25th Nov 2005 07:00
BHP Billiton PLC25 November 2005 BHP Billiton Limited Annual General Meeting - 25 November 2005 Speeches by Don Argus, Chairman, BHP Billiton and Chip Goodyear, Chief Executive Officer, BHP Billiton Don Argus, Chairman, BHP Billiton Good morning. My name is Don Argus, and I will Chair today's meeting. Welcome to the 2005Annual General Meeting of BHP Billiton Limited. I want to say what a pleasure it is for your directors to be here in Perth. Western Australia is a critical part of BHP Billiton's geography and animportant part of the history of the original BHP. 55 years ago we opened an iron ore mine at Cockatoo Island in Yampi Sound.Today, BHP Billiton's iron ore and nickel businesses are headquartered here andin the past four years alone, we have approved the investment of more than US$4billion in our iron ore, nickel, oil and gas, and alumina operations throughoutthe State. Together, our Western Australian operations provide more than 5000 direct jobsand many more jobs for contractors, and generate around A$360 million in Stateroyalties and taxes each year. Importantly, more than 28,000 Western Australians are shareholders in BHPBilliton and I'm glad so many of you could take the time to join us here today. The Board has a commitment to give shareholders in major capital cities ofAustralia the opportunity to attend annual general meetings where possible.Given both the importance of Western Australia to BHP Billiton and the number ofshareholders here, Perth was a logical choice for this year's meeting. Moving on to the business of the meeting, I propose to take the Notice as read.If you need a copy of the Notice, please ask one of the attendants. Minutes ofour last meeting are available for inspection in the registration area outside. All of your directors, other than our newest director, The Honourable Gail dePlanque, are here today. On my left is Chip Goodyear, our Chief ExecutiveOfficer and an Executive Director. The other non-executive directors are seatedin the auditorium. I'll ask them to stand as I introduce them. We have: DavidBrink; John Buchanan; Michael Chaney; Carlos Cordeiro; David Crawford; DavidJenkins; Lord Renwick; and John Schubert. You can read full details of theirbackgrounds and qualifications in the Annual Report. Next to Chip on my left is Chris Lynch, our Chief Financial Officer, and on myright is our Company Secretary, Karen Wood. Next to Karen is Executive Director,Mike Salamon. Unfortunately Dr de Planque could not be with us today and sends her apologies.Gail is a nuclear physicist and world authority in the field of nuclear energyand regulation, and we are delighted to have her join the Board. On your behalf I would like to welcome another recently appointed Director,Carlos Cordeiro to his first Annual General Meeting. Carlos brings to the Boardmore than 20 years' experience in providing financial and strategic advice tocorporations, financial institutions and governments around the world. On the other hand, this is the last meeting for Michael Chaney and Lord Renwick.Not only have Michael and Robin made a strong contribution to the development ofa high-performing company, both played key roles in the integration of BHP andBilliton following the merger. There is never a right time for hard-working, quality directors to leave a boardand, on behalf of all shareholders, I thank them both for their commitment andcontribution to the development of this group. Their wise counsel will bemissed. Also here this morning are Peter Nash and Michael Andrew, representatives fromthe Group's external auditors, KPMG. Let me now run through today's agenda. It's a full agenda, with 21 items ofbusiness. I will talk briefly about the financial results for the 2005 year, ayear in which BHP Billiton delivered another record result. I'll discuss thecompany's broader performance and how we continue to add value for shareholders.And I'll talk about how we see the year ahead. Chip will then talk to you about the operational performance of the company.Then I will discuss some of the questions that shareholders have sent to us,open the meeting for your questions from the floor and, after that, move to theformal items of business. At the end of the meeting, the directors and the management team would like youto join us in the foyer outside for some light refreshments. Last year, after a record profit, I asked Chip, on your behalf, "can you sustainthis level of performance?" Not only has the performance been sustained, Chip's team turned in a new recordprofit. The Group performed financially and, importantly, we continued to buildfor the future, both through new projects and strategic acquisitions. WMCResources adds a further suite of long-life assets in nickel and copper, as wellas expanding our energy portfolio to include uranium. For this reason, I believe2005 has been a hallmark year in the history of BHP Billiton. We have dramatically improved safety while, at the same time, delivering ourbest ever financial results, creating value for shareholders, and delivering onour commitment to the broader community and environment. I would like to paytribute to all our employees and contractors who have so significantlycontributed to this outstanding performance. At the outset, let me remind you that all the dollars we will talk about are USdollars unless otherwise stated. As you know, we operate and report in USdollars so Chip and I will remain consistent with that today. BHP Billiton in 2005 is a very different resources company. It is very differentto