RNS Number:3202R
Virotec International Ld
27 October 2003
NOTICE OF ANNUAL GENERAL MEETING
Virotec International Ltd
ACN 004 801 398
Notice is given that the Annual General Meeting of Virotec International Ltd
('Company') will be held at 10.00am on 28 November 2003 at the Jock Robertson
Auditorium, McCullough Robertson Lawyers, Level 16, Central Plaza Two, 66 Eagle
Street, Brisbane, Queensland, Australia.
Items of Business
Item 1: Financial Statements and Reports
To receive and consider the Financial Report and the Reports of the Directors
and the Auditor in respect of the year ended 30 June 2003.
Item 2: Election of Directors
To consider and, if thought fit, to pass the following ordinary resolution:
'That Bruno Bamonte who retires by rotation in accordance with the Company's
constitution, and being eligible, be re-elected as a director of the Company'.
Item 3: Election of Director
To consider and, if thought fit, to pass the following ordinary resolution:
'That Michael Nissen who retires as previously required by the Corporations Act,
be re-elected as a director of the Company.'
Item 4: Ratification of Share Issue
To consider and, if thought fit, to pass the following ordinary resolution:
'That for the purposes of ASX Listing Rule 7.1, the issue of 25,000,000 ordinary
shares in the Company which was conducted in September 2003 be ratified.'
Item 5: Equity Components of Remuneration - Brian Sheeran, Chairman and
Chief Executive Officer
To consider and, if thought fit, to pass the following ordinary resolution:
'That each of the following is approved for the purpose of ASX Listing Rules 7.1
and 10.14 and sections 200B and 200E of the Corporations Act:
(a) the issue to Brian Sheeran, as part of a short-term incentive plan of
Virotec International Ltd (Virotec) and on the basis, at the times and subject
to the conditions described in the Explanatory Notes to the Notice convening
this Meeting including the Annexures (Explanatory Notes), of:
(i) Virotec Shares having an aggregate value of a maximum of Mr Sheeran's
short-term incentive award in respect of the years ending on 30 June 2003, 2004
and 2005; and
(ii) up to one additional Virotec Share for each Virotec Share previously
issued to Mr Sheeran with approval under sub-paragraph (a)(i) of this
resolution;
(b) the grant to Mr Sheeran, as part of a long-term incentive plan of Virotec
and on the basis, at the times and subject to the conditions described in the
Explanatory Notes, of up to 2,000,000 Performance Rights and the issue to Mr
Sheeran of Virotec Shares upon the exercise of those Performance Rights; and
(c) the giving by Virotec of benefits in connection with Mr Sheeran's retirement
or resignation from, or loss of, office (including through death) as Chairman
and Chief Executive Officer of Virotec as part of a long-term incentive plan or
short-term incentive plan of Virotec and on the basis described in the
Explanatory Notes."
Item 6: Equity Components of Remuneration - Bruno Bamonte, Director and Chief
Financial Officer
To consider and, if thought fit, to pass the following ordinary resolution:
'That each of the following is approved for the purpose of ASX Listing Rules 7.1
and 10.14 and sections 200B and 200E of the Corporations Act:
(a) the issue to Bruno Bamonte, as part of a short-term incentive plan of
Virotec International Ltd (Virotec) and on the basis, at the times and subject
to the conditions described in the Explanatory Notes to the Notice convening
this Meeting including the Annexures (Explanatory Notes), of:
(i) Virotec Shares having an aggregate value of a maximum of Mr Bamonte's
short-term incentive award in respect of the year ending on 30 June 2003, 2004
and 2005; and
(ii) up to one additional Virotec Share for each Virotec Share previously
issued to Mr Bamonte with approval under sub-paragraph (a)(i) of this
resolution;
(b) the grant to Mr Bamonte, as part of a long-term incentive plan of Virotec
and on the basis, at the times and subject to the conditions described in the
Explanatory Notes, of up to 1,400,000 Performance Rights and the issue to Mr
Bamonte of Virotec Shares upon the exercise of those Performance Rights; and
(c) the giving by Virotec of benefits in connection with Mr Bamonte's retirement
or resignation from, or loss of, office (including through death) as Director
and Chief Financial Officer of Virotec as part of a long-term incentive plan or
short-term incentive plan of Virotec and on the basis described in the
Explanatory Notes.'
