the years. A pattern of community resistance to the companys operations, especially in Peru, Indonesia, and Ghana, raises concerns about issues such as the companys mining waste disposal practices, the potential for water pollution, development on sacred sites, and community resettlement.
Resolved: That shareholders request that a committee of independent board members be formed to conduct a global review and evaluation of the companys policies and practices relating to existing and potential opposition from local communities and to our companys operations and the steps taken to reduce such opposition; and that the results of that review be included in a report (omitting confidential information and prepared at reasonable cost) that is made available to shareholders prior to the 2008 annual meeting.
Supporting Statement: Newmont Minings success depends not only on receiving legal permits and licenses, but also on the acceptance and cooperation of the communities it affects.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Board of Directors has established the Environmental, Health and Safety Committee, a standing committee of the Board, which is comprised of at least three independent directors. The Committee is charged with overseeing a wide variety of Company policies and practices designed to achieve environmentally sound and responsible resource development. Therefore, it is well-suited to review and evaluate the Companys policies and practices relating to its engagement with host communities around its operations. In conducting its review and evaluation of such policies, the Committee will also evaluate any existing and potential opposition to Newmonts operations from those communities. The results of that review will be included in a report (omitting confidential information and prepared at reasonable cost) made available to the stockholders prior to the 2008 annual meeting of stockholders.
In particular, the Committee will meet at least twice a year to (a) review the effectiveness of the policies and systems for managing community risks associated with the Companys activities; (b) prepare a public assessment of the Companys community affairs performance; (c) report to the Board the Committees findings, conclusions and recommendations on specific actions or decisions the Board should consider; (d) engage independent experts or advisors, to the extent it is deemed necessary, who have recognized expertise in community affairs; and (e) oversee Newmonts policies, standards, systems and resources required to conduct its activities in accordance with the Companys Core Values.
Independent Board Chairman
The Company has been advised that the following resolution and statement in support thereof may be presented by or on behalf of a beneficial owner of shares of the Companys common stock at the Annual Meeting of Stockholders. The name and address of such beneficial owner, together with the number of shares of common stock held by such beneficial owner, will be furnished by the Company, to any person, orally or in writing as required, promptly upon the receipt of such request.
5Separate the Roles of CEO and Chairman
RESOLVED: Shareholders request that our Board establish a rule (firmly specified in our charter or bylaws if feasible) of separating the roles of our CEO and Board Chairman, so that an independent director who has not served as an executive officer of our Company, serve as our Chairman whenever possible.
This proposal gives our company an opportunity to follow SEC Staff Legal Bulletin 14C to cure a Chairmans non-independence. This proposal shall not apply to the extent that compliance would necessarily breach any contractual obligations in effect at the time of the 2007 shareholder meeting.
The primary purpose of our Chairman and Board of Directors is to protect shareholders interests by providing independent oversight of management, including our Chief Executive Officer. Separating the roles of CEO and Chairman can promote greater management accountability to shareholders and lead to a more objective evaluation of our CEO.
It is important to take a step forward and support this one proposal to improve our corporate governance since our 2006 governance standards were not impeccable. For instance in 2006 it was reported (and certain concerns are noted):
The above status shows there is room for improvement and reinforces the reason to take one step forward now and vote yes to:
Separate the Roles of CEO and Chairman
Yes on 5
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Board believes that it is in the best interests of the Company and its stockholders for the Board to have flexibility in determining the appropriate individual with the necessary qualifications, commitment and support of the other directors to serve as an effective Chairman in light of the circumstances at any point in time. As provided in the Companys Corporate Governance Guidelines, which are available on the Companys website at www.newmont.com/en/investor:
The Board selects the Chairman of the Board in the manner and upon the criteria it deems best for the Company at the time of selection. The Board does not have a policy on whether the role of Chairman and Chief Executive Officer should be separate or combined, but recognizes the value to the Corporation of the combination of the positions.
At the present time, the Board believes that the interests of the Company and its stockholders are best served by the leadership and direction provided by a single person as Chairman and Chief Executive Officer. While the Board may select in the future a Chairman who does not have any management duties, titles or responsibilities should circumstances change, the proposal, if adopted, will limit the Board from organizing itself in a manner best suited to meet the needs of the Company and its stockholders based on the circumstances and individuals at any particular point in time.
In addition, the Board has been, and continues to be, committed to high standards of corporate governance. The Company believes it already has several mechanisms in place to ensure that the Board is able to provide independent oversight of management, including the following: