Chairman Letter
Chairman Letter
Dear Shareholder,
The directors of Randgold Resources are seeking shareholder approval, at an extraordinary general meeting to be held on Monday 28 July 2008, for the adoption by special resolution of a new Restricted Share Scheme (“the Scheme”) to be established to provide executive directors with a long term incentive plan in accordance with the remuneration report which was approved by shareholders at the AGM in April 2008.
The Scheme is proposed in lieu of participation by the executive directors in the current employee share option scheme. The Scheme has been prepared in consultation with our legal counsel, and we believe it is standard in its structure and format and accords with industry best practice, with one deviation from UK institutional investor guidelines explained in the paragraph below. Specific performance criteria for share awards are set by the remuneration committee in consultation with the executives and approved by the board with reference to industry standards and comparative awards, and the management contracts specify minimum individual and company targets required to earn share awards. The individual performance targets are tailored to the responsibilities and challenges of each executive, while the company targets are benchmarked against Total Shareholder Returns (TSR) of other mining companies in the gold mining industry and in Africa.
Shareholders will note that the Scheme limits the aggregate number of restricted shares awarded under the Scheme over any rolling 10 year period to 5% of the outstanding issued share capital, which accords with UK institutional investor guidelines’ best practice for executive schemes. The Scheme deviates from UK institutional investor guidelines, as referred to above, in that the Scheme limits the aggregate option and restricted share grants under all employee share schemes over any rolling 10 year period to 15% of the outstanding issued share capital. The 15% limit is necessary in order to align the Scheme with the existing employee share option scheme already approved by shareholders. The aggregate number of options awarded over the last 10 years under the employee share scheme currently equates to 14% of the issued share capital. However, after taking into consideration options already exercised the current options awarded over such 10 year period and currently outstanding equates to only 4% of the company’s issued share capital. The Board is of the view that the current share option scheme has had a material impact on the retention and motivation of its staff and the company’s performance. The existing share option scheme is the only incentive in place to motivate and reward management performance, as the Board believes that equity awards best align management performance with the interests of shareholders. Except for the CEO and CFO, the company has no cash bonus scheme for management. The following table illustrates the extent to which the company’s share price has consistently outperformed a global gold mining equity index over a number of different time periods.
Relative Share Price Performance (to 31 December 2007)
Furthermore, and in line with the board’s commitment to also comply with UK institutional investor guidelines, since our 2008 annual general meeting the remuneration committee has been re-constituted. One new member has been added, an existing member will serve as chairman, and the former chairman will continue to serve as a member of the committee and provide continuity in its deliberations. The board believes that the new composition of this committee should address concerns that UK institutional investor organisations may have had in the past.
ADR holders are advised that an announcement will be issued by the Bank of New York Mellon providing a mechanism to ensure that their vote is recorded and included in the tabulation of the votes. However, such ADR holders should ensure that their proxy cards are returned to the Bank of New York Mellon by 21 July 2008. Notice of the extraordinary general meeting and a proxy form for ordinary shareholders is enclosed. In order to be valid, the form of proxy must be lodged with the Company's registrars, Computershare Investor Services (Channel Islands) Limited, by not later than 48 hours before the time of the meeting. The completion and return of a form of proxy will not prevent you from attending and voting in person should you so wish.
Accordingly, on behalf of my colleagues on the board, I would recommend that shareholders vote in favour of the special resolution.
The directors of Randgold Resources are seeking shareholder approval, at an extraordinary general meeting to be held on Monday 28 July 2008, for the adoption by special resolution of a new Restricted Share Scheme (“the Scheme”) to be established to provide executive directors with a long term incentive plan in accordance with the remuneration report which was approved by shareholders at the AGM in April 2008.
The Scheme is proposed in lieu of participation by the executive directors in the current employee share option scheme. The Scheme has been prepared in consultation with our legal counsel, and we believe it is standard in its structure and format and accords with industry best practice, with one deviation from UK institutional investor guidelines explained in the paragraph below. Specific performance criteria for share awards are set by the remuneration committee in consultation with the executives and approved by the board with reference to industry standards and comparative awards, and the management contracts specify minimum individual and company targets required to earn share awards. The individual performance targets are tailored to the responsibilities and challenges of each executive, while the company targets are benchmarked against Total Shareholder Returns (TSR) of other mining companies in the gold mining industry and in Africa.
Shareholders will note that the Scheme limits the aggregate number of restricted shares awarded under the Scheme over any rolling 10 year period to 5% of the outstanding issued share capital, which accords with UK institutional investor guidelines’ best practice for executive schemes. The Scheme deviates from UK institutional investor guidelines, as referred to above, in that the Scheme limits the aggregate option and restricted share grants under all employee share schemes over any rolling 10 year period to 15% of the outstanding issued share capital. The 15% limit is necessary in order to align the Scheme with the existing employee share option scheme already approved by shareholders. The aggregate number of options awarded over the last 10 years under the employee share scheme currently equates to 14% of the issued share capital. However, after taking into consideration options already exercised the current options awarded over such 10 year period and currently outstanding equates to only 4% of the company’s issued share capital. The Board is of the view that the current share option scheme has had a material impact on the retention and motivation of its staff and the company’s performance. The existing share option scheme is the only incentive in place to motivate and reward management performance, as the Board believes that equity awards best align management performance with the interests of shareholders. Except for the CEO and CFO, the company has no cash bonus scheme for management. The following table illustrates the extent to which the company’s share price has consistently outperformed a global gold mining equity index over a number of different time periods.
Relative Share Price Performance (to 31 December 2007)
|
|
HSBC Global Gold Index |
Randgold Resources Limited |
Company |
|
Over 10 Years |
204% |
1303% |
640% |
|
Over 5 Years |
134% |
445% |
332% |
|
Over 3 Years |
81% |
223% |
277% |
|
Over 1 Year |
20% |
57% |
290% |
Furthermore, and in line with the board’s commitment to also comply with UK institutional investor guidelines, since our 2008 annual general meeting the remuneration committee has been re-constituted. One new member has been added, an existing member will serve as chairman, and the former chairman will continue to serve as a member of the committee and provide continuity in its deliberations. The board believes that the new composition of this committee should address concerns that UK institutional investor organisations may have had in the past.
ADR holders are advised that an announcement will be issued by the Bank of New York Mellon providing a mechanism to ensure that their vote is recorded and included in the tabulation of the votes. However, such ADR holders should ensure that their proxy cards are returned to the Bank of New York Mellon by 21 July 2008. Notice of the extraordinary general meeting and a proxy form for ordinary shareholders is enclosed. In order to be valid, the form of proxy must be lodged with the Company's registrars, Computershare Investor Services (Channel Islands) Limited, by not later than 48 hours before the time of the meeting. The completion and return of a form of proxy will not prevent you from attending and voting in person should you so wish.
Accordingly, on behalf of my colleagues on the board, I would recommend that shareholders vote in favour of the special resolution.
Kind Regards,
Philippe Liétard
Chairman