Item 7: Issue of Shares - Non-executive Directors
To consider and, if thought fit, to pass the following ordinary resolution:
'That for the purposes of ASX Listing Rules 10.11 and 7.1, the issue of shares
to non-executive directors Dr Michael Nissen, Dr David McConchie and Mr John
Glynn on the basis described in the Explanatory Notes be approved.'
Item 8: Grant of Options - Associate of Director
To consider and, if thought fit, to pass the following ordinary resolution:
'That for the purposes of ASX Listing Rules 10.14 and 7.1, the grant of options
to acquire ordinary shares in the Company to Ms Fiona Davies-McConchie, an
associate of Dr David McConchie, on the basis described in the Explanatory Notes
be approved.'
By Order of the Board
A J Craig
Company Secretary
20 October 2003
Venue for Meeting
The Annual General Meeting is to be held in the Jock Robertson Auditorium,
McCullough Robertson Lawyers, Level 16 Central Plaza Two, 66 Eagle Street,
Brisbane, Queensland, Australia.
Determination of entitlement to attend and vote at the Meeting
Virotec has determined, in accordance with the Corporations Act, that for the
meeting or any adjourned meeting, shares will be taken to be held by those
persons recorded in the Company's register of members as at 7.00pm AEST on 26
November 2003.
Voting exclusion statement
Virotec will disregard:
* any votes cast on the proposed resolution set out in Item 4
(Ratification of Share Issue) by any person or entity that participated in the
issue or any of their associates;
* any votes cast on the proposed resolution set out in Item 5 (Equity
Components of Remuneration - Brian Sheeran, Chairman and Chief Executive
Officer) by Brian Sheeran or any associate of his;
* any votes cast on the proposed resolution set out in Item 6 (Equity
Components of Remuneration - Bruno Bamonte, Director and Chief Financial
Officer) by Bruno Bamonte or any associate of his; and
* any votes cast on the proposed resolution set out in Item 7 (Share Issue
to Non-executive Directors) by Michael Nissen, John Glynn or David McConchie or
any of their associates.
* any votes cast on the proposed resolution set out in Item 8 (Share Issue
to Fiona Davies McConchie) by Fiona Davies-McConchie, David McConchie or any of
their associates.
However, Virotec will not disregard a vote if:
* it is cast by any of those persons as proxy for a person who is entitled
to vote, in accordance with directions on the proxy form; or
* it is cast by the Chairman of the Meeting as proxy for a person who is
entitled to vote, in accordance with a direction on the proxy form to vote as
the proxy decides.
Voting by proxy
A shareholder who is entitled to attend and vote at the Meeting may appoint a
proxy to attend and vote at the Meeting on behalf of that shareholder. A proxy
need not be a shareholder of Virotec. If a shareholder is entitled to cast two
or more votes at the Meeting, the shareholder may appoint two proxies and may
specify the proportion or number of votes each proxy is appointed to exercise.
If the appointment does not specify the proportion or the number of the
shareholder's votes that each proxy may exercise, each proxy may exercise half
of the shareholder's votes on a poll.
Proxies may be lodged with Virotec:
* by mail: Virotec International Ltd, PO Box 188, Sanctuary Cove QLD
4212, Australia
* by facsimile: +617 5530 8052
Proxies may be lodged with Computershare Investor Services Pty Ltd:
* by mail: Computershare Investor Services, GPO Box 523, Brisbane QLD 4001
* by facsimile: +617 3229 9860
To be effective, Virotec must receive the completed proxy form and, if the form
is signed by the shareholder's attorney or authorised representative, the
authority under which the proxy form is signed (or a certified copy of the
authority) by no later than 10.00am AEST on 26 November 2003.
Explanatory Notes
Item 1: Financial Statements and Reports
The Corporations Act and Virotec's Constitution require the following reports in
respect of the financial year of Virotec ended on 30 June 2003 to be laid before
the Meeting:
* the Financial Report (which includes the financial statements and
Directors' declaration); and
* the Directors' Report and the Auditor's Report.
Shareholders will be given a reasonable opportunity at the Meeting to ask
questions and make comments on these Reports and on the business, operations and
management of Virotec and the Virotec Group.
There is no requirement either in the Corporations Act or Virotec's Constitution
for shareholders to approve the Financial Report, the Directors' Report or the
Auditor's Report.
