UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )

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o Preliminary Proxy Statement þ Definitive Proxy Statement o Definitive Additional Materials o Soliciting Material Pursuant to §240.14a-12		o  Confidential, for Use of the Commission       Only (as permitted by Rule 14a-6(e)(2))

Newmont Mining Corporation

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Notice of 2010 Annual Meeting of Stockholders

 

 

Under the Securities and Exchange Commission rules, we have elected to use the Internet for delivery of annual meeting materials to most of our stockholders, enabling us to provide them with the information they need, while lowering the costs of delivery and reducing the environmental impact associated with our annual meeting.

 

All stockholders are cordially invited to attend the meeting in person. It is important that your shares be represented at the meeting whether or not you are personally able to attend. If you are unable to attend, please promptly submit your proxy by telephone, Internet or mail as described in the Notice and Proxy Statement and the Notice of Internet Availability of Proxy Materials. If you have received or requested a paper copy of the proxy materials and choose to submit your vote by traditional proxy or voting instruction card, please sign, date and mail the card in the pre-addressed reply envelope. Your vote is important so that your shares will be represented and voted at the meeting even if you cannot attend.

 

By Order of the Board of Directors

 

Jeffrey K. Reeser

Vice President and Secretary

 

March 4, 2010

 

 

2010 Proxy Statement
Table of Contents

 

 

PROXY STATEMENT

 

 

 

For the second year, we are pleased to use the Securities and Exchange Commission (“SEC”) “e-proxy” rules allowing us to furnish proxy materials through the Internet. By using the e-proxy rules, we can expedite stockholders’ receipt of this 2010 Proxy Statement and Annual Report on Form 10-K, while lowering the costs and reducing the environmental impact associated with our annual stockholders meeting. On or about March 12, 2010, we will furnish a Notice of Internet Availability of Proxy Materials (“Notice”) to most of our stockholders containing instructions on how to access the proxy materials and to vote online. In addition, instructions on how to request a printed copy of these materials may be found on the Notice. For more information on voting your stock, please see “Voting Your Shares” below. If you received a Notice by mail, you will not receive a paper copy of the proxy materials unless you request such materials by following the instructions contained on the Notice. Your vote is important no matter the extent of your holdings.

 

This proxy statement is furnished to holders of:

 

 

each in connection with the solicitation of proxies on behalf of the Board of Directors of Newmont Mining Corporation (“Newmont” or the “Company”) to be voted at the 2010 Annual Meeting of Stockholders (the “Annual Meeting”) of Newmont on April 23, 2010. Stockholders of record holding the following Newmont securities at the close of business on February 22, 2010 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting and at all adjournments:

 

 

Newmont Common Stock. Each share of Newmont Common Stock that you own entitles you to one vote. Your Notice or proxy card shows the number of shares of Newmont Common Stock that you own. You may elect to vote in one of three methods:

 

 

 

Pursuant to a recent rule change, if you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, the organization that holds your shares may generally vote on “routine” matters such as ratification of auditors but cannot vote on “non-routine” matters, which now include matters such as votes for the election of directors or stockholder proposals regarding special meetings and majority voting for election of directors. Thus, if the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, that organization will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”

 

Newmont Exchangeable Shares. Each Newmont Exchangeable Share that you own has economic rights (such as the right to receive dividends and other distributions) that are, as nearly as practicable, equivalent to rights of shares of Newmont Common Stock. Holders of Newmont Exchangeable Shares have a right through a Voting and Exchange Trust Agreement (the “Voting Agreement”) to vote at stockholders’ meetings of the Company. The Newmont Exchangeable Shares, however, are not shares issued by Newmont and, therefore, a holder of Newmont Exchangeable Shares is not a registered stockholder of Newmont, but is a registered stockholder of Newmont Canada. The Newmont Exchangeable Shares are exchangeable at the option of the holders into Newmont Common Stock on a one-for-one basis. There are two ways to vote your Newmont Exchangeable Shares:

 

 

Newmont CDIs. The Newmont CDIs are units of beneficial ownership in Newmont Common Stock held by CHESS Depositary Nominees Pty Ltd (ACN 071 346 506) (“CDN”), a wholly-owned subsidiary of ASX Limited (ACN 008 624 691). References to Newmont Mining Corporation for purposes of Australian equity holder are to “Newmont Mining Corporation ARBN 099 065 997, organized in Delaware with limited liability.” Since July 1, 2002, Newmont CDIs have traded on the ASX as a Foreign Exempt Listing granted by the ASX, which provides an ancillary trading facility to the Company’s primary listing on the New York Stock Exchange. Newmont CDIs entitle holders to dividends and other rights economically equivalent to Newmont Common Stock on a ten-for-one basis. CDN, as the stockholder of record (or its proxy or substitute), will vote the underlying shares of Newmont Common Stock in accordance with the directions of Newmont CDI holders. Your CDI Voting Instruction Form shows the number of Newmont CDIs that you own. There are two ways to vote your Newmont CDIs.

 

 

Holders of Newmont CDIs were notified on November 9, 2009 that Newmont CDIs would be suspended and delisted from ASX effective February 17, 2010. If you hold Newmont CDIs as of the Record Date for the Annual Meeting of Stockholders, February 22, 2010, you will receive your proxy materials from Computershare, the transfer agent for Newmont’s CDIs, including a proxy card to vote your Newmont CDIs. If you have converted your Newmont CDIs to Newmont Common Stock, you will receive a Notice of Internet Availability of Proxy Materials, which provides a convenient way to access our proxy materials and to vote your Newmont Common Stock online.

 

Revocation of Newmont Common Stock Proxy. A stockholder who executes a proxy may revoke it by delivering to the Secretary of the Company, at any time before the proxies are voted, a written notice of revocation bearing a later date than the proxy, or by attending the Annual Meeting and voting in person (although attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy). A stockholder also may substitute another person in place of those persons presently named as proxies. Written notice revoking or revising a proxy should be sent to the attention of the Secretary, Newmont Mining Corporation, at 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA.

 

Revocation of Newmont Exchangeable Shares Voting Instruction Form. A registered holder of Newmont Exchangeable Shares who has submitted a Voting Instruction Form may revoke the Voting Instruction Form by completing and signing a Voting Instruction Form bearing a later date and depositing it with the Trustee. No notice of revocation or later-dated Voting Instruction Form, however, will be effective unless received by the Trustee prior to 5:00 p.m., Toronto time, on April 22, 2010.

 

A non-registered holder of Newmont Exchangeable Shares may revoke a Voting Instruction Form at any time by written notice to the intermediary, except that an intermediary is not required to act on a revocation of a Voting Instruction Form that is not received by the intermediary at least ten days prior to the Annual Meeting.

 

Revocation of Newmont CDI Voting Instruction Form. A holder of Newmont CDIs who has completed and returned a CDI Voting Instruction Form (in the manner described above) may revoke the voting instructions to CDN by delivering to Computershare Investor Services Pty Limited, Level 5, 115 Grenfell Street, Adelaide 5000, South Australia, Australia, no later than 5:00 p.m., Adelaide time, on April 19, 2010, a written notice of revocation bearing a later date than the CDI Voting Instruction Form previously sent.

 

Quorum. The holders of a majority of the outstanding shares of capital stock of the Company entitled to vote at the Annual Meeting must be present in person or represented by proxy in order to constitute a quorum for all matters to come before the meeting. For purposes of determining the presence of a quorum, “shares of capital stock of the Company” include all shares of Newmont Common Stock (including shares represented by Newmont CDIs) and the maximum number of shares of Newmont Common Stock that the Trustee of the Newmont Exchangeable Shares is entitled to vote at the Annual Meeting.

 

Tabulating Votes. Votes at the Annual Meeting will be tabulated by two inspectors of election who will be appointed by the Chairman of the meeting and who will not be candidates for election to the Board of Directors. The inspectors of election will treat shares of capital stock represented by a properly signed and returned proxy as present at the Annual Meeting for purposes of determining a quorum, without regard to whether the proxy is marked as casting a vote or abstaining.

 

Broker Non-Votes and Abstentions. Abstentions and broker “non-votes” as to particular matters are counted for purposes of determining whether a quorum is present at the Annual Meeting. Abstentions are counted in tabulations of the votes cast on proposals presented to stockholders, whereas broker non-votes are not counted for purposes of determining whether a proposal has been approved. Abstentions have the same effect as votes against proposals presented to stockholders. A “broker non-vote” occurs when a nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the nominee does not have discretionary voting power and has not received instructions to do so from the beneficial owner.

 

Election of Directors. Directors will be elected by a favorable vote of a plurality (meaning the largest number of votes cast) of those shares of capital stock present and entitled to vote, in person or by proxy, at the Annual Meeting. A stockholder may withhold votes from any or all nominees. Starting this year, the Election of Directors (Proposal No. 1) is a “non-discretionary” item. Therefore, if you hold your Newmont Common Stock at a broker and you do not instruct your broker how to vote with respect to the election of directors, your broker cannot vote your shares on this proposal. Those votes will be counted as “broker non-votes” and your shares will not be represented in the Election of Directors vote at the Annual Meeting.

 

Ratify PricewaterhouseCoopers LLP as the Company’s Independent Auditors for 2010. The affirmative vote of a majority of the shares present and entitled to vote, in person or by proxy, at the Annual Meeting is required to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as the Company’s independent auditors for 2010.

 

Other Items. If any other items are presented at the Annual Meeting, they must receive an affirmative vote of a majority of the shares present and entitled to vote, in person or by proxy, in order to be approved.

