| Remuneration Report |
| ROLE OF THE REMUNERATION COMMITTEE AND TERMS OF REFERENCE |
| The Remuneration Committee is a committee of the Board of directors and is responsible for: |
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Making recommendations to the Board on the general policy on executive remuneration, benefits, conditions of
service and staff retention. |
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Determining the specific remuneration packages of executive directors and senior management of the Company
including, but not limited to, basic salary, performance-based short- and long-term incentives, pensions and other
benefits. |
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The design and operation of the Company's share incentive schemes. |
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| The full terms of reference of the committee are included on the Company’s website. |
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| MEMBERSHIP OF THE REMUNERATION COMMITTEE DURING 2007 |
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Tom Wixley (chairman) |
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Fred Phaswana |
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Richard Dunne (appointed 14 May 2007) |
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Russell King (appointed 27 July 2007) |
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All members of the committee are non-executive directors, of whom two are independent, including the chairman.
While not in strict compliance with the King II Code of Corporate Practice and Conduct which requires a majority
of independent non-executive directors, the Board considers the composition of the committee to be appropriate
in terms of the necessary blend of knowledge, skill and experience brought to the committee by its members.
The committee met five times during 2007. The chief executive officer and, in recent months, the joint acting chief
executive officers attend the committee meetings by invitation and assist the committee in its deliberations, except
when issues relating to their own compensation are discussed. No director is involved in deciding his or her own
remuneration. In 2007, the committee was advised by the Group's finance and human resources functions, as well as
PricewaterhouseCoopers, who assisted with the implementation and verification of calculations pertinent to the
executive incentive schemes.
The Company's auditors, Deloitte & Touche, have not provided advice to the committee. However, in their capacity
as Group auditors, they undertake agreed upon procedures on the remuneration of directors. |
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| REMUNERATION POLICY AND EXECUTIVE REMUNERATION |
| Principles of executive remuneration |
| Anglo Platinum's remuneration policy aims to attract and retain high-calibre executives and to motivate them to
develop and implement the Company's business strategy in order to optimise long-term shareholder value creation.
The policy conforms to best practice standards and is based on the following principles: |
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Total rewards are set at levels that are competitive within the relevant market. |
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Incentive-based rewards are earned through the achievement of demanding performance conditions consistent
with shareholder interests over the short, medium and long term. |
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Incentive plans, performance measures and targets are structured to operate effectively throughout the business
cycle. |
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The design of long-term incentives is prudent and does not expose shareholders to unreasonable financial risk. |
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| Elements of executive remuneration |
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Base salary |
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Benefits |
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Annual bonus |
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Long-term incentives |
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The committee seeks to ensure an appropriate balance between the fixed and performance-related elements of
executive remuneration, and between those aspects of the package linked to short-term financial performance and
those linked to longer-term shareholder value creation. The committee considers each element of remuneration
relative to the market and takes into account the performance of the Company and the individual executive in
determining both quantum and design.
The policy relating to each component of remuneration is summarised below: |
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| Base salary |
| The base salary of the executives is subject to annual review. It is set to be competitive at the median level, with
reference to market practice in companies comparable in terms of size, market sector, business complexity and
international scope. Company performance, individual performance and changes in responsibilities are also taken into
consideration when determining annual base salaries. |
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| Benefits |
| Benefits for executives include membership of a retirement fund and medical aid, to which contributions are made
by the executives and the Company. |
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| Annual bonus |
All executives are eligible to participate in an annual bonus plan, with payment levels based on corporate and
individual performance. Bonus potentials are set on an individual basis each year. The bonus plan is non-contractual
and not pensionable. The committee retains the discretion to make adjustments to bonuses earned at the end of the
year on an exceptional basis, taking into account both Company performance and the overall and specific contribution
of individual executives to meeting the Company's objectives.
The performance measures for the annual bonus plan include corporate performance targets as well as specific
individual objectives. The corporate element in 2007 was based upon stretching production, cost and profitability
targets. A reduction is made in cases where safety targets have not been achieved.