Item 2: Election of Director
Mr. Bruno Bamonte - Director and Chief Financial Officer - (45 years)
Mr. Bamonte is a Chartered Accountant and a member of the Australian Institute
of Company Directors. He has consulted to a number of public companies on a
range of areas including preparation of prospectuses, assistance to gain
admission to the official list of the Australian Stock Exchange, assistance to
seek re-quotation of shares for suspended companies, corporate governance, and
other financial areas. Mr. Bamonte has been a Director since 1997 and is a
member of the audit committee.
In accordance with the Company's Constitution, Bruno Bamonte automatically
retires at the next meeting of members and, being eligible, has offered himself
for re-election as a director of the Company. The Company's remaining directors
recommend to members that Mr Bamonte be re-elected.
Item 3: Election of Director
Dr. Michael Nissen - Non Executive Director - (75 years)
Dr Nissen is a qualified medical practitioner who graduated from Melbourne
University and is a Member of Royal College of Physicians (UK). He was
responsible for the building and was a co-owner of Florence Nightingale Hospital
in Brighton, Victoria. He was also responsible as the Chief Executive and part
owner in the development of Cedar Court Hospital in Camberwell, Victoria. He was
for 25 years the honorary medical Director of the Montefiore Homes for the aged
in Melbourne. He is a non executive director of the public company, Banque Tec
Limited. Dr. Nissen was has been a Director since 17 March 2000 and is the
Chairman of the audit committee and remuneration and nomination committee.
Under provisions of the Corporations Act which were repealed this year, a
director who is over 72 years of age was required to be offered for election
each year. Although the requirement that he be re-elected annually has been
repealed, it is proposed that Dr Nissen be re-elected as a director of the
Company at this Meeting as effectively Dr Nissen was elected for a one year term
last year. In future meetings, Dr Nissen will retire by rotation in accordance
with the Company's constitution, and the Corporations Act. The Company's
remaining directors recommend to members that Dr Nissen be elected as a director
of the Company.
Item 4: Ratification of Share Issue
On 27 August 2003, Virotec announced that it had entered into a placing
agreement with Numis Securities Limited for the issue of 25,000,000 ordinary
shares at a price of GBP ??0.14 (approximately AUD$0.34) per share. The
placement was completed on 2 September 2003 raising approximately AUD$8.19
million with the shares being issued to clients of Numis Securities Limited.
The issue was conducted to satisfy increasing investor demand for the Company's
securities in the UK and to provide additional working capital for the Company's
ongoing commercialisation and marketing of its technologies.
In accordance with Listing Rule 7.1 of the ASX listing rules, approval of this
resolution will permit the Company to issue up to 15% of the existing equity in
the Company during the next 12 months without seeking the prior approval of
shareholders. This will provide the Company with the ability to take advantage
of any opportunities that may arise without delay to further the
commercialisation of the technologies. However, there is no specific intention
to issue any further shares at this time, other than as contemplated in these
meeting documents.
The Directors recommend that shareholders vote in favour of this resolution.
Participants in the placement will not be permitted to vote on this resolution.
Items 5 and 6 - Equity components of remuneration - Brian Sheeran, Chairman and
Chief Executive Officer, and Bruno Bamonte, Director and Chief Financial Officer
Shareholder approval is being sought for the equity components of Mr Sheeran's
and Mr Bamonte's remuneration agreements which were approved by the board in
September 2003. These resolutions will be considered separately at the meeting,
however for the purposes of providing background information the incentive plans
are being presented together.
In structuring the remuneration packages offered to Mr Sheeran and Mr Bamonte
(referred to in the following information as the 'Executives' or the 'Executive'
as the context requires) as part of their terms of employment as CEO and CFO,
the Board decided that:
* most of the rewards potentially available to the Executives for their
services to Virotec should be performance-based; and
* significant components should consist of equity in Virotec in order to
more closely align the Executive's financial interests with those of Virotec's
shareholders.
In making that decision, the Board took into account the scope of Mr Sheeran's
and Mr Bamonte's roles, the immediate and longer term business challenges facing
Virotec, and market practice for executives in positions of similar
responsibility.
The Executives' remuneration packages contain a mix of base salary, short-term
incentives and long-term incentives.
The Board is proposing that the majority of the Executives' potential short-term
incentive awards and all of their potential long-term incentive awards should be
provided in the form of Virotec shares. Shareholder approval is being sought to
provide Virotec shares to the Executives as part of two separate plans:
* a Short-Term Incentive (STI) plan; and
* a Long-Term Incentive (LTI) plan.
In broad terms, the extent to which the Executives can benefit under the plans
will be linked to Virotec's performance and will depend on their continuing
employment as CEO and CFO.