 

The cost of preparing and mailing the Notice of Internet Availability of Proxy Materials, requests for proxy materials, and the cost of solicitation of proxies on behalf of the board of directors will be borne by the Company. This proxy material will be mailed to the holders of Newmont Common Stock, Newmont Exchangeable Shares, and Newmont CDIs on or about March 12, 2010. In addition, solicitation of proxies and voting instruction forms may be made by certain officers and employees of the Company by mail, telephone or in person. The Company has retained Georgeson Inc. to aid in the solicitation of brokers, banks, intermediaries and other institutional holders in the United States and Canada for a fee of $15,000. All costs of the solicitation will be borne by the Company. The Company also will reimburse brokerage firms and others for their expenses in forwarding proxy materials to beneficial owners of Newmont Common Stock, Newmont Exchangeable Shares and Newmont CDIs.

 

Participants in the Retirement Savings Plan of Newmont and Retirement Savings Plan for Hourly-Rated Employees of Newmont. If you are a participant in the Retirement Savings Plan of Newmont or Retirement Savings Plan for Hourly-Rated Employees of Newmont (collectively, the “Retirement Savings Plans”) and hold Newmont Common Stock under either of the Retirement Savings Plans, you will be furnished a Notice of Internet Availability of Proxy Materials containing instructions on how to access the proxy materials and to vote online. In addition, instructions on how to request a printed copy of these materials may be found on the Notice. The Retirement Savings Plans are administered by The Vanguard Group, as trustee. The trustee, as the stockholder of record of the Newmont Common Stock held in the Retirement Savings Plans, will vote the shares held for you in accordance with the directions you provide. If you do not vote your shares by 11:59 p.m. Eastern time on April 20, 2010, the Trustee will vote the shares in the Retirement Savings Plans in the same proportion as it votes shares as to which directions have been received.

 

For a stockholder proposal, including a proposal for the election of a director, to be included in the proxy statement and form of proxy for the 2011 Annual Meeting, the proposal must have been received by us at our principal executive offices no later than November 19, 2010. Proposals should be sent to the attention of the Secretary of the Company at 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA. We are not required to include in our proxy statement and form of proxy a stockholder proposal that was received after that date or that otherwise fails to meet the requirements for stockholder proposals established by SEC regulations.

 

In addition, under our By-laws, stockholders must give advance notice of nominations for directors or other business to be addressed at the 2011 Annual Meeting no later than the close of business on February 22, 2011. The advance notice must be delivered to the attention of the Secretary of the Company at 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA.

 

The results of the voting at the 2010 Annual Meeting of Stockholders will be reported on Form 8-K and filed with the Securities and Exchange Commission within four business days after the end of the meeting.

 

Each of the 11 persons named below is a nominee for election as a director at the Annual Meeting for a term of one year or until his/her successor is elected and qualifies. Unless authority is withheld, the proxies will be voted for the election of such nominees. All such nominees are currently serving as directors of the Company. All such nominees were elected to the Board of Directors at the last Annual Meeting. If any such nominees cannot be a candidate for election at the Annual Meeting, then the proxies will be voted either for a substitute nominee designated by the Board of Directors or for the election of only the remaining nominees.

 

Robert J. Miller, a director of Newmont since 1999, has decided to retire from service on the Board of Directors, effective as of the date of the Annual Meeting, and not to stand for re-election at the Annual Meeting. Governor Miller’s decision to retire from the Board of Directors was not due to any disagreement with Newmont. Newmont expects to be able to consult with Governor Miller from time to time and to seek his advice and guidance as needed. No person is being nominated at the Annual Meeting to fill the vacancy created by his departure. Instead, the directors expect to reduce the size of the Board of Directors from twelve to eleven members, effective when Governor Miller ceases to be a director.

 

The following table sets forth information as to each nominee for election, including his or her age (as of the Record Date), and background, including his or her principal occupation during the past five years and current directorships (which should be read in conjunction with the skills and qualifications of each nominee set forth in the table on pages 9-13):

 

 

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” ALL OF THE FOREGOING NOMINEES AND, UNLESS A STOCKHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE CONTRARY, THE PROXIES NAMED THEREON INTEND SO TO VOTE.

 

We have established a process for identifying and nominating director candidates that has resulted in the election of a highly-qualified and dedicated Board of Directors. The following is an outline of the process for nomination of candidates for election to the Board: (a) the Chief Executive Officer, the Corporate Governance and Nominating Committee or other members of the Board of Directors identify the need to add new Board members, with careful consideration of the mix of qualifications, skills and experience represented on the Board of Directors; (b) the Chairman of the Corporate Governance and Nominating Committee coordinates the search for qualified candidates with input from management and other Board members; (c) the Corporate Governance and Nominating Committee engages a candidate search firm to assist in identifying potential nominees, if it deems such engagement necessary and appropriate; (d) selected members of management and the Board of Directors interview prospective candidates; and (e) the Corporate Governance and Nominating Committee recommends a nominee and seeks full Board endorsement of the selected candidate, based on its judgment as to which candidate will best serve the interests of Newmont’s stockholders.

 

The Board of Directors has determined that directors should possess the following minimum qualifications: (a) the highest personal and professional ethics, integrity and values; (b) commitment to representing the long-term interest of the stockholders; (c) broad experience at the policy-making level in business, government, education, technology or public interest; and (d) sufficient time to effectively fulfill duties as a Board member. The Corporate Governance and Nominating Committee considers any candidates submitted by stockholders on the same basis as any other candidate. Any stockholder proposing a nomination should submit such candidate’s name, along with curriculum vitae or other summary of qualifications, experience and skills to the Secretary, Newmont Mining Corporation, 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA.

 

Newmont considers diversity, age and skills in deciding on nominees. The Corporate Governance and Nominating Committee considers a broad range of diversity, not limited to merely race, gender or national origin, but considering all relevant background and experience. We consider this through discussions at the Corporate Governance and Nominating Committee meetings. In evaluating a director candidate, the Corporate Governance and Nominating Committee considers factors that are in the best interests of the Company and its stockholders.

 

In addition to meeting the minimum qualifications set out by the Board of Directors, each nominee also brings a strong and unique background and set of skills to the Board, giving the Board, as a whole, competence and experience in a wide variety of areas, including board service, corporate governance, compensation, executive management, private equity, finance, mining, operations, manufacturing, marketing, government, law, international business and health, safety, environmental and social responsibility.

 

The following table sets forth information as to each nominee the qualifications, attributes or skills that led the Board of Directors to conclude that such person should be nominated to serve as a member of the Board of Directors of the Company (which should be read in conjunction with the background and experience of each nominee set forth in the table above):

Skills and Qualifications

 

Glen A. Barton

CEO/Executive Management Skills

Experience as former Chairman, Director and Chief Executive Officer of Caterpillar Inc., a publicly-traded company, from 1999 to 2004, and other senior executive positions noted in the table above.

Financial Expertise

Prior service on the Audit Committee of the Board of Directors of Inco Ltd. and financial oversight experience in senior executive roles.

International Experience

Prior service on the International Committee of the Board of Directors of Valmont Industries, Inc. and experience as a senior executive of an international corporation, Caterpillar Inc.

Compensation Expertise

Prior service on the Company’s Compensation Committee, including as Chairman, and participation in compensation, benefits and related decisions in senior executive roles.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies, including Caterpillar Inc., Valmont Industries, Inc. and Inco Ltd.

 

Vincent A. Calarco

CEO/Executive Management Skills

Experience as President and Chief Executive Officer of Crompton Corporation (now known as Chemtura Corporation), a publicly traded chemicals manufacturing company, from 1985 to 2004 and Chairman thereof from 1996 to 2004. Extensive experience working with Chief Executive Officer of the Company during his service as Non-Executive Chairman of Newmont from 2008 until the present.

Financial Expertise

Experience serving on the Company’s Audit Committee and as the Chairman of the Audit Committee of the Board of Directors of Consolidated Edison of New York. Extensive financial oversight experience in senior management roles.

International Experience

Extensive senior executive experience working with multinational operations at Crompton Corporation, which has global manufacturing facilities on five continents and conducts business in over 120 countries, as well as experience establishing inter-industry relationships and negotiating product safety regulations as Chairman of several chemical industry trade associations.

Operational and Industry Expertise

Extensive experience in the chemical industry, a process industry with similar operating characteristics and issues, and prior service on the Board of Directors of a copper mining company, Asarco Corporation.

Compensation Expertise

Prior service as Chairman of the Compensation Committee of Citadel Plastics and participation in compensation, benefits and related decisions in senior executive roles.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies, including Consolidated Edison, Inc.

Joseph A. Carrabba

CEO/Executive Management Skills

Experience as Chairman, President and Chief Executive Officer of Cliffs Natural Resources Inc. (formerly Cleveland-Cliffs Inc), a publicly-traded mining company, since May 2007, President and Chief Executive Officer thereof from 2006 to 2007 and other executive management positions noted in the table above.

Financial Expertise

Extensive financial management experience in senior executive roles.

Operational and Industry Expertise

Operational experience in the mining industry, including as former President and Chief Operating Officer of Cliffs Natural Resources Inc., former President and Chief Operating Officer of Diavik Diamond Mines, Inc. and former General Manger of Weipa Bauxite Operation of Comalco Aluminum. Awarded a Bachelor’s Degree in Geology from Capital University.

International Experience

Extensive senior executive experience working with multinational mining operations, including with Cliffs Natural Resources Inc., which has operations in North America, Australia, Latin America and Asia.