the BHP and Billiton companies that came together four years ago. Through the work of Chip and his team, BHP Billiton is the world's largestdiversified resources company, with a market capitalisation of around $93billion, and the only one with a full suite of energy products. I'll return tothat theme later. A critical area that Chip and his team are focussed on is safety. I am verypleased to be able to report to you that our safety performance has dramaticallyimproved at a time when we set new production records across the company. However, we still suffered three fatalities during the year and we have had onefurther fatality in the current financial year. The only acceptable bottom linefor the Board and the management team is no accidents and no fatalities, and Ican assure you that everyone in this company of 37,000 employees and around60,000 contractors is working hard to achieve that goal. Turning to the results. On any measure our 2005 results were outstanding: • the injury frequency rate dropped by 21 per cent; • revenue was up 28 per cent to $31.8 billion; • attributable profit of $6.5 billion was up 86 per cent on 2004's then record profit; • available cash flow increased by 70 per cent to $8.6 billion; • we returned around $1.7 billion in dividends to our shareholders; • we acquired and have successfully integrated WMC Resources; • we completed a $1.78 billion share buy-back; • and we completed eight major growth projects with ten more currently under development. And we did all this while maintaining our Moody's single A credit rating andStandard and Poor's A+ stable rating. One of our critical jobs as a Board is to ensure that every dollar invested bythe company on your behalf is used to create long-term value for allshareholders. During the year we successfully completed both stages of a $2 billion capitalmanagement program. The program enabled eligible shareholders to participate inan off-market share buyback and enabled us to increase the total year'sdividend. I will talk more about our dividend policy later. I said earlier that BHP Billiton is a very different resources company. One ofthe ways we are different is our focus on sustainable, value-creating growth. Asimple demonstration of this is the value of a shareholding in BHP Billitontoday. If you had invested $1,000 in BHP in 1998, it would be worth $4200 today,a compound annual growth rate of nearly 23 per cent. The acquisition of WMC Resources was integral to our strategy of creatingsustainable long term value. For instance, WMC expanded our presence in energy. Access to reliable, reasonably priced energy is the foundation for thedevelopment of emerging economies and for improving their living standards.WMC's assets have strengthened our ability to participate in the energy sectorand, therefore, in the development of those economies. With the rapid urbanisation of many regions of the world, energy demand islikely to increase faster than population growth over the next decades. At thesame time, the proportion of the world's population supplied by electricity willgrow faster still. The key question is where that energy is going to come from. Today, worldwide,79 per cent comes from fossil fuels, seven per cent from nuclear fission, 11 percent from bio mass and waste, two per cent from hydro, and one per cent fromrenewable sources. There is no prospect that we can do without any of theseenergy sources. So, meeting the world's future energy needs will require a mix of fuels,including fossil fuels, uranium and renewable energy sources. We believe that uranium has an important role to play in meeting the world'sgrowing energy needs. Along with clean coal technologies, renewables and otherenergy-efficient programs, uranium also has the potential to help address issuesof global climate change. With our existing thermal coal and oil and gas assets, plus the acquisition ofthe Olympic Dam copper and uranium operations from WMC, we are well-positionedto participate in the increase in demand for energy around the world. So, the new BHP Billiton is positioned for continued sustainable growth in arapidly changing world. In the four years since the merger, the value of theGroup has increased from 28 billion dollars to around 93 billion dollars. Thatis a direct reflection of the increase in the value of your investment in thecompany. This slide shows BHP Billiton's market capitalisation relative to the rest ofthe industry in 2001 and where it sits today. While the current economic climateis good for the resources industry generally, BHP Billiton has significantlyout-performed the sector. Not only is the financial performance world class but this is a company that isbecoming world class in every aspect of its business. In our commitment to theenvironment, to safety, to the communities where we operate, and to corporategovernance, BHP Billiton in 2005 is an organisation that shareholders, employeesand communities can be proud of. On behalf of the board, and Chip and his management team, I can assure you thatwe will continue to strive for excellence in all aspects of our business. While you will have received copies of our Annual Report there are some otherreports and documents I believe are equally important. Outside in the foyer wehave copies of our Sustainability report. We used to call this report ourHealth, Safety, Environment and Community report but we believe Sustainabilitybetter reflects its purpose. The full version of this report is available on our website. The report outlinesour key policy positions