These STI and LTI plans provide for the issue of shares to the Executives. As
required by the ASX listing rules, the prior approval of shareholders is
required before any securities may be issued to a director of a listed company.
Accordingly, shareholder approval is being sought in order to permit future
issues which may occur as a result of the STI and LTI plans.
Also, Virotec's STI plan and LTI plan may provide benefits to the Executives in
connection with their retirement, resignation, death or loss of office. The
Corporations Act requires shareholder approval for Virotec to give such benefits
to the Executives. Shareholder approval is being sought in order to permit
Virotec to provide these benefits.
You can read more information about these benefits and the effect of the ending
of Mr Sheeran's or Mr Bamonte's employment on their entitlements under the
Short-Term Incentive plan in Annexure A and under the Long-Term Incentive plan
in Annexure B.
The Executives joined the Company in 1997 at a time when the Company (known as
Norminco Limited) was struggling to survive with a receiver appointed and
operating under a Deed of Administration. The Executives have been instrumental
in transforming the Company from a struggling mining company to an international
environmental technology company listed both in Australia and London.
This has been an exhaustive process and has involved:
* Raising sufficient funds to retire the receiver.
* Restructuring the company debt.
* Overseeing the restructuring of the Board of Directors and
implementing a new corporate culture to the Company.
* Seeking the requotation of the Company's shares on the ASX.
* Dealing with the problems inherent in the Company's mining assets and
seeking to reposition the Company so that shareholder value would be optimised.
* Identifying the potential in, and supporting the trialling of the
BauxsolTM Technology to assist the Company in overcoming one of its major
environmental concerns from its mining operations and at the same time
recognising its potential to transform the business of the Company.
* Obtaining a global distribution and marketing licence for the BauxsolTM
Technology.
* Preparing and implementing a strategic plan to commercialise the
technology globally.
* Supporting an ongoing research and development programme that has led
to the expansion of the platform from which the BauxsolTM Technology applies and
additional technologies being developed.
* Raising further funds in the United Kingdom on two occasions, and
achieving a dual listing on the Alternate Investment Market of the London Stock
Exchange.
The above process has transformed the Company from being on the verge of
liquidation (with potentially a negative value) to a Company with a market
capitalisation of approximately $100 million over a six year period.
The Directors, apart from Mr Sheeran and Mr Bamonte, recommend that shareholders
approve the Incentive Plans to provide the Executives with sufficient incentive
to commit to stay with the Company for a further five years and will provide
them with appropriate bonuses should the pre determined goals be reached.
SUMMARY OF THE INCENTIVE PLANS
The Incentive Plans are the same for both Executives except to the extent of the
number of securities which may be issued.
Under the STI plan, the Executives will be eligible to receive an annual award
(STI Award) of up to 200% of their base salary based on performance for the
relevant year against various measurable criteria.
In any year, the STI Award the Executive may receive would be provided in two
parts:
* up to 30% as a cash payment; and
* at least 70% by way of an issue of shares in Virotec (Virotec Shares) to
the Executive.
Shareholder approval is being sought to provide the Executives with the proposed
share-based component of their annual STI Award for the years 2003, 2004 and
2005.
The following table sets out details of the Executives' proposed maximum STI
Award for each of those years, and the maximum share-based component of that
Award.
Proposed maximum share-based component of the STI Award
STI PERIOD OUTLINE OF STI AWARD
----------- ------------------------------------
Period to During this period, the Executive has the opportunity to earn an
30 June STI Award of a value up to 200% of his base salary, which may be
2003 paid by way of an issue of Virotec Shares.
The actual STI Award is based on the Board's (other than the
Executive's) assessment of his performance against agreed criteria
and the financial performance of Virotec over the period. (Refer
to Annexure A for more information).
The Board has not yet determined the STI Awards in respect of this
period.
----------- ------------------------------------
1 July 2003 During this period, the Executive will have the opportunity to earn
to 30 June an STI Award of a value up to 200% of his base salary, which may be
2004 paid by way of an issue of Virotec Shares.
The actual STI Award is based on the Board's (other than the
Executive's) assessment of his performance against agreed criteria
and the financial performance of Virotec over the period.
----------- ------------------------------------
1 July 2004 During this period, the Executive will have the opportunity to earn
to 30 June an STI Award of a value up to 200% of his base salary, which may
2005 be paid by way of an issue of shares.