Health, Safety, Environmental and Social Responsibility Experience

Experience serving on the Company’s Operations and Safety Committee and the Environmental and Social Responsibility Committee.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies, including Cliffs Natural Resources Inc. and KeyCorp.

 

Noreen Doyle

Financial Expertise

Extensive experience in banking and finance at Bankers Trust Company and at the European Bank for Reconstruction and Development (“EBRD”), including experience as head of risk management and head of banking at EBRD. Experience serving on the Company’s Audit Committee and the Audit Committees of the Board of Directors of QinetiQ Group plc and Rexam PLC.

International Experience

Extensive senior executive experience working with businesses, global and local, and governments throughout eastern Europe and the former Soviet Union.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies, including Credit Suisse, QinetiQ plc and Rexam PLC.

 

Veronica M. Hagen

CEO/Executive Management Skills

Experience as Chief Executive Officer of Polymer Group, Inc., a publicly-traded company, since April 2007, President and Chief Executive Officer of Sappi Fine Paper North America from 2004 to 2007.

Industry and Operational Expertise

Extensive mining industry experience, including in executive positions with Alcoa, Inc., an international aluminum producer, for over 10 years, including as former Vice President and Chief Customer Officer and former Vice President, Alcoa North American Extrusions.

International Experience

Extensive senior executive experience including Chief Executive Officer of Polymer Group Inc., a company operating manufacturing facilities in seven countries.

Health, Safety, Environmental and Social Responsibility Experience

Experience serving on the Company’s Operations and Safety Committee and the Environmental and Social Responsibility Committee.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies, including Southern Company.

Michael S. Hamson

CEO/Executive Management Skills

Experience as Chairman, Hamson Consultants Pty Ltd, a consulting company, since 1987 and former Joint Chairman and Chief Executive Officer of McIntosh Hamson Hoare Govett Limited (now Merrill Lynch Australia) from 1972 to 1986.

Financial Expertise

Experience serving on the Company’s Audit Committee, the Audit Committee of the Board of Directors of Genesis Emerging Markets Fund Ltd., membership in the Charter Accountants Institute and financial management experience in senior executive roles.

Legal Expertise

Extensive experience as practicing lawyer in multiple jurisdictions.

Industry and Operational Expertise

Experience as Director and Deputy Chairman of Normandy Mining Limited from 1987 to 2002.

International Experience

Extensive senior executive experience working in global banking activities with McIntosh Hamson Hoare Govett Limited.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies, including Genesis Emerging Markets Fund Ltd.

 

Richard T. O’Brien

CEO/Executive Management Skills

President and Chief Executive Officer of the Company since July 2007 and other senior executive positions noted in the table above.

Financial Expertise

Extensive financial management experience in executive roles, including as President and Chief Financial Officer of the Company from April 2007 to July 2007, Executive Vice President and Chief Financial Officer during 2006 and 2007 and Senior Vice President and Chief Financial Officer from 2005 to 2006, as well as Executive Vice President and Chief Financial Officer and Senior Vice President and Chief Financial Officer of AGL Resources from 2001 to 2005. Experience serving on the Audit Committees of Inergy Holdings, L.P. and Vulcan Materials Company. Awarded a Bachelor of Arts degree in economics from the University of Chicago.

Industry and Operational Experience

Over 20 years of broad financial and operational experience in the energy, power and natural resources businesses.

International Experience

Extensive senior executive experience working with the Company’s multinational mining operations.

Compensation Expertise

Participation in compensation, benefits and related decisions in senior executive roles.

Legal Expertise

Awarded a Doctor of Jurisprudence degree from Lewis and Clark College, Northwestern School of Law.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies, including Inergy Holdings, L.P. and Vulcan Materials Company.

John B. Prescott

CEO/Executive Management Skills

Experience as acting Chairman of Queensland Rail Limited since 2006, retired Chairman of ASC Pty Ltd from 2000 to 2009, former Managing Director and Chief Executive Officer of The Broken Hill Proprietary Company Limited from 1991 to 1998 and other executive management positions noted in the table above.

Financial Expertise

Extensive financial management experience in executive roles and served on the Audit Committee of the Board of Directors of Queensland Rail Limited.

Industry and Operational Experience

Experience in the mining industry as a senior executive with The Broken Hill Proprietary Company Limited, a natural resource company, and as a former director of Normandy Mining Limited, a mining company.

International Experience

Extensive senior executive experience working with multinational mining operations.

Compensation Expertise

Experience serving on the Company’s Compensation Committee and participation in compensation, benefits and related decisions in senior executive roles.

Health, Safety, Environmental and Social Responsibility Experience

Experience serving on the Company’s Operations and Safety Committee, including as Chairman, and the Environmental and Social Responsibility Committee.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies, including Normandy Mining Limited from 1999 to 2002.

 

Donald C. Roth

Financial Expertise

Extensive financial management experience in various roles, including as former Vice President and Treasurer of the World Bank from 1988 to 1992, as Chairman of the Audit Committee of Ireland’s National Pension Reserve Fund, and other executive management positions noted in the table above.

International Experience

Extensive experience in international investment banking and capital markets.

Compensation Expertise

Experience serving as a member of the Company’s Compensation Committee, including as Chairman. Participation in compensation, benefits and related decisions in senior executive roles.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies, including ISEQ Exchange Traded Fund Public Limited Company.

 

James V. Taranik

Industry Expertise

Expert in the applications of economic geology and geophysical technology. Serving as Regents Professor and Arthur Brant Endowed Chair for Exploration Geophysics of the Mackay School of Earth Sciences and Engineering, in the College of Science, at the University of Nevada, Reno and experience in other positions noted in the table above.

Health, Safety, Environmental and Social Responsibility Experience

Experience acting as President and Chief Executive Officer Emeritus of Desert Research Institute, University and Community College System of Nevada, an environmental research organization, since 1998 and serving on the Company’s Environmental and Social Responsibility Committee, including as past Chairman, and on the Company’s Operations and Safety Committee.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies.

Simon R. Thompson

Financial Expertise

Over 15 years experience in merchant and investment banking and financial management experience in executive roles. Service on the Audit Committee of the Board of Directors of AMEC plc.

International Experience

Extensive experience in international investment banking, as well as multinational mining experience with Anglo American, which operates in Africa, Europe, South and North America, Australia and Asia.

Industry and Operational Experience

Over 15 years experience in the mining industry, including as former Chief Executive of Anglo Base, the base metals mining division of Anglo America, and other positions noted in the table above. Awarded a Masters Degree in Geology from Oxford University.

Health, Safety, Environmental and Social Responsibility Expertise

Experience acting as Chairman of the Health, Safety and Environmental Committee of United Company Rusal and serving on the Company’s Operations and Safety Committee and as Chairman of the Environmental and Social Responsibility Committee.

Board Experience

Prior service on the Company’s Board of Directors, as well as on the boards of several other companies, including Sandvik AB and AMEC plc.

 

The Board affirmatively determines the independence of each director and each nominee for election as director. For each individual deemed to be independent, the Board has determined (a) that there is no relationship with the Company, or (b) the relationship is immaterial. The Board has considered the independence standards of the New York Stock Exchange and adopted more stringent categorical independence standards described below.

 

The Board has determined that the relationships that fall within the standards described in its independence standards are categorically immaterial. As such, provided that no law, rule or regulation precludes a determination of independence, the following relationships are not considered to be material relationships with the Company for purposes of assessing independence: service as an officer, director, employee or trustee or greater than five percent beneficial ownership in (i) a supplier of goods or services to the Company if the annual sales to the Company are less than $1 million or two percent of the gross revenues or sales of the supplier, whichever is greater; (ii) a lender to the Company if the total amount of the Company’s indebtedness is less than one percent of the total consolidated assets of the lender; (iii) a charitable organization if the total amount of the Company’s total annual charitable contributions to the organization is less than $1 million or two percent of that organization’s total annual gross receipts (excluding any amounts received through the Company’s employee matching program for charitable contributions), whichever is greater; or (iv) any relationship arising out of a transaction, or series of transactions, in which the amount involved is less than $60,000.

 

In making its independence determinations, the Board considered the circumstances described below.

 

Mr. Hamson is a director of Genesis Emerging Markets Ltd. The committee administering the investment of Company funds for its pension plan selected one of the Genesis Emerging Market funds as one investment in its portfolio. This relationship meets categorical independence standard (i) above.

 

Dr. Taranik retired as Director of the Mackay School of Earth Sciences and Engineering in August 2009 and returned full-time to his position as Regents Professor in the Department of Earth Sciences and Engineering, in the College of Science, at the University of Nevada, Reno (“UNR”). The Company donated $200,000 to the University of Nevada Foundation for mining engineering education in the Department of Mining Engineering at UNR. Dr. Taranik is not a director, trustee, or employee of the University of Nevada Foundation. The Company’s donation to the University of Nevada Foundation constituted less than 2% of the Foundation’s charitable receipts in 2009. The Company’s donation reflects its strong interest in promoting mining engineering education at universities that produce engineers for its workforce, and Nevada is one of our major core operating regions. The Board of Directors has considered these circumstances and determined that the donation does not constitute a material relationship with the Company that would affect independence.

Mr. Thompson is a director of Sandvik AB, an international engineering group that provides certain products to the Company including certain mining equipment for rock excavation. Mr. Thompson also is a director of AMEC plc, an international engineering and project management company, which provides certain consulting services to the Company. These relationships both meet the categorical independence standard (i) above.

 

Based on the foregoing analysis, the Board determined that the following directors are independent:

 

 

In addition, based on these standards, the Board has affirmatively determined that Richard T. O’Brien is not independent because he is President and Chief Executive Officer of the Company.

