PRIVATE & CONFIDENTIAL
19 August 2002
Mr Andrew Michelmore
WMC Resources Ltd
Level 17, IBM Tower
60 City Road
Southbank Vic 3006
Dear Andrew
LETTER OF OFFER
Further to our recent discussions, we are pleased to offer you the following position with WMC Resources Ltd.
Confirmation of your details are:
Position: | | Chief Executive Officer – WMC Resources Ltd |
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Job Band: | | Executive |
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Commencement Date: | | 1 January 2003 |
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Reporting to: | | Chairman WMC Resources Ltd |
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Location: | | Melbourne |
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Term: | | 4 years |
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Your Package is comprised of: | |
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| | Fixed Annual Reward (FAR) $1,000,000 |
| | Short Term Incentive (STI) |
Salary Packaging Arrangements
Your Fixed Annual Reward includes both your Superannuation benefit and a value for the provision of a motor vehicle. You will be required to salary sacrifice the minimum statutory superannuation contribution, and you are aware you may elect to salary sacrifice to obtain a motor vehicle(s) via Esanda Fleet Partners.
Your superannuation salary sacrifice options are:
1. | The minimum required under the Superannuation Guarantee (SG), equivalent to the prevailing SG rate multiplied by the maximum contribution base (MCB). The SG rate is currently 9% effective 1 July 2002. The MCB is curently $109,924 and is adjusted by the average weekly ordinary times earning (AWOTE) index each year. |
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2. | The prevailing SG rate multiplied by your cash base. Age based contribution limits apply and at 1 July 2002 for employees aged 35 to 49 is $35,138 and for employees 50 years and over $87,141. These limits are adjusted by the AWOTE index each July. |
The Board has recently approved the concept of Superannuation contributions being directed to a complying Personal Superannuation account. Further details of this option are available from Greg Travers.
Tenure
The nature of your employment with WMC is on a full time basis and your contract will provide for a term of four years from the date of commencement. The term of the contract will be subject to annual review by the Board and may be varied by mutual agreement between the Board and yourself.
Short Term Incentive
A Short Term Incentive will be made available annually to provide a variable cash bonus subject to performance outcomes. Your “at target” bonus under the Company’s STI program has been established at 50% of FAR. Performance parameters will be established with you annually incoporating KPIs, KBIs, Budgets, costs etc. At the Board’s discretion, the bonus may be increased to up to 100% of FAR for “outperform” outcomes. These will be considered as part of your annual performance review based on both the Company’s and your own personal performance in the year.
Long Term Incentive
A cash based long term incentive scheme will be provided annually to you subject to Company performance. The specific triggers and parameters of the scheme are yet to be determined. However, an amount within a range of 0 – 100% will be the range of potential outcome. This scheme will replace the issue of any future options in the Company unless otherwise advised, consistent with our announcement on options made on 13 August 2002.
Contractual Terms
Your contract of employment will reflect the standard terms and conditions as applied to WMC Resources Ltd and a contract to that effect is attached. The contract specifically provides that in the event you are terminated by the Company other than for ‘cause’, you will be entitled to notice or payment in lieu thereof of a maximum of 2 years’ FAR or where the contract has less than two years remaining term, the remaining life of the contract, with a minimum payment of 1 years’ FAR.
Should you require clarification on any aspect of the offer please contact Greg initially or myself if you wish to discuss any specific aspect.
To accept the offer, please sign one copy of this letter and the Contract of Employment and forward these to Greg for our records.
Once again, congratulations on your appointment, and we look forward to future success with you in the role.
Yours sincerely
I G R Burgess AO
Chairman
I confirm my acceptance of this offer and the terms and conditions in the Contract of Employment. |
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______________________________ | Date: / / |
CONTRACT OF EMPLOYMENTBetween
WMC Resources LTD
(A.C.N. 004 184 598)
and
Andrew G Michelmore
Should you require clarification on any aspect of this contract
please contact Greg Travers.