The actual STI Award is based on the Board's (other than the
Executive's) assessment of his performance against agreed criteria
and the financial performance of Virotec over the period.
----------- ------------------------------------
The number of shares to be issued under an STI Award will be calculated using
the weighted average market price of the ordinary shares traded on ASX over the
last ten trading days before the end of the relevant period. The remuneration
agreements recently approved by the Board of Virotec provide for a base salary
for Mr Sheeran of $650,000 and for Mr Bamonte of $450,000, to be increased
annually in line with the Australian Consumer Price Index. Under both the STI
and LTI, it is proposed that shares may be issued over a period of five years if
the various criteria of the plans (including performance hurdles) are satisfied.
The approval being sought pursuant to the ASX Listing Rules places a three
year time limit on such issues, and as a result any shares eligible to be issued
in accordance with these plans after 3 years from the date of the meeting may
require a further shareholder approval prior to being issued.
If the Executive remains employed by Virotec on the third anniversary of any
date on which Virotec Shares are issued to the Executive through the STI Plan
(STI Shares), then Virotec intends to provide the Executive with one additional
Virotec Share (a Matching Share) for each STI Share that was issued on or before
that date.
If, before the third anniversary of the date on which STI Shares are issued to
the Executive under the STI Plan, either:
* Virotec terminates the Executive's employment (other than for serious
misconduct or a similar event); or
* the Executive resigns from his employment as a result of a change to his
duties or responsibilities (without his agreement) which has the effect of
materially changing his status or authority,
Virotec intends to provide to the Executive a pro-rated number of the Matching
Shares that he would have received had he remained in Virotec's employment for
the full three year period. The number of these Matching Shares will be
calculated by reference to the proportion of the three year period which had
elapsed before the Executive's employment ended. The value of this benefit will
depend upon the market value of the Matching Shares provided to the Executive
after the ending of his employment.
Under the STI Plan, when the Executive's employment ends, the Executive may
receive Matching Shares and a three year restriction on the disposal of his STI
Shares will in some circumstances cease to apply.
You can read more information about the basis on which Virotec Shares are
proposed to be provided to the Executives under the STI Plan (and the benefits
connected with the ending of the Executive's employment) in Annexure A.
To provide the Executives with long-term incentives that more closely align
their interests with the interests of Virotec shareholders, the Board proposes
to give the Executives Performance Rights under the LTI plan that would require
Virotec to provide the Executive with one Virotec Share for each Performance
Right that the Executive exercises. (Certain terms and conditions would apply to
the Performance Rights, see Annexure B).
The Board proposes that five separate tranches of Performance Rights (totalling
a maximum of 2,000,000 for Mr Sheeran and 1,400,000 for Mr Bamonte) be granted
under the LTI plan. Each tranche will represent a different performance period
over the next five years.
The Executive would be able to exercise the Performance Rights in a particular
tranche only if specified performance hurdles are met at the end of the
applicable performance period for that tranche (except in the circumstances
described in Annexure B).
The following table sets outs details of each tranche of Performance Rights for
which approval is sought, and the performance period applicable to that tranche.
TRANCHE PERFORMANCE PERIOD
----------------------- -----------------------
Year ended 30 June 2004 500,000 Performance Rights to Mr Sheeran
280,000 Performance Rights to Mr Bamonte
----------------------- -----------------------
Year ended 30 June 2005 500,000 Performance Rights to Mr Sheeran
280,000 Performance Rights to Mr Bamonte
Year ended 30 June 2006 500,000 Performance Rights to Mr Sheeran
280,000 Performance Rights to Mr Bamonte
----------------------- -----------------------
Year ended 30 June 2007 500,000 Performance Rights to Mr Sheeran
280,000 Performance Rights to Mr Bamonte
Year ended 30 June 2008 500,000 Performance Rights to Mr Sheeran
280,000 Performance Rights to Mr Bamonte
----------------------- -----------------------
For each tranche of Performance Rights, the Board proposes that there be two
different performance hurdles. In general terms:
* the vesting of 50% of the Performance Rights in each tranche will depend
on achievement of a hurdle linked to Virotec's performance against other
Australian listed companies; and
* the vesting of 50% of the Performance Rights in each tranche will depend
on achievement of a hurdle linked to Virotec's increased financial performance
from exploitation of its technologies.
