Annual Report 2010 - Ophir Energy

34
Ophir energy plc | 2010 ANNUAL REPORT
gOvernAnce | diRECTORs’ REmUNERATiON REPORT
governance
Directors’ Remuneration Report
The Remuneration Committee is responsible for the
determination of the remuneration of the Executive and
Non Executive Directors. The Committee, which is made
up of independent Non Executive Directors, is wholly
independent of management and free from any conflicts
of interest arising from cross-directorships and the day to
day running of the Company. No member has a financial
interest, other than as a shareholder, in the matters
delegated to the Committee.
The Committee, which currently comprises Messrs Lander
(Chairman), McShane, Powell and Smith, operates under
a written mandate and meets on a regular basis. The
Managing Director may attend part of the Committee’s
meetings and be consulted in setting the remuneration
of the other Executive Directors, by invitation.
remuneration policy
Ophir’s policy on Directors’ Remuneration in 2010 and for
subsequent years is to maintain levels of remuneration so
as to attract, motivate and retain executives of the highest
calibre who can contribute their experience to Ophir’s
operations and further development of the business.
Directors’ remuneration
Executive Directors
The elements of the remuneration package for Executive
Directors are base salary, annual bonus, non-cash benefits,
pension/superannuation contributions and, in certain cases,
participation in Ophir’s share incentive arrangements. The
founder Executive Directors have a significant stake in the
Company’s equity. A significant element of the potential
remuneration package is, therefore, performance and/or
equity linked.
Executive Directors’ remuneration packages are
reviewed annually each December with regard to
personal performance, Company performance, changes in
responsibilities and competitive market practices. Following
the annual review conducted in December 2009, the
Executive Directors’ basic salaries were retained at their
existing levels during 2010. In determining the total
remuneration of the Executive Directors, the Committee
takes into account the remuneration practices adopted by
listed and unlisted companies of a similar capitalisation
and overseas complexity to the Group. The Committee
sets annual performance targets relevant to Ophir’s key
objectives for the year, against which to assess awards of
performance-related annual bonuses for the Executive
Directors. The Committee is in the process of engaging
remuneration consultants to assist it in formulating an
overall remuneration policy for Executive Directors, taking
account of remuneration policies for the Group as a whole
and external benchmarking.
During 2010, Key Performance Indicators (“KPIs”) targets
were set for the Executive Directors in respect of Health,
Safety & Environmental performance; progress towards a
liquidity event; and reserves and resources additions (firm
and provisional). The Committee have approved bonuses for
the Executive Directors for 2010 equivalent to 70% of salary
by reference to these targets.
No options were held by Executive Directors at the date
of this report or at any time during the year nor were any
options exercised during the year (2009: Nil)
With the prior permission of the Board, Executive Directors
are permitted to accept non executive appointments. Under
this policy Dr Stein serves as Chairman of Neon Energy
Limited, an unrelated entity, for which he received
remuneration of US$45,997 (2009: US$7,442). Dr Fischer
serves as a Non Executive Director for Barrel Chasers Pty Ltd,
an unrelated entity, for which he receives no remuneration
(2009: N/A).
The Company contributes 11% of Executive Directors’ base
salary to private pension plans or superannuation funds.
Where the level of contribution is higher than that which
is eligible for tax relief, the excess can be converted into
additional salary. Both Dr Stein and Mr Taylor so elected in
2010 in respect of part of their entitlements.
No options are held by Executive Directors nor were any
options exercised during the year (2009: Nil).
Non Executive Directors
The Board as a whole determines the remuneration of the
Non Executive Directors.
Remuneration paid to independent Non Executive Directors
is set at a level to attract persons with the necessary
experience and ability to make a significant contribution to
the Company’s operations. Remuneration levels are set
based on external advice and give consideration to the time
commitment and responsibilities of the role.
Non Executive Directors representing the Company’s major
shareholders and appointed by virtue of various relationship
agreements between the Company and the shareholder
entities they represent are not remunerated.
There were no issues of options during the year to Non
Executive Directors or entities in which Non Executive
Directors are deemed to be interested, nor were any
options in which any Non Executive Directors are
interested exercised during the year (2009: Nil) or
during the subsequent period up to the date of these
Financial Statements.