Impact of Spin-out on BHP and OneSteel Employees

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108 PART 7 <strong>Impact</strong> <strong>of</strong> <strong>Spin</strong>-<strong>out</strong> on BHP and OneSteel EmployeesThe SSP in Australia will generally operate intwo forms:(a) the SSP Tax Exempt Plan: to satisfy therequirements <strong>of</strong> the $1,000 tax exemptionunder Division 13A <strong>of</strong> the ITAA; and(b) the SSP Tax Deferred Plan: to satisfy therequirements <strong>of</strong> the tax deferral concessionsunder Division 13A <strong>of</strong> the ITAA.OneSteel Shares acquired under the SSP can besourced either by way <strong>of</strong> a new issue, or by onmarket purchase. The OneSteel Shares will beheld by the plan trustee, subject to the plan rulesand trust deed.All OneSteel Shares acquired under the SSP willrank equally with all other OneSteel Shares thenissued for dividends, rights issues, bonus issuesand voting rights and participants will be entitled toreceive these shareholder benefits while theOneSteel Shares are held in the SSP.All plan management and administration costsrelating to the SSP will be met by OneSteel.(a) SSP Tax Exempt PlanThe SSP Tax Exempt Plan is open to all eligibleemployees except OneSteel Directors. The SSPTax Exempt Plan allows for the allocation <strong>of</strong> up to$1,000 worth <strong>of</strong> OneSteel Shares per annum pereligible employee, as a combination <strong>of</strong> abonus/incentive and a remuneration sacrifice.This benefit is tax deductible to OneSteel and, ifelected by the eligible employee, tax exempt tothe OneSteel employee, subject to certain conditions.Participants in the SSP Tax Exempt Plan will notbe permitted to dispose <strong>of</strong> their OneSteel Sharesuntil three years after the date <strong>of</strong> acquisitionunless they leave the employment <strong>of</strong> OneSteel.This is a requirement <strong>of</strong> Division 13A <strong>of</strong> the ITAA.There is no risk <strong>of</strong> forfeiture <strong>of</strong> the shares byparticipants.The SSP Tax Exempt Plan General Offer whichOneSteel proposes to make is set <strong>out</strong> inPart 7.2.4.(b) SSP Tax Deferred PlanThe SSP Tax Deferred Plan allows employees toreceive OneSteel Shares as a combination <strong>of</strong> abonus/incentive and a remuneration sacrifice and,subject to certain conditions and unless theparticipant elects otherwise, not to pay tax on thebenefit for up to ten years. OneSteel receives atax deduction for the value <strong>of</strong> any OneSteelShares acquired under the SSP Tax Deferred Planby on market purchase on ASX.The SSP Tax Deferred Plan General Offer whichOneSteel proposes to make is set <strong>out</strong> in Part 7.2.4.OneSteel executives and executive OneSteelDirectors will also have OneSteel Shares allocatedas part <strong>of</strong> their long term incentive, expressed asa percentage <strong>of</strong> their fixed salary. The allocation <strong>of</strong>these OneSteel Shares will be subject to financialperformance hurdles and time based vesting. Thelong term incentive <strong>of</strong>fer <strong>of</strong> OneSteel Shares whichOneSteel proposes to make is set <strong>out</strong> in Part 7.2.5.Participants in the SSP Tax Deferred Plan may notbe permitted to dispose <strong>of</strong> their OneSteel Sharesunless certain conditions are satisfied, asspecified at the time <strong>of</strong> <strong>of</strong>fer <strong>of</strong> participation.Participants may forfeit their OneSteel Shares ifthey voluntarily cease to be an employee at a timewhen they have not met any conditions, timebased vesting criteria, completed a remunerationsacrifice commitment, or their employment isterminated for misconduct or other similarcircumstances. All OneSteel Shares acquired byparticipants as a result <strong>of</strong> forgoing part <strong>of</strong> theirsalary or bonuses will not be subject toperformance hurdles.7.2.3 Executive Option Plan (“EOP”)The EOP allows OneSteel to grant options overOneSteel Shares to key executives and OneSteelExecutive Directors as selected by the OneSteelBoard remuneration committee, as part <strong>of</strong> theirlong term incentive. Details <strong>of</strong> the long termincentive option <strong>of</strong>fers which OneSteel proposesto make are set <strong>out</strong> in Part 7.2.5.Eligibility: Options to acquire OneSteel Sharesmay be <strong>of</strong>fered to OneSteel executives andexecutive OneSteel Directors, having regard toactual and potential contribution to OneSteel,record <strong>of</strong> employment, other matters which tend toindicate merit, and any other matters consideredrelevant by the OneSteel Board.Option issue: Options may be issued for nominalconsideration in which case the exercise price <strong>of</strong>the options will equal the prevailing market price<strong>of</strong> the OneSteel Shares at the time <strong>of</strong> grant.Options may also be issued for considerationequal to the prevailing market price <strong>of</strong> OneSteelShares at the time <strong>of</strong> grant. The consideration forissue <strong>of</strong> an option may be paid in cash or by thegiving <strong>of</strong> a promise to pay.