 

As of February 22, 2010, the directors and executive officers of the Company as a group beneficially owned, in the aggregate, 1,100,766 shares of the Company’s outstanding capital stock, constituting, in the aggregate, less than 1% of the Company’s outstanding capital stock.

 

No director or executive officer beneficially owned (a) more than 1% of the outstanding shares of Newmont Common Stock or Newmont Exchangeable Shares, or (b) shares voting power in excess of 1% of the voting power of the outstanding capital stock of the Company. Each director and executive officer has sole voting power and dispositive power with respect to all shares beneficially owned by them, except as set forth below.

 

The following table sets forth the beneficial ownership of Newmont Common Stock as of February 22, 2010 held by (a) each current director and nominee; (b) the Chief Executive Officer, the Chief Financial Officer and each of the other highly compensated executive officers (the “Named Executive Officers”); and (c) all current directors and executive officers as a group. The address for each of the named individuals below is c/o Newmont Mining Corporation, 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA.

 

 

 

 

The following table sets forth information with respect to each person known by the Company to be the beneficial owner of more than 5% of any class of the Company’s voting securities. The share information contained herein is based on investor filings with the SEC pursuant to Section 13(d) of the Securities Exchange Act of 1934.

 

 

 

 

The annual compensation for non-employee directors for their service on the Board of Directors for 2009 and the anticipated annual compensation for such service for 2010 are as follows:

 

The following table shows the compensation paid to the Company’s non-employee directors for the year ended December 31, 2009:

 

2009 Directors Compensation

 

 

 

 

Outstanding Awards. The following table shows outstanding equity compensation for all non-employee directors of the Company as of December 31, 2009:

 

 

 

 

Retirement. The Company has no current retirement plan for non-employee directors, but certain non-employee directors serving on the Board have been grandfathered under the previous plan. On retirement from the Board of Directors at any time after attaining age 65, a non-employee director who was serving on the Board of Directors on January 27, 1999 and who has served for at least ten consecutive years as a director of the Company is entitled to be paid an annual sum of $50,000 for life.

Robert J. Miller, a director of Newmont since 1999, was grandfathered under the Company’s previous retirement plan. He will attain age 65 on March 30, 2010, with more than ten years of consecutive service to the Board and will not stand for re-election at the Annual Meeting. Pursuant to the previous retirement plan, an annual sum of $50,000 per annum will be paid to him for life.

 

Share Ownership Guidelines. All directors are encouraged to have a significant long-term financial interest in the Company. To encourage alignment of the interests of the directors and the stockholders, each director is expected to own, or acquire within three years of becoming a director, shares of Newmont Common Stock having a market value of three times the annual cash retainer payable under the Company’s director compensation policy. All directors meet the share ownership guidelines.

 

Compensation Consultant. The Board of Directors has engaged Frederic W. Cook & Co. during 2009 to assist in the evaluation of independent director compensation. The Compensation Charter provides that the committee has sole authority to retain and terminate a compensation consultant, including sole authority to approve the compensation consultant’s fees and other retention terms.

 

Attendance at Meetings. During 2009, the Board of Directors held 11 meetings. Each incumbent director attended 75% or more of all meetings of the Board of Directors and committees of the Board of Directors on which he or she served. It is the policy and practice of the Company that nominees for election at the Annual Meeting of Stockholders attend the meeting. All of the board members at the time of the 2009 Annual Meeting of Stockholders held on April 29, 2009, attended the meeting.

 

Board Committees. The Board of Directors has, in addition to other committees, Audit; Compensation; Corporate Governance and Nominating; Operations and Safety; and Environmental and Social Responsibility Committees. All members of these five committees are independent, as defined in the listing standardsof the New York Stock Exchange and the Company’s Corporate Governance Guidelines. Each Committee
functions under a written charter adopted by the board and are available on our website at http://www.newmont.com/our-investors/our-governance.

 

 

 

 

 

 

 

 

 

 

Corporate Governance Guidelines and Charters. The Company has adopted Corporate Governance Guidelines that outline important policies and practices regarding the governance of the Company. In addition, each of the committees has adopted a charter outlining responsibilities and operations. The Corporate Governance Guidelines and the charters are available on our website at http://www.newmont.com/our-investors/our-governance.

 

Board Leadership and Independent Chairman. The Board of Directors selects the Chairman of the Board in the manner and upon the criteria that it deems best for the Company at the time of selection. The Board of Directors does not have a prescribed policy on whether the roles of the Chairman and Chief Executive Officer should be separate or combined, but recognizes the value to the Company of the combination of the positions. At all times, the Board of Directors has either a Non-Executive Chairman or lead director of the Board, which Chairman or lead director will meet the Company’s independence criteria and will be elected annually by the independent members of the Board of Directors.

 

Before 2008, the positions of Chairman of the Board and Chief Executive Officer were held by a single person. Due to the potential efficiencies of having the Chief Executive Officer also serve in the role of Chairman of the Board and the long tenure of the Chief Executive Officer, the Board of Directors determined that the interests of the Company and its stockholders were best served by the leadership and direction provided by a single person as

Chairman and Chief Executive Officer. In 2007, the Board of Directors considered a shareholder proposal included in the 2007 Proxy Statement regarding the separation of such roles. The Board agreed to separate the roles as of January 1, 2008 in response to the stockholder vote and the Board’s determination regarding what was in the best interest of the Company at such time. The Board will continue to evaluate whether this leadership structure is in the best interests of the stockholders on a regular basis.

 

Beginning January 2008, and again in January 1, 2009, the independent members of the Board of Directors elected an independent Non-Executive Chairman, Vincent A. Calarco, for a one-year term. Mr. Calarco was re-elected, effective January 1, 2010, for a third one-year term. Mr. Calarco presides at independent directors sessions scheduled at each regular Board meeting. The Non-Executive Chairman serves as liaison between the Chief Executive Officer and other independent directors, approves meeting agendas and schedules and notifies other members of the Board of Directors regarding any significant concerns of stockholders or interested parties of which he or she becomes aware. The Non-Executive Chairman presides at stockholders meetings and provides advice and counsel to the Chief Executive Officer.

 

Board Oversight of Risk Management. The Board of Directors is engaged in company-wide risk management oversight. Directors are entitled to rely on management and the advice of the Corporation’s outside advisors and auditors, but must at all times have a reasonable basis for such reliance. The Board of Directors relies upon the Chief Executive Officer and Chief Financial Officer to supervise the day-to-day risk management, each of whom provide reports directly to the Board of Directors and certain Board Committees, as appropriate. The Company has a global Enterprise Risk Management team, led by the Company’s Vice President and Treasurer. The Enterprise Risk Management team’s objectives include conducting the compensation risk assessment and reporting the process and findings to the Audit Committee and the Compensation Committee regularly, and to the full Board of Directors on at least an annual basis.

 

The Board of Directors also delegates certain oversight responsibilities to its Board Committees. For a description of the functions of the various Board Committees, see “Board Committees” above. For example, while the primary responsibility for financial and other reporting, internal controls, compliance with laws and regulations, and ethics rests with the management of the Company, the Audit Committee provides risk oversight with respect to the Company’s financial statements, the Company’s compliance with legal and regulatory requirements and corporate policies and controls, the independent auditor’s selection, retention, qualifications, objectivity and independence, and the performance of the Company’s internal audit function. Additionally, the Compensation Committee provides risk oversight with respect to the Company’s compensation program. For a discussion of the Compensation Committee and Enterprise Risk Management team’s assessments of compensation-related risks, see “Compensation Discussion and Analysis—Risk Assessment.” The Operations and Safety Committee provides oversight and direction with regard to safety and operating risks. The Environmental and Social Responsibility Committee provides oversight and direction with respect to environmental, social responsibility and community relations risks.

 

Communications with Stockholders or Interested Parties. Any stockholder or interested party who desires to contact the Company’s Chairman, the non-management directors as a group or the other members of the Board of Directors may do so by writing to the Secretary, Newmont Mining Corporation, 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA. Any such communication should state the number of shares owned, if applicable. The Secretary will forward to the Chairman any such communication addressed to him, the non-management directors as a group or to the Board of Directors generally, and will forward such communication to other board members, as appropriate, provided that such communication addresses a legitimate business issue. Any communication relating to accounting, auditing or fraud will be forwarded immediately to the Chairman of the Audit Committee.

 

Majority Voting Policy. If a nominee for director does not receive the vote of at least a majority of votes cast at an Annual Meeting of Stockholders, it is the policy of the Board of Directors that the director must tender his or her resignation to the Board. In such a case, the Corporate Governance and Nominating Committee will make a recommendation to the Board, and the independent members of the Board will determine, whether to accept or reject the tendered resignation, taking into account all of the facts and circumstances. The director who has tendered

his or her resignation will not take part in the deliberations. The Board will publicly disclose its decision within 90 days following the date of certification of the election results.

 

Retirement Age. The Company’s retirement policy for non-employee directors provides that, except at the request of the Board of Directors, no non-employee director may stand for reelection to the Board after reaching age 72.

 

Code of Business Ethics and Conduct. Newmont has adopted a Code of Business Ethics and Conduct (the “Code”) applicable to all of its directors, officers and employees, including the Chief Executive Officer, the
Chief Financial Officer, the Chief Accounting Officer and other persons performing financial reporting
functions. The Code is available on our website at http://www.newmont.com/our-investors/our-governance. The Code is designed to deter wrongdoing and promote (a) honest and ethical conduct; (b) full, fair, accurate, timely and understandable disclosures; (c) compliance with laws, rules and regulations; (d) prompt internal reporting of Code violations; and (e) accountability for adherence to the Code. The Company will disclose any amendments to, or waivers from, certain provisions of the Code that apply to the Company’s directors or executive officers within four days of such event on Form 8-K.

