Integrated Annual Review 2012 Annual Financial Report 2012 Mineral Resources and Mineral Reserves Regional overview  
 

4.2.1 Summary of the Remuneration Report

This is a summary of the key points of the remuneration report is a summarised version of the key points of the remuneration report published in the Annual Financial Report 2012, which is contained on the CD attached to this Integrated Annual Review 2012 as well as on our website (www.goldfields.co.za).

Remuneration policy

The key principles of our remuneration policy are unchanged:

  • Support the execution of the Group’s business strategy
  • Provide competitive rewards to attract, motivate and retain highly skilled executives
  • Motivate and reinforce individual, team and business performance
  • Ensure our remuneration arrangements are equitable and help the deployment of people across the Group’s operations.

The principle of performance-based remuneration is one of the cornerstones of the reward strategy. The reward strategy is also underpinned by sound remuneration management and governance principles.

The Gold Fields reward strategy includes the following elements:

  • Salary
  • Benefits
  • Annual bonus
  • Long-term incentive
    Bonus shares
    Performance shares

Remuneration mix

Gold Fields’ remuneration philosophy is aimed at attracting and retaining motivated, high-calibre employees aligned with the interests of shareholders. Such alignment is achieved through the right mix of guaranteed and performance-based remuneration (variable pay), which provides for differentiation between high, average and low performers. Generally, the more senior the employee, the higher the proportion of variable pay in their total package.

Salary

Gold Fields aims to reward its people fairly and consistently according to their role and individual contribution to the Company. To achieve external equity and competitive remuneration, Gold Fields uses surveys of peer-group mining companies. The benchmark for salaries is the market median for the relevant market, with a significant proportion of performance-related variable pay comprising short, medium and long-term incentives.

As a global company, with the majority of our operations now outside South Africa, we expect our senior executives to have experience in a number of different countries. We therefore compete for talent in a global marketplace. To achieve these goals, in 2012 the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) were awarded significant increases in their salaries. For 2013, however, their salaries and those of other senior executives have been frozen due to the challenging economic times and in light of the revenue lost in 2012 due to the illegal strike action. Fees for non-executive directors in 2013 are also unchanged.

Annual bonus

Executive directors are able to earn bonuses of 60% (for the CFO) and 65% (for the CEO) of their salaries for on-target performance, which is a combination of Company and personal performance. The annual bonus could increase above 60% and 65% respectively if the stretch target is achieved. The maximum bonus is capped at twice the on-target bonus percentage.

Targets for annual bonuses are set by the committee. In the case of the CEO and CFO, 65% of the annual bonus is based on Group objectives and the remaining 35% on personal objectives. For the regional EVPs, bonuses are also judged against regional and operational objectives.

Operational objectives are measured against the operational plans approved by the Board and cover safety, production, costs and progress in developing long-term ore reserves. These operational objectives roll into the regional objectives and subsequently into the Group objectives.

Aside from those four key drivers, the CEO and CFO were also assessed on personal objectives. Personal objectives are set every year for each executive based on key performance areas and are approved at the beginning of the year by the committee. The personal objectives are centred around three themes: Operational excellence, Growing Gold Fields and Securing our future.

Taking all these factors into account, the average bonus paid to members of the executive team in February 2013 was 47% of annual salary; for the CFO it was 61% of annual salary; and for the CEO 77% of annual salary.

The Group objectives for 2013 comprise five elements, weighted as follows:

  Safety: 30% (2012: 39%)
  Total gold production: 20% (2012: 23%)
  Notional cash expenditure: 20% (2012: 23%)
  Growth portfolio: 15% (2012: 0%)
  Development or waste mined: 15% (2012: 15%)

The share plan

The company operates a long-term incentive share plan designed to:

  • Encourage senior and key employees to identify closely with the long-term objectives of Gold Field
  • Align their interests with the continuing growth of the company and delivery of value to its shareholders
  • Allow them to participate in the future financial success of Gold Fields

Gold Fields 2012 Share Plan contains two equity instruments: Performance Shares and Bonus Shares. Share awards are made annually to senior and key staff, and any pay-out depends on outcomes independently reviewed by an external auditor.

Performance Shares: The actual number of Performance Shares awarded to a participant is determined by the Company’s share price performance measured against the performance of a peer group.