Under the LTI plan, when the Executive's employment ends, the performance period
for the Executive's Performance Rights may be shortened, Performance Rights may
be exercisable irrespective of whether performance hurdles have been met and
whether performance hurdles have been met may be assessed by reference to a
period during which the Executive was no longer employed by Virotec.
You can read more information about the effect of the ending of the Executive's
employment on the Performance Rights proposed to be granted to the executive in
Annexure B. Annexure B also contains important additional information about the
terms and conditions of those Performance Rights (including details of the
applicable performance hurdles).
The Board's recommendation of the proposed resolutions 5 and 6
The Board, with Mr Sheeran and Mr Bamonte abstaining, recommends that
shareholders vote in favour of the proposed resolutions in Items 4 and 5.
Item 7: Issue of Shares to Non-Executive Directors
As required by the ASX listing rules, the prior approval of shareholders is
required before any securities may be issued to a director of a listed company.
This item seeks shareholders' approval to issue shares to Virotec's
non-executive directors in recognition of their service and commitment to the
Company over a number of years.
Dr Nissen and Mr Glynn were appointed as directors in March 2000 and Dr
McConchie was appointed in July 2000. All of these directors have contributed
to the development of the Company during a challenging period. The
non-executive directors have been paid $24,000 per annum plus superannuation for
their services during this time which is below the current market rate for such
services (Dr McConchie has also been paid for additional specialist advice
provided during this time). Dr Nissen has also acted as Chairman of both the
Audit Committee and Remuneration and Nomination Committee since their respective
inceptions.
It is proposed that shares be issued on the following basis:
Dr Nissen 100,000 ordinary shares
Mr Glynn 50,000 ordinary shares
Dr McConchie 50,000 ordinary shares
It is proposed that if this item is approved, the shares will be issued on the
business day following the annual general meeting at the closing price on ASX on
that day. No amounts will be payable by the directors as consideration the
issue of these shares.
The directors, apart from the non-executive directors, recommend that
shareholders vote in favour of this resolution. The non-executive directors
participating in this issue and their associates will not be permitted to vote
on this resolution.
Item 8: Grant of Options to Accociate of Director
As required by the ASX listing rules, the prior approval of shareholders is
required before any securities may be issued to a director or an associate of a
director of a listed company. This item seeks shareholders' approval to grant
options to acquire ordinary shares in the Company to Fiona Davies-McConchie, an
associate of Dr McConchie (being his wife), in recognition of her service and
commitment to the Company over a number of years in her role as an integral part
of the Virotec research team.
The Directors of the Company recently conducted an issue of options to Virotec
employees under Virotec's Option Incentive Scheme (the "Scheme"). As part of the
issue, Fiona Davies-McConchie received an allocation of options. Dur to her
association with a direcotr of the Company approval of shareholders at this
meeting is required before the options can be granted.
It is proposed that an issue of 50,000 options exercisable at 50 cents each on
or before 30 September 2006 be made to Fiona Davies-McConchie on the terms and
conditions as provided in the Option Incentive Scheme (a copy of which is
available on request). If this item is approved, it is proposed that the issue
will occur on the business day following the meeting.
Directors do not participate in the Scheme, and there have been no issues to any
associates of any directors since the last approval of the Scheme in November
2002.
The directors, apart from David McConchie, recommend that shareholders vote in
favour of this resolution. Fiona Davies-McConchie, David McConchie and their
associates will not be permitted to vote on this resolution.
Annexure A
The Short-Term Incentive plan
Under the STI plan, the Executive will be eligible to receive an annual award
(STI Award) of up to 200% of the base remuneration based on performance for the
relevant year against various measurable criteria.
For the years ended 30 June 2003, 2004 and 2005, the STI Award the Executive may
receive would be provided in two parts:
* Up to 30% as a cash payment; and
* The balance (between 70% and 100%) be satisfied by the issue of an
equivalent number of shares in the Company based on the weighted average market
price for the last 10 trading days of the relevant financial year.
Shareholder approval is required to provide the Executive with the proposed
share-based component of their annual STI Award.
It is proposed that any actual awards granted to the Executive under the STI
plan will be based on a consideration of quantitative and qualitative measures
to be determined by the Board (other than the Executive) each year. These
criteria are as follows:
* quantitative measures include cost management, and value of new
business; and
* qualitative measures include performance relative to competitors and
market conditions, stakeholder perspectives, personal leadership, effective
teamwork at senior management levels and strategic positioning of Virotec.
The following table sets out details of the Executive's proposed maximum
share-based component of that Award.