 

Related Person Transactions. The Board has adopted written policies and procedures for approving related person transactions. Any transaction with a related person, other than transactions available to all employees generally or involving aggregate amounts of less than $120,000 must be approved or ratified by the Audit Committee, the Compensation Committee for compensation matters or disinterested members of the Board. The policies apply to all executive officers, directors and their family members and entities in which any of these individuals has a substantial ownership interest or control. One transaction with a related person has been approved in accordance with the policies: the donation for the benefit of the Mackay School of Earth Sciences and Engineering, Dr. Taranik’s employer, described on page 13.

 

The Compensation Committee of the Board of Directors (the “Compensation Committee”) is composed entirely of directors who are not officers or employees of the Company or any of its subsidiaries, and are independent, as defined in the listing standards of the New York Stock Exchange and the Company’s Corporate Governance Guidelines. The Compensation Committee has adopted a Charter that describes its responsibilities in detail and the Compensation Committee and Board review and assess the adequacy of the Charter on a regular basis. The Compensation Committee has the responsibility of taking the leadership role with respect to the Board’s responsibilities relating to compensation of the Company’s key employees, including the Chief Executive Officer, the Chief Financial Officer and the other executive officers. Additional information about the Compensation Committee’s role in corporate governance can be found in the Compensation Committee’s Charter, available on the Company’s web site at www.newmont.com under the Our Investors section.

 

The Compensation Committee has reviewed and discussed with management the Company’s Compensation Discussion and Analysis section of this Proxy Statement. Based on such review and discussions, the Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. The Compensation Discussion and Analysis is incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

 

Submitted by the following members of the Compensation Committee of the Board of Directors:

 

Donald C. Roth, Chairman
Glen A. Barton
Veronica M. Hagen

 

Introduction. The Company is one of the world’s largest gold producers and the only gold company included in the Standard & Poor’s 500 Index. The Company’s share price is heavily influenced by gold prices and other commodity prices. Therefore, the Company’s executive compensation practices include components that drive performance within the control of the Company’s management as well as components that align Company management with share price performance in the long-term, which is often heavily influenced by gold, copper and other commodity prices, all with the goal of attraction and retention of key talent.

 

In 2009, the Board and Compensation Committee conducted a detailed analysis of executive compensation designed to: 1) assess the status of the Company’s executive compensation levels against numerous peer groups; 2) consider the desired target benchmark for total executive compensation levels; and 3) refine the long-term incentive compensation vehicles for 2010 to further align executive compensation with long-term Company performance.

 

Compensation Committee’s Process for Arriving at Compensation Decisions. The Chairman of the Committee sets the agenda for each meeting, in consultation with management representatives and other Compensation Committee members. The Chief Executive Officer, a human resources expert representative and a representative from the corporate legal department generally attend part of each Committee meeting. The role of management is to provide the Committee with perspectives on the business context and individual performance to assist the Committee in making its decisions. Experts in the Company’s Human Resources Department support the Compensation Committee by providing data and analyses on compensation items. Management is also responsible for keeping the minutes of Committee meetings. External compensation experts are invited to attend from time-to-time for consultation regarding specific topics. An executive session, without management present, is generally held at the end of each meeting. The independent members of the Board of Directors make all decisions regarding the Chief Executive Officer’s compensation in executive session, upon the recommendation of the Compensation Committee. The Chairman provides regular reports to the Board of Directors regarding actions and discussions at Committee meetings.

 

Since 2002, the Compensation Committee has engaged Frederic W. Cook & Co., Inc. (“Cook & Co.”) to provide advice regarding trends in executive and director compensation, and for independent review of management proposals and other items that come before the Committee to assist the Compensation Committee in making its decisions. Cook & Co. has reviewed compensation philosophy, objectives, strategy, benchmark analyses and recommendations regarding executive officer compensation. Cook & Co. is engaged solely by the Compensation Committee, and provides no services or advice directly to management. Cook & Co. has not been given specific instructions regarding its services. In early 2009 management engaged John England with Towers Perrin (now Towers Watson) to aid in management’s review of executive officer competitive market pay positioning. Specifically, Towers Perrin provided survey data and recommendations regarding executive compensation levels to management.

 

When making compensation decisions for Named Executive Officers, the Compensation Committee considers factors beyond market data and the advice of consultants. The Compensation Committee considers the individual’s performance, tenure and experience, the performance of the Company overall, any retention concerns, the individual’s historical compensation and the compensation of the individual’s peers within the Company and market. There is no mandatory framework that determines which of these additional factors may be more or less important, and the emphasis placed on any of these additional factors may vary among the executive officers. While the Compensation Committee does have certain guidelines, goals, and tools that it uses to make its decisions, as explained below, the compensation process is not an exact science and does incorporate the judgment of the Compensation Committee. In making decisions for executives other than the Chief Executive Officer, the input and perspective of the Chief Executive Officer has a significant influence on the Compensation Committee’s decisions.

Compensation Components and Alignment to Compensation Goals. For 2009, the executive compensation program contained five basic elements, as shown below, along with a package of benefit plans designed to attract and retain key talent, drive performance within the control of Company management, and/or align Company management with share price performance in the long-term.

 

Components of Executive Compensation

 

 

Excluding base salary, all compensation components are at-risk, expressed as a percentage of base salary, and designed to drive performance within the control of Company management, and/or align Company management with long-term share price performance.

 

Compensation Components that Drive Performance Within the Control of Company Management:

 

 

Align Company Management with Share Price Performance in the Long-Term:

 

 

 

The Company recognizes that its share price is heavily influenced by the price of gold and other commodities, which are outside of the control of the Company and its leaders. Thus, as a way to balance that commodity fluctuation, the Company grants both stock options and financial performance stock bonuses (common stock and restricted stock units) to align the interests of management with the long-term interests of stockholders. This balanced approach means that management needs to achieve specific performance goals to earn the common stock and restricted stock units even in periods of positive gold price movement, and that the equity package continues to motivate performance in down-cycles as the common stock and restricted stock units retain value and have motivational impact even when gold prices are falling. At the same time, the use of stock options ensures that the highest rewards will only occur with an increasing share price.

 

Target Pay Levels Relative to Market and Competitive Benchmarking Analysis. In the past, the Compensation Committee generally targeted a total compensation program (including all components, but exclusive of benefits) at the 75^th percentile of comparable market practices, with base salary targeted at the 62.5 percentile to emphasize at-risk compensation components. Within total target compensation, the Compensation Committee sought to balance the target compensation components at 40-50% short-term cash compensation (including salary) and 50-60% long-term equity compensation. However, at the end of 2008 and in 2009, a review of 2008 target compensation levels revealed that despite the Board’s consideration and general desire to approximate the 75^th percentile total target compensation for the selected benchmark, total target compensation for the Named Executive Officers was well below the 75^th percentile target pay positioning.

 

In 2009, the Compensation Committee conducted an in-depth analysis of the Company’s executive pay positioning. The Committee reviewed large survey data involving hundreds of companies from general industry in the $5-$10 billion revenue range as well as mining and natural resource sectors available in three firms’ survey materials, Towers Perrin, Mercer and HayGroup. These data indicated that the Company’s base salaries and target short-term incentives (cash bonus) opportunities were moderately below the desired levels of 62.5 percentile for base salary and the 75^th percentile for target short-term incentives. As a result, in April 2009, the Compensation Committee increased the base salaries and target short-term incentives of the executives to approximate the 62.5 percentile for base salary and above the 50^th percentile, but not always at the 75^th percentile, for target short-term incentives for comparable positions in the large survey data. However, the large survey data indicated that the largest gap in the Company’s target compensation levels was in the area of target long-term incentive compensation. Rather than make any changes to the target long-term incentive compensation in April 2009, the Compensation Committee conducted further analysis of the gap in long-term incentive compensation, target pay positioning and peer data and deferred making any changes to target long-term incentive compensation until 2010, as explained on page 31.

 

Following the initial review of large survey data, the Compensation Committee spent considerable time selecting a mining and extractive industry peer group of companies with the aid of its independent compensation consultant, Frederic W. Cook & Co., Inc., and with input from management and its compensation consultant, Towers Perrin. In selecting the mining and extractive industry peer group, the Compensation Committee considered the complexity of the business of the potential peers and organizational size information, including revenue, net income, total assets, market capitalization and number of employees. Viewing the prior four quarters of organizational size for the selected peers, the Company ranked as follows: revenue 72%; net income 95%; total assets 59%; market capitalization 73%; and, employees 78% as of the time of the most recent review by the Committee. The fact that the Company falls between the 59^th and 95^th percentile of the selected peers in the areas of comparison demonstrates that the Compensation Committee identified a peer group in which Newmont is one of the larger entities to ensure that the peer data does not provide inflated compensation data. Below is the peer group selected by the Committee.

 

 

Upon selection of the mining and extractive industry peer group, the Compensation Committee reviewed proxy disclosure data (and publicly disclosed equivalent data for the non-U.S. based peers) of the peer group prepared by its independent consultant.