A precondition for any award of Performance Shares is that gold production exceeds a minimum of 85% of the annual target over a three-year measurement period.

Bonus Shares: The size of the award of Bonus Shares depends on an employee’s annual cash bonus, which is determined by actual performance against predetermined targets. Two-thirds of the cash bonus is awarded in Bonus Shares.

Last year the long-term share plan paid out considerable sums, largely because of the strength of Gold Fields share price in the three years 2009 to 2011. Gold Fields was ranked first in its peer group which resulted in a 300% settlement of the initial shares awarded in 2009. This outperformance accounts for more than 95% of share proceeds, listed in the table below.

Non-executive directors’ fees, executive directors’ and prescribed officers’ remuneration

The directors and officers were paid the following remuneration for the year ended at 31 December 2012:

  Board fees       Performance pay                  
Names Directors’
fees
(R’000)
  Committee
fees
(R’000)
  Salary
(R’000)
  Annual
bonus1
(R’000)
  Share
proceeds2
(R’000)
  Pension
scheme
total
contributions
(R’000)
  Expense
allowances
(R’000)
  For the
year ended
31 December
20123
(R’000)
  For the
year ended
31 December
2011
(R’000)
 
Executive directors                                    
Nicholas J Holland3     9,310   8,460   25,389   1,573   600   45,332   32,699  
Paul A Schmidt3     5,465   5,553   8,001   614   327   19,960   8,793  
Prescribed officers                                    
Zakira Amra4     2,250           128     2,378   2,192  
Naseem A Chohan     2,464   1,402   236   325     4,427   3,279  
Jimmy Dowsley     3,115   3,298   4,110   765     11,288   7,208  
Michael D Fleischer3     4,603   4,307   8,462   741     18,113   11,172  
Juan L Kruger     4,753   5,726   5,455   916     16,850   13,933  
Tommy McKeith     7,391   3,782   7,985   212     19,370   11,996  
Kgabo FL Moabelo     3,499   3,102   321   467     7,389   4,412  
Tim W Rowland     3,227   2,679   4,854   595   71   11,426   6,388  
Peet van Schalkwyk3     4,827   2,771   113       7,711   3,609  
Peter L Turner     5,032   3,394   4,521   798     13,745   10,197  
Richard Weston     5,483   2,909   20   632     9,044   7,491  
Willie Jacobsz5     2,102   3,325   3,551       8,978    
Non-executive directors                                    
Kofi Ansah 758   214       410       1,382   908  
Cheryl A Carolus 758   107             865   808  
Roberto Dañino 758   364       412       1,534   866  
Alan R Hill 758   107             865   808  
Richard P Menell 758   418             1,176   1,096  
David N Murray 758   371       411       1,540   966  
Donald MJ Ncube 758   249       413       1,420   997  
Mamphela Ramphele6 2,284               8   2,292   2,102  
Rupert L Pennant-Rea 758   513             1,271   1,064  
Gayle M Wilson 758   583       414     117   1,872   1,143  
Delfin L Lazaro 758   107             865   454  
Matthews S Moloko7 758   142             900   735  
Chris von Christierson                 404  
Total 10,622   3,175   63,521   50,708   75,078   7,766   1,123   211,993   135,720  

1 The annual bonus relates to bonus accruals for the year ended 31 December 2012 paid in February 2013
2 This relates to all share transactions for the year ended 31 December 2012 in terms of the Gold Fields Management Incentive Scheme and the Gold Fields 2005 and 2012 Share Plans. Mr Holland’s 2009 share award resulted in a pay-out of R24.3 million and Mr Schmidt’s 2009 share award resulted in a pay-out of R6.4 million in 2012
3 These amounts reflect the full directors’ emoluments in Rand for comparative purposes. The portion of executive directors’ emoluments payable in US$ is paid in terms of agreements with the offshore subsidiaries for work done by directors offshore for offshore companies. The total US$ amounts paid for 2012 were as follows: Mr NJ Holland US$336,300, Mr PA Schmidt US$90,300, Mr MD Fleischer US$77,303 and Mr P van Schalkwyk US$272,924
4 Resigned 31 May 2012
5 Appointed as a prescribed officer on 1 August 2012
6 Resigned as Chair of the Board on 13 February 2013
8 Resigned as non-executive director on 31 December 2012