Nomination & Remuneration Committee Charter
1. General Scope and Authority
Babcock & Brown Power (“BBP”) is a stapled structure comprised of the following entities:
- Babcock & Brown Power Limited (“BBPL”);
- Babcock & Brown Power Trust (“BBPT”); and
- any respective subsidiary entities of BBPL and BBPT.
Babcock & Brown Power Services Limited (“BBPS”) is the responsible entity of BBPT. The issued units of BBPT and the issued shares of BBPL are stapled together and listed on the Australian Securities Exchange (“ASX”) and trade as stapled securities under the ASX code “BBP”. The relationship between BBPL and BBPS is governed by the terms of a Stapling Deed dated 9 November 2006 (“Stapling Deed”).
Following consultation with the Board of Directors of BBPS, the Board of Directors of BBPL by a resolution passed on 25 June 2007 established the BBPL Nomination and Remuneration Committee (“Committee”), which is constituted under this Charter.
The proceedings and meetings of the Committee will be regulated by the provisions of the constitution of BBPL for regulating the meetings and proceedings of the Board of BBPL to the extent to which they are relevant to the terms of this Charter. The Committee may vary the rules regulating its proceedings and meetings.
The Board of BBPL has certain responsibilities to its shareholders. The Board of BBPS has similar responsibilities to unitholders in BBPT. Pursuant to separate management agreements, the Boards of BBPL and BBPS have each appointed Babcock & Brown Power Management Pty. Limited (“Manager”) to provide management services for BBPL and BBPT respectively, in order to assist the Boards discharge their duties.
The Board of BBPL has delegated certain tasks to the Committee under this Charter. Specifically the Committee will:
(a) consult with the Manager regarding the composition of the BBPL Board (having particular regard to the skills possessed by Directors) and succession planning of the Board of BBPL;
(b) in consultation with the Manager, monitor and recommend to the BBPL Board the level of remuneration for Directors, as well as approve, on behalf of the Board, the public reporting of BBPL Director remuneration;
(c) approve, on behalf of the Board, the public reporting of remuneration for the Key Management Personnel of the Manager; and
(d) monitor and periodically review the performance of:
(i) the Manager; and
(ii) individual Key Management Personnel of the Manager.
The Committee will also be consulted by the Manager on the proposed remuneration (base salary and any short term incentive payments) as determined by the Board of the Manager for the Key Management Personnel of the Manager, however the Committee recognises and acknowledges that such remuneration is based on the Babcock & Brown Group’s remuneration principles and practices.
Any Committee Member who is also a member of the Board of the Manager, will exclude himself or herself from the room during any discussion or voting by the Committee on matters under paragraph 1(d)(i) above. Any discussion or voting by the Committee on matters under paragraph 1(d)(ii) above will be undertaken in the absence of the individual Key Management Personnel of the Manager whose performance is the subject of the review.
The Committee, as representative of BBPL with delegated authority under this Charter, has the right to request any information from the Manager that the Committee considers necessary or desirable to enable it to assess the performance of the Manager in providing the management services under the management agreement, or to comply with any law. This right to request information includes the right to obtain external advice when necessary, and any advice so obtained will be made available to all Directors of the Board.
2. Composition
This Committee will consist of not less than 3 Members, a majority of whom must be independent of the Manager. This will remain the case until that number and composition is amended by a resolution of the Board of BBPL.
A Member of the Committee need not be a Director of BBPL. A Member of the Committee will cease to be a Member of the Committee if the Member retires, is removed or resigns from the Board of BBPL and it is determined that the Member will not continue as a (non-director) Member of the Committee. The Board of BBPL will decide a suitable replacement for that Member of the Committee in its discretion, subject only to the ASX Listing Rules and the Corporations Act.
The Chairman of the Committee will be independent of the Manager.
A Committee quorum will comprise 2 Members of the Committee. Ordinarily a quorum will comprise at least one Member who is independent from the Manager and at least one Member who is not independent from the Manager. The exception to this is circumstances where the non-independent Member has excluded himself from discussion and voting (e.g. consideration of matters under paragraph 1(d)(i)), in which case a quorum requires any other 2 Members. In the absence of the Chairman of the Committee, the other Members of the Committee must elect one of their Members as Chairman for the meeting or for the relevant part of the meeting, as appropriate.
The Committee may invite any representative of the Manager and any of its Key Management Personnel or other individual to attend the meetings of the Committee as they deem appropriate.
The Company Secretary is the secretary of the Committee.
3. Meetings
The Committee will meet as frequently as required but not less than once per year.
Any Committee Member or the Company Secretary may call a meeting of the Committee.
A notice of each meeting confirming the date, time, venue and agenda must be forwarded to each Member of the Committee (with a copy to all Directors of BBPL) a reasonable time prior to the date of the meeting. The notice for Members will be accompanied by, or closely followed by, all relevant supporting papers for the agenda items that are to be discussed at the meeting.