STI PERIOD OUTLINE OF STI AWARD
----------- -----------------------------------
Year ended During this period, The Executive had the opportunity to earn an
STI Award of up to 200% of his base remuneration. His actual STI
Award will be based on the Board's (other than any of the
Executive's representatives) assessment of his performance against
agreed criteria and the financial performance of Virotec over the
period.
30 June The Board has not yet considered the Executive's STI Award for this
2003 period.
----------- -----------------------------------
Year For 2004, the Executive will have the opportunity to earn an STI
ending Award of up to 200% of the average base remuneration paid for the
year.
30 June
2004
----------- -----------------------------------
Year For 2005, the Executive will have the opportunity to earn an STI
ending Award of up to 200% of his average base remuneration paid for the
year.
30 June
2005
----------- -----------------------------------
Matching Shares
To ensure there is incentive to retain the services of the Executive, it is
proposed that on the third anniversary of any date on which Virotec Shares are
issued for the Executive through the STI plan (STI Shares), then Virotec provide
the Executive with one additional Virotec Share (a Matching Share) for each STI
Share that was issued on or before that date.
If, before the third anniversary of the date on which STI Shares are issued to
the Executive under the STI plan, either:
* Virotec terminates the Executive's contract (other than for serious
misconduct); or
* The Executive resigns as a result of a change to his duties or
responsibilities (without his agreement) which has the effect of materially
changing his status or authority,
It is proposed that Virotec provide to the Executive a pro-rated number of the
Matching Shares that would have been received had the Executive remained engaged
by Virotec's for the full three year period. The number of these Matching Shares
will be calculated by reference to the proportion of the three year period which
had elapsed before the Executive's contract ended.
Termination of Contract
Under the proposed STI plan, when the Executive's contract ends, the Executive
may receive Matching Shares and any restriction on the disposal of his STI
Shares will cease to apply.
Rights Attaching to Shares
Virotec Shares issued as part of a particular STI Award (STI Shares) will be
issued in the relevant person's name. Accordingly, that person:
* will be able to exercise voting rights attaching to the STI Shares;
* will be entitled to receive any dividend paid on the STI Shares, even
though the STI Shares will be subject to a restriction on disposal (see below);
and
* will be entitled to participate in any bonus issue or pro rata rights
issue (or to sell renounceable rights acquired) in respect of the STI Shares.
Capital Reconstruction and or Share Splits
The number of Matching Shares Virotec may provide to the Executive will be
adjusted to reflect any capital reconstructions (eg share splits or
consolidations) that Virotec undertakes between the time of the acquisition of
STI Shares and the acquisition of Matching Shares.
Disposal of shares
It is proposed that the Executive will not be able to dispose of the STI Shares
until one year after the issue of those Shares. However, this restriction on the
disposal of the STI Shares will cease to apply:
* to all of the STI Shares if a takeover bid for Virotec Shares or a
scheme of arrangement (or an acquisition of Virotec Shares approved at a general
meeting) results in either:
* a change in legal or beneficial interests in more than 50% of Virotec
Shares; or
* any person having voting power (as defined in the Corporations Act) in
Virotec of greater than 50%;
* if and to the extent that the Board waives or reduces the restrictions;
* if, the Executive ceases to be engaged by Virotec due to total and
permanent disablement, death of the Executive's representative or other
circumstances determined by the Board.
These restrictions on disposal will apply only to STI Shares. They will not
apply to any Matching Shares that Virotec provides to the Executive under the
STI plan.
Annexure B
The Long-Term Incentive plan
It is proposed under the Long Term Incentive plan that five separate tranches of
Performance Rights be granted to the Executive. These Performance Rights would
require Virotec to provide the Executive with one Virotec Share for each
Performance Right that is exercised.
For each tranche of Performance Rights, it is proposed that there be two
different performance hurdles. In general terms:
* the vesting of 50% of the Performance Rights in each tranche will depend
on achievement of a hurdle linked to Virotec's performance against other
Australian listed companies; and
* the vesting of 50% of the Performance Rights in each tranche will depend
on achievement of a hurdle linked to Virotec's performance in the growing of the
revenues generated in the exploitation of the company's Technologies.
The Executive will be able to exercise the Performance Rights in a particular
tranche only if specified performance hurdles are met at the end of the
applicable performance period for that tranche.
Each tranche will become available to be granted on 31 July each year,
commencing on 31 July 2004. The performance hurdles will be assessed in
relation to the financial year ending 30 June each year.
