The remuneration committee is committed to the principles of accountability and transparency, and to ensuring that remuneration arrangements demonstrate a clear link between reward and performance.

The members of the committee during the 2008 financial year were Mr Norborne P Cole Jr (Chairman), Mr Robert I Israel, Dr Karl Voltaire and Mr Bernard H Asher. On 29 April 2008 the following changes in membership status took place:

• Mr Israel stood down as chairman, but remained a member;
  
• Mr Cole assumed the chairmanship;
  
• Mr Asher resigned as a member; and
  
• Dr Karl Voltaire replaced Mr Asher as a member.
  

The committee met six times in the 2008 financial year, and attendance is set out in the table below. At the invitation of the committee, the chairman and the CEO attended meetings except where matters associated with their own remuneration were considered. The company secretary also attended meetings by invitation. Details of board and committee performance also appear in the corporate governance report.

REMUNERATION COMMITTEE
The committee is dedicated to the principles of accountability and transparency, and to ensuring that remuneration arrangements demonstrate a clear link between reward and performance. Operating under delegated authority from the board, its activities are governed by terms of reference (adopted by the board in June 2005), which are available on the company’s website. The committee focuses on:

• remuneration policy and its specific application to the CEO and other executives reporting to the CEO (executive committee) as well as the general application to all our employees and those of our subsidiaries;
  
• the determination of levels of reward to the CEO and other members of the executive committee;
  
• providing guidance to the chairman of the board on evaluating the performance of the CEO; and
  
• effective communication with shareholders on the remuneration policy and the committee’s work on behalf of the board.
  

The committee has access to advice and views from the human resources executive, the company secretary, other company directors and from a range of external sources, including legal and remuneration consultants. During the year, the committee employed the services of Bachelder & Dowling in the US and Kepler Associates in the UK, as well as its lawyers at Ashurst in the United Kingdom, Fulbright and Jaworski in the United States and Ogiers in Jersey. These resources assisted with the preparation of the restricted share scheme and the review of executive remuneration. Apart from providing specialist remuneration advice, Bachelder and Dowling and Kepler Associates have no links to the group.

REPORTING REQUIREMENTS
The senior management team of the company during the 2008 financial year was the executive committee and other key senior managers. Their names, photographs and titles are set out in the directors and management section of this annual report.

International Financial Reporting Standards require the company to make certain disclosures for senior key management staff who are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly. For the purposes of this report, it has been determined that the senior key management staff are the directors, the members of the executive committee and a few other key managers who served during the 2008 financial year.

REMUNERATION POLICY AND STRUCTURE
The committee recognises that the company operates in a global environment and that its performance depends on the quality of its people. It keeps the remuneration policy under regular review to ensure it is appropriate for the needs of the company.

Key principles of our remuneration policy
The key principles of our remuneration policy are to:

• provide competitive rewards to attract and retain executives of the highest calibre who are willing to work around the world and spend significant amounts of time or be based in West and/or East Africa;
  
• apply demanding key performance indicators (outputs), including financial and non-financial measures of performance;
  
• link a significant component of pay to individual and company performance to encourage and reward superior performance and to motivate our executives to facilitate the success of the company in creating value for our shareholders;
  
• ensure remuneration arrangements are equitable and facilitate the deployment of human resources around our businesses; and
  
• limit severance payments on termination to pre-established contractual arrangements that do not commit the company to making unjustified payments.
  

The committee is confident that these principles, which were applied in the year under review and will continue to be applied in the 2009 financial year and beyond, facilitate the meeting of the company’s objectives.