The committee reviews measures annually to ensure that these, and the targets set, are appropriate given the economic
context and the performance expectations for the Company. It is the committee's policy to base 75% of each annual
bonus award on the corporate measures and the remaining 25% on the personal key performance indicators. |
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| Long-term incentives |
| Since 2004 a new set of share incentive schemes have been in operation. These schemes are in line with best
international practice in this field and replaced the Anglo American plc long-term incentive schemes in which
executive directors formerly participated. The vesting of awards under the Executive Share Appreciation Scheme and
Long-term Incentive Plan is subject to a number of performance conditions, which are designed to align the interests
of senior executives with those of the Company's shareholders. The shareholding requirements for executives
outlined below further strengthen the alignment. These schemes apply to senior executives. |
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| Executive Share Option Scheme (ESOS) |
| The Remuneration Committee gives consideration to making allocations of share options to executives on an annual
basis. On 1 March 2007, the remuneration committee made an allocation of share options in terms of this scheme to
all senior executives. The option is conditional on performance and is subject to a three-year vesting period. The option
price is set at the market price on the date immediately prior to allocation. Shares equal to the value of the growth of
the option from the allocation date to the exercise date will be transferred to the participants upon exercising,
provided that the performance condition has been met. The performance condition is an increase in headline earnings
per share measured in US dollars of at least 6% over the three-year period. Options are normally exercisable, subject
to satisfaction of the performance condition, between three and ten years from the date of grant. |
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| Long-term Incentive Plan (LTIP) |
| Annual conditional allocations of LTIP shares are made to the executives. The shares vest over a three-year period
subject to the achievement of two stretching performance measures over this period: total shareholder return
measured against a group of comparable companies, and return on capital employed. These performance conditions
have been selected on the basis that they clearly foster the creation of shareholder value. The LTIP closely aligns the
interests of shareholders and executives by rewarding superior shareholder and financial performance, and by
encouraging executives to build up a shareholding in Anglo Platinum. |
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| Deferred Bonus Plan |
| Under the Deferred Bonus Plan, senior executives are required to defer between 50% and 100% of their bonus on
a year-by-year basis (net of tax) to acquire shares in Anglo Platinum. If these shares are held for three years, they are
matched by the Company on a one-for-one basis (or in such specified ratio as determined by the Remuneration
Committee), conditional upon the executive's continued employment. Use of this share match will allow Anglo
Platinum to maintain competitiveness in annual bonus plan levels and encourage executives to invest in the shares of
the Company, thus increasing the proportion of executive rewards linked to both short-term performance and
longer-term total shareholder returns. The deferred bonus and share match will also act as a retention tool, and
ensure that senior executives share a significant level of personal risk with the Company's shareholders. |
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| Executive shareholding targets |
Within five years of their appointment, members of the Executive are expected to accumulate a holding of shares
and conditional awards in the company with a value of 150% of annual base salary for the CEO and 100% of annual
base salary in the case of other executives. In accumulating holdings, executives are not required to use their own
funds to purchase shares in the market as it is anticipated that the retention of all or a portion of the share incentive
awards which they receive will satisfy this goal. In measuring the extent to which the guidelines have been satisfied
holdings will be valued at closing prices at the end of each financial year and base salary will be taken at the amount
earned in respect of the year just ended.
It was noted that the current executive shareholding/awards as at 31 December 2007 for each of the seven share
schemes indicated that the shareholding in Anglo Platinum was more than adequate to fulfil the requirements of the
policy. |
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| Former share option plans |
| Certain executives still hold share options granted under the previous Anglo Platinum share option scheme. The
options were allocated at the middle market price ruling on the trading day prior to the date of allocation, vest after
stipulated periods and are exercisable up to a maximum of ten years from the date of allocation. No allocations of
these options to executive directors were made after 2004. |
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