WMC Resources Ltd and Name
1. | SALARY ADMINISTRATION |
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| Salaries will be reviewed on an individual basis following completion of the Company’s Performance Review in December of each year. An increase is not guaranteed and is subject to the individuals assessed performance and the Company’s economic performance. |
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. | The salary is paid by the Company to fully compensate you in respect of all entitlements including payment for all hours worked. |
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| The salary will be paid monthly, half monthly in arrears and half monthly in advance, by direct transfer into your nominated account with a bank or other approved, recognised financial institution. |
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| On engagement, and following reviews, the Company will advise you in writing of your entitlements. |
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2. | HOURS OF WORK AND DUTIES |
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| Hours of work and duties will be commensurate with the role and the requirements of the Board, as agreed with you, to fulfill your role as Chief Executive Officer. |
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3. | DISCLOSURE OF INFORMATION ON ENGAGEMENT |
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| All information provided by you to the Company prior to appointment must be accurate and complete. Failure to comply with this obligation may result in disciplinary action, including termination of employment, being taken. |
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4. | TERMINATION OF EMPLOYMENT |
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4.1 | Termination of employment |
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| The provisions of this clause 4.1 shall apply to your employment with the Company from 1 January 2003 to 31 December 2006, and any such further period as is agreed to in writing by both you and the Company. |
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| Subject to the terms of this contract, and notwithstanding the provisions of clause 16 of this contract, the Company may terminate your employment with it by giving you: |
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| (a) | two years’ written notice of termination or payment in lieu in notice of termination; or |
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| (b) | where the contract has less than two years remaining term, written notice of termination or payment in lieu of notice of termination, of a period equivalent to the remaining period of the Contract Term with a minimum period of one year, as at the date notice of termination or payment in lieu of notice (as applicable) is given, |
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| whichever is the lesser. |
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| Contract of Employment |
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WMC Resources Ltd and Name
| Subject to the terms of this contract, you may terminate your employment by giving six (6) months written notice of termination to the Company or written notice of termination of a period equivalent to the remaining period of the Contract Term (as at the date the notice of termination is given) whichever is the lesser. |
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| If you give notice of termination to the Company and you terminate your employment without the agreement of the Company before the end of that notice period, you must immediately pay to the Company an amount equivalent to the salary you would have received during the unworked part of the notice period. |
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| This contract may be terminated immediately by the Company for any conduct on your part which justifies summary dismissal. In such circumstances, payment shall be up to the time of dismissal only. |
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| Monies owed by you to the Company, or paid in advance by the Company to you, may be recovered from any accrued entitlements owing to you. The Company is authorised to make any deductions for the purposes of this clause following presentation of a statement of all amounts owed by you to the Company. |
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5. | LEAVE |
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| Upon completion of each 12 months service you shall be entitled to four weeks annual leave in accordance with your leave advice. Annual Leave will be accumulated on a pro-rata basis. |
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| Your accumulation of annual leave may not exceed six (6) weeks without the express written approval of the Board. |
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| Annual leave will be taken at a time subject to the convenience of the Company. Payment shall be at the salary applicable immediately prior to the taking of leave. |
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| Your Long Service Leave entitlement shall be in accordance with relevant statutory provisions |
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| Payment in lieu of leave on termination will be in accordance with the Group HR Policy and Procedures Manual. |
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6. | SAFETY |
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| You will comply with relevant Acts, Regulations and other Codes of Practice and Company Safety Policy (as amended from time to time) including, without limitation, requirements to wear safety equipment whilst in areas requiring such equipment. |
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| Contract of Employment |
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WMC Resources Ltd and Name
7. | MEDICAL SCREENING |
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| The Company may require you to undertake such medical tests as the Company deems appropriate including, without limitation, random drug and alcohol testing as part of the Company’s safety policy and you hereby agree to undertake such test or tests as directed by the Company. |
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8. | SECURITY REQUIREMENTS |
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| The Company may, through its officers, employees or delegates, inspect your personal property on Company premises, at any time for security reasons and you hereby consent to such inspection. |
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9. | BUSINESS CONDUCT |
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| You will ensure that your standard of conduct is at all times in accordance with the highest ethical standards with respect to all business dealings involving the Company and undertake to comply with all requirements of the Company’s Code of Conduct (copy attached). You will be required to acknowledge that you have read our Code of Conduct and confirm that you agree to act in accordance with the Code. The WMC Board and all employees reaffirm their commitment to the Code annually. |