 

The peer group compensation data supported the conclusions from the larger survey data that the long-term incentive compensation of the Company’s senior executives was well below the previous target pay positioning of 75^th percentile, and even well below 50^th percentile for certain positions. The peer group data supported the April 2009 increases in base salary and target short-term incentives, which approximated the 50^th percentile of the peer group data. As a result, the Compensation Committee decided to increase target long-term incentive compensation for 2010, not 2009, to the approximate 50% percentile of the peer group, with the potential to attain above 50^th percentile long-term incentive compensation payout in the event of outstanding performance. The Compensation Committee adopted a new long-term incentive vehicle for 2010 called performance leveraged stock units, as described on page 31, along with a total target pay positioning philosophy of providing the opportunity to earn above 50^th percentile total compensation for above-average performance.

 

In summary, 2009 was a year of analysis with target salaries set at the approximate 62.5 percentile of the large survey data, target short-term incentives set above the 50^th percentile, but not always at the 75^th percentile, of the large survey data and target long-term incentive compensation below the median of the large survey data and peer group data. While the collection of peer data is a factor in determining compensation levels, this is not intended to be an exact science. Other factors such as an individual’s performance, tenure and experience, the overall performance of the Company, any retention concerns and the individual’s historical compensation impact the decision-making process. The Compensation Committee does not weigh any of these factors more heavily than others and does not use any formula to assess these factors, but rather considers each factor in its judgment and at its discretion.

 

Material Differences Between Named Executive Officers. With the exception of Mr. O’Brien, the Company has set the same target percentages of base salary for each compensation component for all of the Named Executive Officers. Base salary varies to some degree based upon position, relevant benchmark data for such position, tenure, experience and historic compensation. Mr. O’Brien’s target percentages of base salary for each compensation component is greater in amount than the other Named Executive Officers due to his position as the top executive officer of the Company. Market pay levels for top executives are in general significantly higher than the pay levels for other executives, as indicated by the large survey data and peer group data utilized by the Committee and described above. Additionally, the pay mix for the Chief Executive Officer typically includes a greater emphasis on at-risk pay, commensurate with the level of responsibility of the Chief Executive Officer position and the greater degree of impact that this executive can have on overall business results.

 

Base Salary. In early 2009, the Compensation Committee reviewed large survey data involving hundreds of companies from general industry in the $5-$10 billion revenue range as well as mining and natural resource sectors available in three firms’ survey materials, Towers Perrin, Mercer and HayGroup. The Committee used the 62.5 percentile of comparable positions in the survey data as a general guidepost in setting base salaries for 2009, but the Committee also considered individual performance, tenure and experience, the performance of the Company overall, any retention concerns, individual historical compensation and input from other Board members. The base salaries earned by the Named Executive Officers in 2009 are shown in the Summary Compensation Table. The Compensation Committee has not adopted a policy with regard to the internal relationship of compensation among the Named Executive Officers or other employees.

 

Short-Term Non-Equity Incentive Compensation. Short-term non-equity incentives include a Corporate Performance Bonus and a Strategic Objectives Bonus. Each is expressed as a percentage of base

salary. The Corporate Performance Bonus has a target level and the Strategic Objectives Bonus has a maximum level, leaving the Board full discretion to decrease the maximum level. The total of the target Corporate Performance Bonus and 50% of the maximum Strategic Objectives Bonus is designed to achieve between the 50^th and 75^th percentile of the large survey data for total short-term compensation, as described above.

 

2009 Short-Term Non-Equity Incentives

 

 

 

 

Corporate Performance Bonus. The Corporate Performance Bonus provides an annual reward based on four publicly-reported metrics designed to balance short-term and long-term factors, business performance and successful investment in and development of Company assets. The Compensation Committee reviews and approves the performance metrics and target levels of performance annually. The amounts of 2009 Corporate Performance Bonuses earned by the Named Executive Officers are shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table on page 39. The four metrics that the Committee established for 2009 were:

 

1. Gold Equity Ounces Sold Metric: The equity ounces sold metric focuses employees on achieving budgeted amounts of gold sales. The metric also provides incentive to bring various projects into production in a timely manner.

 

2. Gold Costs Applicable to Sales Metric: The cost metric balances the equity ounces sold metric by encouraging efficient production of gold. The cost metric is designed to promote implementation of Company-wide cost control measures.

 

3. Capital Expenditures Metric: The capital expenditures metric focuses employees on efficient utilization of capital.

 

4. Gold Reserve and Non-Reserve Mineralization Additions Metric: The reserve and non-reserve mineralization additions metric promotes the discovery of new gold deposits and successful completion of the work needed to report these discoveries as proven and probable reserves and non-reserve mineralization. In a business that depletes its reserves every year through production, just maintaining the level of reserves and non-reserve mineralization from one year to the next is a substantial challenge.

 

The Company and the Compensation Committee believe that these metrics contribute to a balanced approach of driving both short-term and long-term share price appreciation. All targets are adjusted for acquisitions and divestitures during the year, if any, with the exception of reserve and non-reserve mineralization targets.

 

Calculation of Corporate Performance Bonuses: If the Company achieves its targeted performance for each of the metrics, the payout percentage for the Corporate Performance Bonus is 100%. If the maximum amounts for each metric are achieved or exceeded, the payout percentage for the Corporate Performance Bonus is 200%. If the minimum amounts are not achieved for a particular metric, no Corporate Performance Bonus is payable for that metric. For performance between the minimum and maximum for any metric, the amount is prorated to result in a payout percentage between 50% and 200%.

 

The 2009 targets were a mix of demanding financial, production, and reserve/non-reserve mineralization targets.

2009 Corporate Performance Bonus Metrics

 

 

For 2009, the Board of Directors applied its discretion to effect one adjustment to the bonus targets, as contemplated by the plan established earlier in the year, relating to the delayed completion of the Boddington project in Australia. Specifically, the Board of Directors adjusted the target Gold Equity Ounces Sold to remove timing impacts of the loss of Boddington volumes that resulted from the delayed commencement of commercial production at the Boddington project. The Board made this adjustment in recognition of the superior results in other parts of the Company in exceeding the Gold Equity Ounces Sold target. The Board of Directors did not remove the impacts of the delayed Boddington project from the Gold Costs Applicable to Sales or the Capital Expenditures metrics. The 2009 payout percentage for the Corporate Performance Bonus was 129.6%, calculated as follows:

 

2009 Corporate Performance Bonus Calculation

 

 

Thus, to calculate the Corporate Performance Bonus for each of the executives, the relevant target percentage of base salary was multiplied by 129.6%.

 

The targets for 2010 performance have not yet been finally established as of the date of this proxy.

 

Strategic Objectives Bonus. The purpose of the Strategic Objectives Bonus is to align personal performance with key individualized strategic objectives that will support the long-term sustainability and performance of the Company. The strategic objectives are not always quantitative, and may not have immediate impact on financial results of the Company, but are still important for sustained Company success. In order to encourage focus on the strategic objectives and reward individuals appropriately for results, the Compensation Committee decided that the Board’s business judgment must be applied to evaluating payout of the Strategic Objectives Bonus for individual Executive Officers. Accordingly, the Compensation Committee set the Strategic Objective Bonus at a maximum opportunity for each Named Executive Officer, rather than a target, with the intent that the Compensation Committee will exercise its business judgment in determining the amount of payout up to a maximum. For the Named Executive Officers other than the Chief Executive Officer, the Chief Executive Officer provides recommendations regarding the Strategic Objectives Bonuses to the Compensation Committee. The Board of Directors determines the Strategic Objectives Bonus of the Chief Executive Officer.

 

The Board designated several common Strategic Objectives for each Named Executive Officer in 2009, and also designated Strategic Objectives tailored to each Officer’s specific role. The common Strategic Objectives for the Named Executive Officers in 2009 were: build the best management team in the mining business (through honest constructive feedback and succession planning) and build the best company in the mining business (through delivery on near-term performance, planning for long-term sustainability, simplifying management structure/

performance reporting and creating a culture of innovation). Following is a summary of the key individual Strategic Objectives for the Named Executive Officer.

 

 

The amounts of the Strategic Objective Bonuses that the Compensation Committee approved for the Named Executive Officers for 2009 are shown in the Bonus column of the Summary Compensation Table on page 39. The Compensation Committee’s determination of the amounts of Strategic Objectives Bonuses is subjective, and not subject to mathematical precision. The Compensation Committee negatively impacted the Strategic Objectives Bonus for all of the Named Executive Officers based upon two issues in 2009, namely: 1) the late commencement of commercial production at the Boddington project in Australia, and; 2) the number of workplace accidents during the year. In determining the amounts of 2009 Strategic Objectives Bonuses, the Compensation Committee evaluated the Board’s opinions regarding progress against goals and, in the case of Messrs. Ball, Engel, Hill and Lansdown, the recommendations of the Chief Executive Officer.

 

Long-Term Compensation – Equity. Long-term compensation consisted of a Financial Performance Stock Bonus and stock options for 2009, with no increase in the target levels for 2009. The 2009 target long-term incentive compensation amounts are comprised of 50% Financial Performance Stock Bonus and 50% stock options. Rather than increase or alter long-term incentive compensation in 2009, the Committee elected to spend 2009 analyzing the gap in target long-term incentive compensation demonstrated in large survey and peer group data, as explained previously, and designing a new long-term incentive compensation vehicle to fill the gap for 2010, called Performance Leveraged Stock Units, explained below.