The Committee will have access to advice from a representative of the Manager and any of its Key Management Personnel or other individuals including appropriately qualified external advisors, if that is required. The Committee may meet with external advisors in the absence of a representative of the Manager or any of its Key Management Personnel.
The Chairman of the Committee or that person’s delegate must report to the Board of BBPL (or, where applicable, BBPS) at its next meeting following each meeting of this Committee.
A meeting of the Committee may be held by Members communicating with each other by any technological means by which they are able simultaneously to hear each other and participate in discussion. The minutes of the meeting shall record the method by which the meeting was conducted. Decisions of the Committee may also be made by way of circular or written resolution of Committee Members.
Minutes of proceedings and resolutions of Committee meetings, as well as resolutions passed by way of circular resolution, must be kept by the Company Secretary. Minutes and circular resolutions will be distributed to all Committee Members and the Chairman of the Board of BBPL after preliminary approval of those minutes has been given by the Chairman of the Committee. Minutes, agenda and supporting papers will be provided to any BBPL Director upon a request to the Company Secretary, so long as no conflict of interest exists.
4. Duties and Responsibilities
The duties and responsibilities of this Committee are as follows:
Remuneration
Manager Performance
The Committee will, at least once per year, monitor and review the performance of the Manager in providing services under the management agreement. During this review, any Committee Member who is not independent from the Manager will exclude themselves from the room during discussion and any voting on the Manager’s performance.
KMP Performance and Remuneration
Taking into account the fact that the Key Management Personnel’s remuneration is set by the Manager under the Babcock & Brown Group’s remuneration principles and practices, the Committee will:
(a) consult with the Manager in respect of the Key Performance Indicators (KPIs) for each of the Manager’s Key Management Personnel as determined by the Manager and provide feedback to the Manager about their respective performance against such KPIs;
(b) provide input and advice to the Manager about remuneration of Key Management Personnel or other individuals, as requested by the Manager, based on the Babcock & Brown Group’s remuneration principles and practices;
(c) approve the Remuneration Report to be disclosed in the BBPL Annual Report; and
(d) monitor any amendments to the Babcock & Brown Group’s remuneration principles and practices and report such amendments to the BBPL Board as appropriate.
Long Term Incentive Plans
Taking into account the fact that the Key Management Personnel’s remuneration is set by the Manager under the Babcock & Brown Group’s remuneration principles and practices, the Committee will:
(a) consider for approval the formulation of any long term incentive plans (“LTI Plans”) recommended by the Manager involving the issue of BBP Stapled Securities; and
(b) monitor and review any LTI Plans for compliance with changes to legislation, regulation and market expectations or practices.
Independent Director Remuneration
The Committee will make recommendations to the Board for determining the level of remuneration to be applied to Independent Directors of BBPL. The Committee may engage external advisors to provide information to the Board to be considered in its deliberations for the purpose of recommending an appropriate level of remuneration for Independent Directors. All fees paid to Independent Directors will be disclosed in BBPL’s Annual Report to the extent required by law.
Nomination and Succession
The Committee will:
(a) periodically assess the skills required to competently discharge the Board’s obligations considering the strategic direction of BBP and report to the Board on the outcome of that assessment;
(b) make recommendations to the Chairman of the Board about how to enhance the skill levels possessed by the present Directors of BBPL;
(c) review potential candidates for appointment to the Board of BBPL as identified by the Manager. In identifying suitable candidates, the Manager will have regard to the skills required relative to the skills represented by the then members of the Board of BBPL;
(d) make recommendations to the Board on candidates identified by the Manager, that the Committee considers appropriate for appointment;
(e) provide confirmation of the Directors to retire annually by rotation; and
(f) have oversight of the BBPL Board’s annual performance evaluation process which will be managed by the Committee Chairman and the Company Secretary.
5. Advice to the BBPS Board
(a) Consistent with the intent and philosophy that underpins the terms and conditions of the Stapling Deed that exists between BBPL and BBPS as the Responsible Entity of BBPT, the Committee will, at the request of the Board of BBPS, from time to time carry out on behalf of BBPS, similar activities as the Committee is authorised to carry out for BBPL, and the Committee will provide to the Board of BBPS, advices and recommendations in relation to the matters referred to in this Charter. It is the intent that the BBPS Board can rely on those activities, advices and recommendations as if the Committee was a committee of the BBPS Board.
(b) The Board of BBPS only has the authority to request the Committee to carry out activities that relate to BBPS, and have no authority to request the Committee to carry out activities in relation to BBPL or any entities in which BBPL has a direct or indirect membership interest.
6. Review
The terms of this Charter will be reviewed by the Board of BBPL periodically as required, but not less than every two years.