The remuneration payable and paid to members of the board (including executive directors) in respect of the 2008 financial year is disclosed in this report. It comprises fixed and at risk components. The manner in which these components are determined is outlined in this section. Tables showing the actual remuneration paid and payable, prepared in accordance with the requirements of the listing rules and the US Securities and Exchange Commission regulations and relevant accounting standards, are set out in this section of the annual report. A summary provided below of remuneration paid to the executive directors

 
Service contracts
It is our policy that service contracts should not exceed a one year period. The company and the executive directors can terminate the contract by giving six months’ notice in writing and can end the employment relationship immediately by making a payment equal to six months’ base salary and any retirement benefit due from the company’s provident fund contribution in lieu of notice. Our two executive directors have service contracts. These contracts typically outline the components of remuneration paid, but do not prescribe how remuneration levels are to be modified from year to year.

A new service contract was concluded with Dr DM Bristow on 28 April 2008. A service contract was concluded with Mr GP Shuttleworth when he joined the company on 1 July 2007 and an updated contract concluded on 1 July 2008. These contracts acknowledged that in accordance with best practice, periods of employment should not exceed one year. In addition, both salary and bonuses have been structured to align with the interests of the company’s shareholders by motivating the executive directors to achieve agreed and specified goals independent of short term commodity price fluctuations. The primary goals of these criteria are to ensure that the company identifies and develops new gold reserves and resources and produces gold at the lowest possible price.

EXECUTIVE DIRECTORS’ REMUNERATION
The remuneration of the executive directors comprises:

• a basic salary;
  
• an annual bonus; and
  
• the award of restricted shares.
  

The total executive directors’ remuneration for the year ended 31 December 2008, was US$12 428 613 (2007: US$3 904 483).

The directors’ bonuses were histori cally paid on an April to March cycle, and whilst these amounts were accrued during the year, the final determination of the bonus amount was made in April of each year, with reference to the company’s share price performance over this period. As such the 2008 bonus for Dr DM Bristow and Mr GP Shuttleworth, as shown below, include the amounts accrued in the first quarter of 2008, in respect of the movement in the share price from 1 April 2007 to 31 March 2008, being US$23.16 to US$50.26, based on a notional shareholding of 300 000 and 33 000 shares, respectively, the latter capped at US$400 000 and pro-rated from 1 July 2007. During 2008, in order to align Dr DM Bristow’s contract with best practice, a new contract was signed and a new bonus scheme introduced running on a calendar year basis. Consequently, the table below reflects both a portion of the April to March bonus as well as a portion of the new 2008 calendar year bonus payments. This new bonus scheme is explained in the paragraph headed “At risk remuneration”. The new bonus calculation is determined with reference to a number of performance indicators, including with reference to the company’s annual reserve growth which was finalised in March 2009. In this regard the remuneration committee determined that Dr DM Bristow should be entitled to a bonus of US$3 million and Mr GP Shuttleworth a bonus of US$225 000 for the 2008 year. Of this amount US$1.5 million was accrued for until 31 December 2008 and is included in the table below.

Neither Dr DM Bristow nor Mr GP Shuttleworth participates in the company’s share option scheme but do participate in a restricted share scheme, as set out in “long term incentives” shown below. Other than the benefits listed above, the company has no other incentive schemes, be they long term or short term.

Fixed remuneration
Fixed remuneration is made up of basic salary, which includes any provision for contributions to provident funds and medical aid membership and other benefits. It normally represents less than 50 per cent of the individual’s remuneration package (based on target performance and using expected values for share awards).

Base salary is targeted at comparative industry levels for comparable experience and ability in global companies of similar complexity and size. Special consideration is also made with respect to the amount of personal commitment to extensive travel and time spent at the company’s operations, which is considered critical in being able to effectively manage the company’s business. Market data is used to benchmark salary levels and to inform decisions on base salary changes. Base salaries are set by reference to the scope and nature of the individual’s performance beyond what is considered the minimum requirement for the job as well as experience and ability, and are reviewed each year. The review takes into account personal performance against agreed criteria, any change in the scope of the role performed by the individual, the relevant experience gained to date by the incumbent in the role, any changes required to meet the principles of the remuneration policy and the company’s market competitiveness.

Retirement benefits are delivered under defined contribution plans and in the case of executive directors are funded out of the total base salary package as agreed with the individual.