Proposed Performance Hurdles
For each tranche of Performance Rights granted to the Executive there will be
two different performance hurdles. The following table summarises the operation
of each different performance hurdle and shows the percentage of the Performance
Rights in each tranche to which that performance hurdle will apply.
% OF
TRANCHE PERFORMANCE HURDLE
-------- -----------------------------------------
50% If Virotec's Total Shareholder Return ("TSR") (i.e. the change in
share price plus any dividends paid over the applicable performance
period, expressed as a percentage) when compared to the TSR of a
comparison group made up of ASX 300 Index as at the start of the
applicable performance period:
is below the 50th percentile of the comparison group, then none of
these Performance Rights will vest.
is at the 50th percentile of the comparison group, then only half of
these Performance Rights will vest.
is between the 50th and 75th percentile of the comparison group, then
these Performance Rights will vest on a straight line basis with
Virotec's TSR ranking against the comparison group.
is in at least the 75th percentile of the comparison group, then all
of these Performance Rights will vest.
-------- -----------------------------------------
50% If Virotec's revenue growth in relation solely to the exploitation of
the company's Technologies relative to the base year being the year
ended 30 June 2003. The amount of performance rights that accrue will
be determined by taking the average annual growth achieved from 1 July
2004 to the end of each financial year and if the
average growth is below 40% p.a. then none of these Performance
Rights for that year will vest.
average growth is between 40%p.a. and 60% p.a. then only half of the
Performance Rights for that year will vest.
average growth is above 60% p.a. and below 100% p.a. then three
quarters of the Performance Rights for that year will vest.
average growth is above 100% p.a., then all of these Performance
Rights for that year will vest.
-------- -----------------------------------------
It is proposed that after the end of the performance period that applies to a
tranche of Performance Rights, the Board will determine whether (and the extent
to which) the performance hurdles have been achieved in respect of that tranche
and report to the Board on such findings.
If the performance hurdles that apply to a tranche of Performance Rights are not
met at the end of the relevant performance period, then those Performance Rights
will lapse.
If it is determined that the performance hurdles have been achieved in respect
of some or all of the Performance Rights in a tranche, the Executive will
generally have three months from the end of the relevant performance period to
exercise those Performance Rights. The Executive will not be required to pay
anything when they exercise those Performance Rights to receive Virotec Shares.
The number of Virotec Shares that the Executive is entitled to when the
Performance Rights are exercised will be adjusted to reflect any bonus issues or
capital reconstructions (eg share splits or consolidations) that Virotec
undertakes between the grant of a Performance Right and the exercise of the
Performance Right. The adjustment will be in accordance with ASX requirements.
Shares provided to the Executive following the exercise of a Performance Right
will rank equally with other existing Virotec Shares and they will be entitled
in full to dividends that have a record date after the Virotec Shares are
registered.
If the Executive is no longer contracted by the Virotec Group while holding
Performance Rights, the treatment of those Performance Rights will depend on:
* whether the Performance Rights had vested at the time the contracts
ended (that is, whether the applicable performance hurdles had been met in
respect of those Performance Rights); and
* the reason the contracts ended.
If Performance Rights have vested, then:
* if the Executive's contract is terminated by mutual agreement or is
terminated by the Virotec Group (other than for misconduct), they will generally
have 30 days in which to exercise their Performance Rights. After that period
any unexercised Performance Rights will lapse;
* if the Executive cease to be engaged due to special circumstances
(namely, total and permanent disablement, death of the Executive's
representative or the sale of the shares or business of the Virotec group), the
Executive will generally be able to exercise their Performance Rights until the
end of the original three month exercise period; and
* If the Executive's contract is terminated for misconduct or a breach of
contract, the Performance Rights will lapse immediately.
If any Performance Rights have NOT vested when the Executive's contract ends,
then the unvested Performance Rights will generally lapse unless:
* The Executive contract is terminated by mutual agreement later than 30
days before the end of the applicable performance period and the Board (other
than the Executive's representative) determines that the performance hurdles
have been achieved in respect of some or all of the Performance Rights. In that
case, those Performance Rights will vest and be exercisable within the next 30
days following the determination; or
* the Board decides otherwise. For example, in circumstances of
retrenchment, retirement, the sale of the shares or business of the employing
company or in other circumstances the Board (other than the Contractor's
representative) considers appropriate.
This information is provided by RNS
The company news service from the London Stock Exchange
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