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10. | CONTINUITY OF SUPPLY |
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| You are required at all times to provide your services to the Company in a manner commensurate with your position, with due regard for health and safety, and as directed by any authorized officer, without restrictions, limitations, or stoppages. Any such actions will be grounds for disciplinary action, and may result in the termination of your employment. |
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11. | COMPUTER USE |
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| You agree to comply with the Company’s policies regarding Computer Use. These policies are available on WMC’s Intranet. You recognise that the Company uses certain computer software under licence which may not be reproduced or copied by you in any way, unless specifically approved. |
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| Contract of Employment |
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WMC Resources Ltd and Name
12. | CONFIDENTIALITY - COMPANY PROPERTY |
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| Except with the prior written approval of the Company or in the proper discharge of your duties, you shall not disclose to any third party during the currency of this contract or thereafter any information relating to the Company’s affairs which may come to your knowledge. In the course of your employment and during the term of this contract and as far as is reasonable thereafter you shall use your best endeavours to prevent the disclosure of any such confidential information to or by a third party. |
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| All property of the Company including, without limitation, reports, documents, files, books, manuals, records, information, statements, papers, writing and similar items (whether in hard copy, electronic, magnetic or other form) relating to the Company’s affairs and all other materials, property or equipment shall be and remain the property of the Company and shall be handed over to the Company by you from time to time on demand and in any event on your leaving the service of the Company. |
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| You agree to treat the terms of this contract, in particular Clause 4 - Termination of Employment and other communications with Company officers in or in connection with the formation of this contract (“the contract information”) as confidential. You further agree that you will not disclose the contract information either directly or indirectly to any other employee of the Company. |
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| In the event that you breach this confidentiality obligation in respect of the contract information, you agree and accept that the Company is entitled, at its discretion, to substitute in lieu of the notice of termination obligations set out in Clause 4, a provision entitling the Company to terminate your contract of employment on the giving of one month’s notice or by payment in lieu. |
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13. | INTELLECTUAL PROPERTY |
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| You must immediately, freely and fully disclose to the Company any work related invention, improvement or discovery you make as an employee. All such inventions, improvements or discoveries you make are the absolute property of WMC. |
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| You must not at any time during or after the cessation of your employment with WMC apply for or claim any entitlement to any letters patent, design, copyright (registrable or otherwise) or other form of protection whether in Australia or elsewhere, in relation to such intellectual property. |
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| You are required to assign to WMC any right you may have to a grant of letters patent, design, copyright (registrable or otherwise) or other form of protection regardless of whether it is held in Australia or elsewhere. |
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| The Company policy in relation to intellectual property is contained in the Business Ethics section of the WMC Group Human Resources Policy & Procedures Manual. |
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| Contract of Employment |
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WMC Resources Ltd and Name
14. | INDIGENOUS PEOPLE |
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| You are required to respect the responsibilities, laws, tradition and culture of all people regardless of race and whether or not they are enacted in legislation. The laws with respect to indigenous people will be the minimum standard to which adherence is required. |
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15. | ENVIRONMENTAL RESPONSIBILITIES |
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| You are required to carry out your role in an environmentally responsible manner and comply with relevant Acts, Regulations and other Codes of Practice and the Company Environmental Policy. |
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16. | POLICIES AND PROCEDURES |
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| In addition to the provisions of this contract of employment, the terms and conditions of employment which apply to you are those contained in the WMC Resources Ltd Group Human Resources Personnel Policy and Procedures Manual. |
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| You are required to comply with all lawful directions of the Company in relation to workplace policies and procedures and with the Company’s rules, regulations, policies, practices, and procedures, as amended from time to time. Company Policy and Procedures Manuals can be accessed on the WMC intranet site. |
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| It is your responsibility to familiarize yourself with the requirements of WMC’s policies and procedures. |
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17. | HEALTH AND FITNESS EXAMINATION |
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| The Company provides a health care program for senior managers, this is currently provided by MBF Health Management Services. A representative from MBF will contact you at the appropriate time to discuss the program and arrange for your next appointment. |
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| Contract of Employment |
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WMC Resources Ltd and Name
IN WITNESS WHEREOF the parties have executed this agreement.
For WMC Resources Ltd
Signed: | ____________________________________ |
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Name: | I G R Burgess |
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Title: | Chairman |
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Date: | ____________________________________ |
and
Signed: | ____________________________________ |
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Name: | |
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Date: | ____________________________________ |