Other benefits include health insurance, medical aid, social club fees to facilitate the entertainment of business associates, cost of providing security services for executives who travel extensively on company business, relocation costs, professional associations membership costs, life assurance and tax advisory services as applicable. All such benefits are non-pensionable and end when the employee leaves the company’s service, for whatever reason.

At risk remuneration
At risk remuneration is geared to individual and group performance and is made up of short term and long term incentives. It represents the major proportion of the individual’s remuneration package if targeted performance is achieved. Short term incentives are delivered annually under the annual bonus schemes.

Executive directors’ service contracts provide for the payment of an annual bonus which is subject to performance criteria. In respect of Dr DM Bristow, the annual bonus was determined by the board (after receiving proposals from the remuneration committee) based on the achievement of certain performance criteria. The performance criteria identified were:

• Annual production in ounces measured against the budget.
  
• Reserve replacement as calculated on a three year rolling average in arrears.
  
• Specific performance outputs agreed at the annual strategic planning review.
  
• Annual financial performance of the group as measured by earnings before interest, tax, depreciation and amortisation (EBITDA)

The above criteria are equally weighted.

The total calculated criterion percentage score must equal or exceed 80% to qualify for a bonus. The calculated bonus is converted to a total bonus percentage by using the conversion shown below.

Each percentage point above 80% increases the total bonus percentage progressively. The total bonus is capped at 300%.

The above criteria focuses the CEO on achieving annual goals that contribute to sustainable shareholder value and provide significant bonus differential based on performance against challenging personal, business and other targets.

Mr GP Shuttleworth is entitled to an annual bonus, the determination of which is subject to agreed performance criteria, which include ensuring that production costs per ounce are controlled within budget together with the achievement of a series of other personal objectives (outputs) that are identified at the company’s annual strategic planning workshop, agreed with the CEO and approved by the board. In addition, the performance of the company’s share price over a 12 month period based on a notional shareholding of 33 000 ordinary shares, with a fixed total maximum bonus ceiling amount of US$400 000 per annum. By agreement, the CFO’s bonus criteria are weighted more toward the delivery against specific outputs than the share performance. The reason being that given his recent engagement, it is important that his activities are focused on gaining maximum understanding of the company’s business as well as specific experience of its operations. The committee believes that these bonuses effectively incentivise short term performance.

LONG TERM INCENTIVES
A further component of the remuneration for executive directors, in terms of the shareholder approved share scheme, approved on 28 July 2008 is an award of restricted shares that are awarded periodically. The gold mining industry is capital intensive, cyclical and long term. Outstanding performance comes from finding and accessing high quality resources, successfully developing new projects and maintaining efficient and safe operations. The committee believes that in this environment, success can best be measured by the company’s performance being measured against the HSBC Global Mining Index. The HSBC Global Mining Index is a capitalisation - weighted index calculated in dollars (US$). The services represent the mining industries of 21 countries for securities with a market capitalisation generally in excess of US$50 million. The services have a base of 100 on 31 December 1985, with the exception of two Latin American indices which are based at 100 at 31 December 1989. A copy of the graph is shown below.

In terms of his service contract and in accordance with the Randgold Resources Restricted Share Scheme, Dr DM Bristow was awarded 40 000 restricted shares in August 2008, subject to agreed performance criteria and with a one year vesting period. In order to bring future awards of restricted shares in line with a three year vesting period, the remuneration committee has proposed and the board agreed to the following recommendation:

• 40 000 restricted shares with an award date of 1 January 2009, two thirds vesting on 1 January 2010 and the remaining third vesting on 1 January 2011;
  
• 40 000 restricted shares with an award date of 1 January 2009, one third vesting 1 January 2010, one third vesting 1 January 2011 and the final third vesting 1 January 2012; and
  
• 40 000 restricted shares with an award date of 1 January 2010, one third vesting 1 January 2011, one third vesting 1 January 2012 and the final third vesting 1 January 2013.
  