 

2009 Target Long-Term Equity Incentives

 

 

Financial Performance Stock Bonus. The Financial Performance Stock Bonus vehicle is an opportunity to earn Company common stock and restricted stock units based on a target number of shares. Specifically, the Company establishes a target number of shares by identifying a percentage of base salary for each executive officer in January and converting that dollar amount to a target number of shares using the average Company closing share price in December of the prior year. The Financial Performance Stock Bonus to be earned is tied to overall Company performance in two ways. First, the target grant is set in number of shares, versus dollars, so that the Officer is “at-risk” to changes in share price over the performance period. Second, the number of shares granted at the end of the performance calendar year (the following year in late February or early March) is based upon corporate

performance that the Company measures by way of the Corporate Performance Bonus metrics, and can range from 0% to 200% of target.

 

In 2009, the Financial Performance Stock Bonus was weighted between 2008 and 2009 results, 40% and 60% respectively. The purpose of the weighting is to emphasize long-term performance, while also emphasizing recent performance more significantly than performance from prior years. For the 2009 Financial Performance Stock Bonus (target shares determined in January 2009), the payout factor was 129%, representing 40% at 128.1% (2008 Corporate Performance Bonus payout factor) and 60% at 129.6% (2009 Corporate Performance Bonus payout factor). One third of the Financial Performance Stock Bonus was paid in common shares on the date of actual grant (March 1, 2010) and two-thirds of the Financial Performance Stock Bonus will be paid in restricted stock units that vest in equal annual increments on the second and third anniversaries from the date the Company set the target shares (March 1, 2011 and 2012).

 

On March 1, 2010, the Company awarded Financial Performance Stock Bonuses for 2009 performance in the following amounts.

 

2009 Financial Performance Stock Bonuses

 

 

 

 

In 2010, the Financial Performance Stock Bonus will be weighted between 2008, 2009 and 2010 results, 20%, 30% and 50% respectively.

 

The Company pays cash dividend equivalents on restricted stock units upon the grant of the common shares, meaning the Company pays no dividend unless the share is earned and vested.

 

Stock Option Awards. The stock option vehicle rewards executives for growth in the value of Company stock over the long-term. This is the high-risk, high-return component of the executive total compensation program because stock options deliver value to an executive only if the share price is above the grant price after the date of vesting and before expiration, and therefore stock price volatility will have a greater impact on total compensation results delivered from stock options as compared to restricted stock units.

 

Each Named Executive Officer has a target percent of base salary to be awarded in options. The Compensation Committee had the discretion to grant above or below the target, with management’s recommendation that individuals with high personal performance should receive a grant above target. In April 2009, all of the Named Executive Officers received at least the targeted amount of stock options, as well as additional options in recognition of high personal performance during 2008. To determine the exact number of options to grant, the Company divides the percentage of base salary for the grant by the Black Scholes value on the date of grant, which was $12.88 for 2009.

2009 Stock Options

 

 

The numbers and grant date fair values of stock options granted to the Named Executive Officers in 2009 are shown in the 2009 Grants of Plan-Based Awards Table on page 41.

 

2010 Performance Leveraged Stock Units. After identifying and confirming a gap in target long-term incentive compensation, the Committee designed a new long-term incentive equity vehicle for 2010 to close the gap, and add new metrics to the overall compensation scheme that closely align executive compensation to long-term Company and share price performance. At the beginning of each year starting in 2010, the Company will determine a target number of Performance Leveraged Stock Units (“PSUs”) for each eligible executive by dividing the target dollar amount of the PSU award, which will be a percentage of salary, by the average closing sales price of Company common stock for the fourth quarter of the prior year. The number of PSUs earned will be determined at the end of a three-year performance period based upon two metrics. First, the Company will determine the percent relationship (or ratio) between the average closing price of a share of Company common stock for the fourth quarter prior to the start of the three-year performance period to the average closing price of a share of Company common stock for the last quarter of the performance period. That percent relationship (or ratio) will determine the percentage of the target PSUs that will be earned by the executive. The Committee set a minimum payout of 50% of the target number of PSUs and a maximum payout of 150% of the target PSUs based on the metric of stock price. Second, eligible participants will have the opportunity to earn an additional 50% of target PSUs based upon a relative total shareholder return (“TSR”) metric, resulting in a possibility of earning a total maximum PSU payout of 200% of the target PSUs. The Company will measure its relative TSR versus a specific gold and mining company peer group over the three-year performance period. For any percentage point that the Company’s TSR is above the median of the peer group, eligible executives shall earn 2% of target PSUs with a maximum payout of 50% of target PSUs. This means that maximum payout of PSUs dependent upon the TSR metric would occur if the Company’s TSR reaches the 75^th percentile of the peer group. If the Company’s TSR is at or below the median of the peer group, there will be no payout of PSUs based on the TSR metric. Payout of PSUs will be in the form of Company common stock.

 

As a result of the adoption of the new equity compensation vehicle, the total target long-term incentives for senior executives will increase in 2010. See the chart below for the increase in total target long-term compensation, which will be comprised of equal parts of the Company’s existing Financial Performance Stock Bonus, stock options and the new PSUs.

 

2009 and 2010 Target Long-Term Equity Incentives

 

 

In addition to the full annual PSU target set in 2010 which will payout in 2013, in 2010 the Company will set one-time target PSU awards for each participant equal to the value of the 2010 target award. One-third of the target award will be eligible for payout in 2011 and two-thirds of the target will be eligible for payout in 2012. The purpose

of these additional PSU opportunities is to feather in the PSU program, allowing executives the opportunity to earn PSUs prior to early 2013, the payout date of the first full three-year PSU performance period.

 

The Committee elected the market and relative TSR metrics to strengthen the alignment between executive compensation and long-term Company and shareholder performance. The PSUs involve a three-year performance period with strictly external measures of Company stock performance and relative TSR performance. The minimum payout of 50% of target PSU is designed to fill a portion of the gap in target long-term incentive compensation identified in 2009, while the remainder of the payout potential is designed to payout only upon strong Company performance. In other words, the 50% of target minimum payout will serve to provide target long-term incentive compensation to the Company executives at a level to approximate the 50% percentile of the peer group named on page 26, but the potential payout of PSUs up to 200% of target will only occur when the Company’s performance is in the third quartile of the TSR peer group. The companies in the TSR peer group are listed below, and may be altered from time to time due to mergers, acquisitions or at the discretion of the Compensation Committee:

 

 

The TSR peer group varies from the total compensation peer group on page 26 because the TSR peer group is comprised of only companies with large gold mining operations and irrespective of comparable company size. The Committee determined that a relative TSR peer group should focus on gold operations entities, as those are the Company’s direct competitors for investors. The total compensation peer group includes companies without gold operations, but those entities are similar in revenue, net income, total assets, market capitalization and number of employees. The Committee determined that the total compensation peer group is a superior peer group for total compensation, rather than the TSR peer group, because the entities in the total compensation peer group are the Company’s competitors for employees and whose business operations are of a comparable size.

 

The Company has a package of post-employment compensation plans and policies in place that include Company funded benefits as well as employee-contribution benefits. The combination of plans and policies allow the Company to offer a broad base of its employees, including the Named Executive Officers, post-employment compensation as well as powerful incentives for employees to remain with the Company, rather than seeking alternative employment. The Company’s decisions regarding post-employment compensation take into account the industry sector and general business comparisons to ensure post-employment compensation is aligned with the broader market.

 

Retirement. On a regular basis, usually every three years, the Company reviews its retirement benefits. The purpose of the review is to assess the level of replacement income that the Company’s retirement plans provide for a full career Newmont employee. The Company attempts to maintain a competitive suite of retirement benefits that accomplishes income replacement post retirement. The level of income replacement varies depending on the income level of the employee. Those employees at lower income levels enjoy much higher levels of income replacement with the Company retirement benefits package, compared to higher income level employees. The benefits included in the analysis are the pension plan, pension equalization plan, 401(k) matching contribution and social security benefits. The Company retirement benefits are important hiring and retention tools for all levels of employees within the Company.

 

The Company offers two tax-qualified retirement plans, the Pension Plan, which is a defined benefit plan and the Savings Plan, which is a defined contribution plan (401(k)). Both of these plans are available to a broad range of Company employees, generally including all salaried U.S. based employees. Because of the qualified status of the Pension Plan and Savings Plan, the Internal Revenue Code limits the benefits available to highly-compensated employees. As a result, the Company provides a non-qualified defined benefit plan (Pension Equalization Plan) and a non-qualified savings plan (Savings Equalization Plan) for highly-compensated employees who are subject to the

Internal Revenue Code limitations in the qualified plans. The two equalization plans are in place to give employees the full benefit intended under the qualified plans by making them whole for benefits otherwise lost as a result of Internal Revenue Code annual compensation limits.

 

In 2009, Mr. Hill was not eligible for any of the above-named plans because he was employed in Australia. In Australia, Mr. Hill received superannuation retirement payments, which are designed to provide funds for retirement. In Australia, employers are required to contribute 9% of base earnings to a superannuation fund on behalf of the employee. The Company followed the compulsory superannuation contribution requirement of 9% base earnings for Mr. Hill.

 

See the Pension Benefits Table and 2009 Non-Qualified Deferred Compensation Table on pages 43 and 45 for a description of benefits payable to the Named Executive Officers under the Pension Plan, Pension Equalization Plan and the Savings Equalization Plan.

 

Change of Control. The Company recognizes that the potential for a change of control can create uncertainty for its employees that may result in loss or distraction of executives during a critical period. As a result, the Company adopted the Executive Change of Control Plan of Newmont (“Change of Control Plan”) to retain executives and their critical capabilities to enhance and protect the best interests of the Company and its stockholders during an actual or threatened change of control. When the Company adopted the original Change of Control Plan in 1998, the Compensation Committee at the time determined that the level of benefits in the plan were competitive within the mining industry. In the opinion of the present Compensation Committee, the levels of benefits provided in the Change of Control Plan continue to be appropriate to motivate and retain key executives during an actual or threatened change of control.