<strong>Impact</strong> <strong>of</strong> <strong>Spin</strong>-<strong>out</strong> on BHP and OneSteel Employees PART 7109Quotation <strong>of</strong> options on ASX will not be sought.However, OneSteel will apply for <strong>of</strong>ficial quotation <strong>of</strong>OneSteel Shares issued on the exercise <strong>of</strong> options.OneSteel Shares issued on the exercise <strong>of</strong> optionswill rank equally with other OneSteel Shares.Exercise price: The exercise price applicable tooptions issued for nominal consideration shall, atthe discretion <strong>of</strong> the OneSteel Directors, bedetermined by reference to the volume weightedaverage market price <strong>of</strong> OneSteel Shares during thefive trading days on ASX up to and including thedate <strong>of</strong> grant <strong>of</strong> the options or such other date orperiod as the OneSteel Board considersappropriate.Where options are not issued for nominalconsideration, the exercise price will be nil. If apromise to pay was given in respect <strong>of</strong> the optionissue price, the option issue price must be paidon the earlier <strong>of</strong> 12 months from the date <strong>of</strong>exercise <strong>of</strong> the options, the cessation <strong>of</strong>employment <strong>of</strong> the executive or on a change incontrol <strong>of</strong> OneSteel.Restrictions on exercise: An option may only beexercised between three to nine years after thedate the option is granted, subject to the rules <strong>of</strong>the EOP, any applicable performance hurdles, anyminimum holding period, and any other exerciserestrictions imposed by the OneSteel Board.Options may be exercised before expiry <strong>of</strong> anyminimum holding period and satisfaction <strong>of</strong> anyperformance hurdles if the executive dies, retires,is made redundant, becomes disabled, or if thereis any change in control <strong>of</strong> OneSteel.Lapse: An unexercised option will lapse on theearlier <strong>of</strong> the last exercise date (generally nineyears after the date <strong>of</strong> grant unless determinedotherwise by the OneSteel Board), the date sixmonths after the termination <strong>of</strong> employment, inthe event the executive dies, retires, is maderedundant or becomes disabled, or the date onemonth after the eligible executive ceases to beemployed by the OneSteel Group for any otherreason (other than dismissal for cause) or thedate determined by the OneSteel Board if theexecutive is dismissed for cause.7.2.4 Staff Share Plan General OfferIt is proposed that all OneSteel employees will be<strong>of</strong>fered the opportunity to be allocated OneSteelShares under either the SSP Tax Exempt Plan orthe SSP Tax Deferred Plan. The key details <strong>of</strong> thisStaff Share Plan General Offer will be:Either under the SSP Tax Exempt Plan:(a) $500 worth <strong>of</strong> OneSteel Shares at no costto the participant;plus, if the participant so elects,(b) $500 worth <strong>of</strong> One Steel Shares funded by theparticipant forgoing $500 <strong>of</strong> pre-tax salary.None <strong>of</strong> the OneSteel Shares acquired under theSSP Tax Exempt Plan General Offer will be subjectto forfeiture.Or under the SSP Tax Deferred Plan:(a) $1,000 worth <strong>of</strong> OneSteel Shares at no costto the participant;plus, if the participant so elects,(b) up to $2,000 worth <strong>of</strong> OneSteel Sharesfunded by the participant forgoing thesame amount <strong>of</strong> pre-tax salary matched ona dollar for dollar basis by an additionalamount <strong>of</strong> up to $2,000 worth <strong>of</strong> OneSteelShares allocated by OneSteel to the account<strong>of</strong> the participant.The $1,000 <strong>of</strong> OneSteel Shares issued at no costto the participant, plus the matching OneSteelShares issued under the SSP Tax Deferred PlanGeneral Offer, are subject to forfeiture if theparticipant voluntarily resigns within two years <strong>of</strong>the OneSteel Shares being issued.In addition, employees, including executiveOneSteel Directors, may forgo up to 25% <strong>of</strong> theirpre-tax base salary and up to 100% <strong>of</strong> any shortterm incentive to acquire OneSteel Shares underthe SSP Tax Deferred Plan.All OneSteel Shares acquired by the participantunder the SSP Tax Deferred Plan are only subjectto forfeiture if the participant commits theft,fraud, defalcation, gross misconduct, or bringsOneSteel into disrepute.The number <strong>of</strong> OneSteel Shares to be issued underthe Staff Share Plan General Offer will be based onthe weighted average price <strong>of</strong> all OneSteel Sharestraded on the ASX on the five trading dayscommencing on a date after the Listing Date to bedetermined by the OneSteel Board.Under current Australian tax law, employees mayparticipate in either the SSP Tax Exempt Plan orthe SSP Tax Deferred Plan, but not both, in thesame tax year.7
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Impact of Spin-out on BHP and OneSteel Employees

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