All the newly awarded restricted shares are subject to the achievement by the company of a performance bettering the HSBC Global Gold Mining Index.

Mr GP Shuttleworth, in terms of his contract and in accordance with above approved Randgold Resources Restricted Share Scheme, was awarded 36 000 restricted shares.

In accordance with the terms of the contract and having met the agreed performance criteria, the first tranche of a third of the restricted shares vested on 1 July 2008, with the second and third tranches vesting on 1 July 2009 and 1 July 2010 respectively. The vesting of any portion of the award is subject to the employee being employed and achieving a satisfactory performance based on agreed criteria, including an overall “strategic output” achievement score of 70% or greater, for the 12-month period preceding each vesting date.

NON-EXECUTIVE DIRECTORS’ REMUNERATION

Basic fee
In April 2008, following both the recommendations of the remuneration committee and the board, shareholders approved a revised policy on non-executive directors’ remuneration. No additional changes are proposed for 2009 and non-executive directors’ remuneration will continue to comprise:

• a general annual retainer to all non-executive directors of US$50 000;
  
• an annual committee assignment fee:
  
  • audit committee US$35 000;
    
  • remuneration committee US$25 000;
  • nomination and governance committee US$10 000;
    
• the chairman of a board committee to receive an additional premium to the committee assignment fee of US$15 000;
  
• the senior independent director, in addition to the general annual retainer but in lieu of any committee assignment fee, to receive an additional US$85 000;
  
• the non-executive chairman, in addition to the general annual retainer, but in lieu of any committee assignment fee, to receive an additional US$170 000;
  
• an award to each director of restricted shares being 1 200 ordinary shares per year. The shares are to vest over a three year period from the date of the award, being 1 January 2010. Vesting would accelerate on the following conditions:
  
  • termination other than resignation or dismissal;
    
  • voluntary retirement after the age of 65, with a minimum of three years service as a director; and
    
  • change in control of the company.
    

The award in 2008 of US$30 000 to each non-executive director translated into share grants which vest over a three year period from the date of the award, while the award of 1 200 shares for 2009 to the non-executive directors also vest over a three year period. The annual general meeting held on 28 April 2008 approved the award of restricted shares to non-executive directors as at 1 January 2009.

Share options
In respect of the non-executive directors, the last options were awarded in 1998. In November 2008, Mr R Israel exercised his 25 400 share options by acquiring the shares. Currently one non-executive director has not exercised his options.

NON-EXECUTIVE DIRECTORS’ SHAREHOLDING
A non-executive director must hold shares at least equal in value (as at the beginning of the year) to the general annual retainer. New directors are granted three years in which to acquire the required shareholding and this period could be extended by the unanimous approval of the disinterested directors. If the number of shares were to fall below the threshold due to a fall in the share price, no additional purchase of shares would be required. Save for Mr Walden, who was appointed to the board in November 2008 and only obtained his first restricted shares with effect from 1 January 2009, the remaining non-executive directors hold shares equal to the value of the general annual retainer.

Mr CL Coleman, who was also appointed to the board in November 2008, acquired 1 400 ordinary shares on 26 November 2008, which when valued at the closing price of the company’s shares on the Nasdaq Global Market on 31 December 2008, exceeded the value of the general annual retainer.

In terms of the US$30 000 awarded to each non-executive director on 1 January 2006, the third tranche of 584 shares were issued on 1 January 2008. Regarding the US$30 000 awarded to each non-executive director on 1 January 2007, 447 shares were issued on 1 January 2008, the third and final tranche of 447 shares were issued on 1 January 2009. In terms of the US$30 000 awarded to each non-executive director on 1 January 2008, the second tranche of 262 shares were issued on 1 January 2009 and the remaining 262 will be issued in on 1 January 2010. In respect of the 1 200 shares awarded on 1 January 2009, the first tranche of 400 shares vested on the date of the award, with the second tranche vesting on 1 January 2010 and the third and final tranche vesting on 1 January 2011.