 

In the event of a Change of Control, as defined in the Plan, and a qualifying termination of employment, the Named Executive Officers receive three times annual pay and other benefits. See the Potential Payments Upon Termination or Change of Control section beginning at page 46 for potential amounts payable to the Named Executive Officers under the Change of Control Plan.

 

Severance. The Severance Plan of Newmont (“Severance Plan”) provides a certain number of weeks of salary and pro-rated annual cash bonus (at target levels) to U.S. domestic salaried employees of the Company following involuntary termination. Messrs. O’Brien, Ball, Engel, and Lansdown are all salaried employees of the Company and thus eligible to participate in the Severance Plan. Mr. Hill was an employee in Australia for 2009 and therefore he was eligible for the Australian redundancy program. The purpose of both of the Severance Plan and the Australian redundancy program is to provide basic income and benefit replacement for a period of weeks following employment termination, where termination is not due to an employee’s poor performance or misconduct. The Severance Plan and Australian redundancy program allow the terminated employee time and resources to seek future employment. In the judgment of the Compensation Committee, the benefits in the Severance Plan and Australian redundancy program are typical of those provided by other similar companies and provide the appropriate level of basic income and benefit replacement for a period of weeks that increases with the number of years of service.

 

See the Potential Payments Upon Termination or Change of Control section, beginning at page 50, for potential amounts payable to the Named Executive Officers under the Severance Plan, and under the Australian redundancy program in the case of Mr. Hill.

 

Officer’s Death Benefit. The Company maintains group life insurance for the benefit of all salaried employees of the Company. In addition, for highly-compensated executives, including the Named Executive Officers, the Company provides a supplemental Officer Death Benefit Plan. The purpose of the Officer Death Benefit Plan is to provide benefits to officers of the Company beyond the maximum established in the Company’s group life insurance, as appropriate to their higher income levels.

 

See the Potential Payments Upon Termination or Change of Control section starting on page 50 for potential amounts payable to the Named Executive Officers under the Officer Death Benefit Plan.

 

All of the Named Executive Officers are at-will employees of the Company, without employment agreements.

 

Executive Compensation Risk Assessment

 

In 2009, the Compensation Committee conducted a comprehensive risk assessment of the Company’s executive compensation program, which included the new PSU equity vehicle that will be in place for 2010. The Company has a global Enterprise Risk Management team, led by the Company’s Vice President and Treasurer. One of the Enterprise Risk Management team’s objectives is to conduct the compensation risk assessment and report on the process and findings to the Compensation Committee and the Audit Committee, as well as the full Board of Directors. In 2009, the Enterprise Risk Management team reviewed the executive compensation program, identified risk factors in compensation plans that may lead to excessive risk taking (meaning risks that are reasonably likely to have a material adverse effect on the Company) by executives, made an initial assessment as to whether the Company’s compensation program includes risk factors that may lead to excessive risk taking, and assessed the design features in the compensation program that moderate the potential for excessive risk-taking in the short and long-term.

 

The risk assessment of the compensation program will be an ongoing process for the Enterprise Risk Management team. In November 2009, the team reported to the Committee that the current analysis of the Company’s compensation program did not uncover risk factors that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee agreed with the conclusions of the risk assessment.

 

The general potential risk factors that may lead to excessive risk taking and related mitigation factors that the Enterprise Risk Management team reviewed were:

 

 

In evaluating the Company’s executive compensation program, the Enterprise Risk Management team determined that the compensation program does not exhibit indications of excessive compensation risk factors that are reasonably likely to have a material adverse effect on the Company, for the specific reasons stated above. Additionally, the Enterprise Risk Management team determined that there are compensation design elements in the Company’s compensation program that address each tier of a risk time horizon. To elaborate, the Enterprise Risk Management team groups enterprise risks by level of risk and time horizon. The time horizon includes short-term, medium-term and long-term. The Company compensation scheme includes design elements to mitigate risks at each of the time horizons:

 

 

The risk assessment of the compensation scheme will be an ongoing process for the Enterprise Risk Management team. The November 2009 analysis did not uncover risk factors that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee agreed with the conclusions of the current analysis.

 

Accelerated Vesting of Stock Awards.

 

Change of Control: A change of control will have certain immediate effects on stock awards granted to Named Executive Officers. Immediately prior to a change of control, among other things:

 

 

 

The restricted stock and stock option awards to Mr. O’Brien on October 31, 2008 do not vest upon a change of control, but do vest upon any involuntary termination of employment, excluding termination for cause as defined in the Executive Change of Control Plan.

 

Death/Long-Term Disability/Retirement/Severance: 

 

 

Granting Stock Options. The Company, at the direction of the Compensation Committee, has examined its policies and procedures relating to the grant of stock options. The Company:

 

 

The Company has a written policy governing the grant of stock options. The policy applies equally to grants of stock options to executives and other employees. The policy provides, among other things, that:

 

 

The Company’s 2005 Stock Incentive Plan defines fair market value of the stock as the average of the high and low sales price on the date of the grant. The Company selected, and the Compensation Committee approved, this formula to mitigate the effect of the volatility of the Company’s stock price, often a direct result of day-to-day changes in the gold price and not factors related to Company performance. The formula does not increase the likelihood that recipients will be granted in-the-money stock options.

 

Stock Ownership Guidelines. The Company’s stock ownership guidelines require that all employees designated as “executives” for purposes of this policy (approximately 60 individuals) own shares of the Company’s stock, the value of which is a multiple of base salary. For the Named Executive Officers, the stock ownership guidelines are as follows:

 

Stock Ownership Guidelines

 

 

Stock ownership guidelines were put in place to increase the alignment of interests between executives and stockholders by encouraging executives to act as equity owners of the Company. The Compensation Committee sets the ownership guidelines by considering the size of stock awards. Based upon the historic conservative levels of stock awards to Company executives, the Compensation Committee sets the ownership guidelines at corresponding levels. Unvested shares of restricted stock, restricted stock units and shares held in retirement accounts are considered owned for purposes of the guidelines. The Compensation Committee reviews compliance with the guidelines annually. Executives who are new to their positions have three years to comply with the guidelines. All of the executives identified above are in compliance with the stock ownership guidelines.

 

Restrictions on Trading Stock. The Company has adopted a stock trading policy for its employees, including the Named Executive Officers. The policy prohibits certain employees from trading during specific periods at the end of each quarter until after the Company’s public disclosure of financial and operating results for that quarter, unless they have received the approval of the Company’s General Counsel. The Company may impose additional restricted trading periods at any time if it believes trading by employees would not be appropriate because of developments at the Company that are, or could be, material. In addition, the Company requires pre-clearance of trades in Company securities for its Executive Officers, and prohibits buying shares on margin or using shares as collateral for loans.

 

Perquisites. The Company’s philosophy is to provide a minimum of personal-use perquisites to its executives. The Company seeks to provide perquisites that involve a significant business purpose. In 2009,

such business related perquisites for the Named Executive Officers were: (a) golf club membership for the President and Chief Executive Officer, Mr. O’Brien; and (b) personal use of administrative assistant services for Mr. O’Brien.

 

Mr. O’Brien uses the golf club for substantial business purposes, including business entertainment, meetings and dinners. In recognition of the fact that some portion of the membership is used for personal purposes, the entire amount reimbursed is considered a perquisite, is fully taxable to Mr. O’Brien, and reported in the All Other Compensation column of the Summary Compensation Table on page 40.

 

Tax Deductibility of Compensation. Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the amount of compensation in excess of $1,000,000 that the Company may deduct in any one year with respect to its chief executive officer and three other most highly compensated executive officers (excluding the chief financial officer) whose compensation must be included in this proxy statement because they are the most highly compensated executive officers. There are exceptions to the $1,000,000 limitation for performance-based compensation meeting certain requirements. The Company has not adopted a formal policy requiring all compensation to meet the exception requirements under Section 162(m) and therefore not be subject to the $1,000,000 deductibility limitation. The Company has decided not to implement a formal policy so that the Company can maintain flexibility in compensating executive officers in a manner designed to promote various corporate goals.

 

In 2009, Messrs. O’Brien, Engel, Hill and Lansdown amounts are greater than $1,000,000, and a portion of their salaries, bonuses, stock awards, and other compensation items are not deductible by the Company. Stock option awards pursuant to stockholder approved plans are performance-based and are fully deductible, regardless of the $1,000,000 limit in Section 162(m). Corporate Performance Bonuses, Strategic Objectives Bonuses and Financial Performance Stock Bonuses do not meet the performance-based exception under Section 162(m) and are therefore subject to the $1,000,000 deduction limit. To date, the Company has deemed the additional tax benefits that it could receive from a Section 162(m) executive compensation plan as immaterial to the Company. However, the Company continually assesses the materiality of additional Section 162(m) tax benefits that it could receive from a Section 162(m) executive compensation plan as executive compensation evolves.

 

2009 Summary Compensation Table

 

 

 

 

Refer to the Compensation Discussion and Analysis section for a description of the components of compensation, along with a description of all material terms and conditions of each component. In 2009, salary and bonus payments accounted for 31% of Mr. O’Brien’s total compensation. Salary and bonus accounted for 30%, 31%, 44% and 31% of Messrs. Ball’s, Engel’s, Hill’s and Lansdown’s total compensation, respectively.

 

2009 All Other Compensation Table

 

 

 

 

2009 Grants of Plan-Based Awards Table