and the management standards we have put in place toensure we do what we say. It covers a range of areas from communityrelationships to the environmental challenges and ethical issues we face. I am also very pleased to be able to take the opportunity to launch our newcommunity programs report. This document, titled "Yesterday, Today, Tomorrow" isalso available in the foyer or from our website. It shows some of the communitysupport programs we have in place around the world. As you know, we have astated commitment to spend one per cent of our pre-tax profit on communityprograms. Finally, I would like to welcome some of the winners of our Health, Safety,Environment and Community Awards. These awards recognise the employees fromaround the world who have done the most outstanding work in their localcommunities. I will ask them to stand up so that you can recognise them. We have: MichaelJose from Australia; Monica Arrieta from Columbia; Ed Pincerato from Australia;Humera Malik from Pakistan; Venecia Van Loggerenberg from South Africa;Steynberg Van Rensburg from South Africa; Yogen Chetty, also from South Africa;and Eliseu Canuma from Mozambique. Please join me in congratulating them on their excellent achievements. I'm surethey will be happy to talk to you about their work over a cup of tea after themeeting. Now let me give you a view on how we see the year ahead. When we announced ourresults in August, some commentators were disappointed that our outlookstatement seemed a little subdued. That was despite our comments that weexpected commodity prices to remain high by recent historical standards. We have not retreated from our projected capital spend of around $6 billion onprojects and exploration this year. We remain optimistic about the growthprospects of China, India and Russia. The United States continues to grow, andJapan and Latin American countries are beginning to exceed growth expectations.That said, we are working in an environment where geopolitical unrest willcontinue to cast a shadow over the world. We take a pragmatic view on the value drivers of the Group and we still expectcommodity prices to remain high by historical standards, although it is notunreasonable to expect that prices will ease from their highs as new supplycomes on stream to meet strong demand. Our strategy continues to be to build a diversified geographic and productplatform to enable BHP Billiton to deliver sustainable value regardless ofeconomic conditions and at any stage of the cycle. Our pipeline of major projects - those that are currently either in developmentor in what we call 'feasibility' stage, demonstrates this strategy. Each of these projects goes through our robust evaluation process to determinethat they will be low-cost, long-life assets that deliver value, regardless ofglobal economic conditions. I will now ask Chip to talk to you about the performance of the operationsduring the year and how he sees our growth prospects. After Chip's presentation, I'll take questions from shareholders before weproceed with the formal items of business. Chip Goodyear, Chief Executive Officer, BHP Billiton Thank you Don. Good morning ladies and gentlemen. You've heard this morning about our financial results for the '05 financial yearand the strong total return to shareholders over the last several years. I'd like to look at some of the highlights of the year from an operationalperspective, to help explain how the efforts of everyone working at BHP Billitonare directly contributing to our current performance. First, in the area of safety, we achieved a 21 per cent underlying improvementin our Classified Injury Frequency Rate. The CIFR, as it is known, is animportant measure as it records every injury where the individual is unable toreturn to their normal work. And this covers our direct employees andcontractors. We have now gone to a metric of measuring Total RecordableInjuries, which is an even broader measure of safety performance. It is the very nature of accidents or incidents, particularly in our industry,that the same occurrence can result in anything from no injury to a fatality,depending on the precise circumstances. So it is vital that we eradicate thebehaviours and activities that lead to any of these injuries - not just tofatalities - hence our focus on this measure. We did have three fatalities during FY05 and, while that's an improvement on the17 in the previous year, it is still three too many and we must continue tofocus on making progress toward our Zero Harm target. Our people have produced some great results in the environment and communityareas over the last several years and we were honoured to receive the 'Companyof the Year" award from the Business in the Community organisation in the UK inJuly. We are the first company in the extractive industries to win the award andit was a great reflection of the work of our people around the world over theyears. We are all hearing about the strength of demand for commodities globally and thehigh prices that are being achieved in the current environment. It might seeminevitable that a company like BHP Billiton, with such a diverse spread ofproducts, is going to achieve record profits in this high-demand environment.But it is important to remember that years like this happen when preparationmeets opportunity. Indeed, every one of our seven Customer Sector Groups produced higher earningsbefore interest and taxes in 2005, compared to the corresponding period. In the Petroleum CSG, EBIT increased by 32 per cent; in the Aluminium CSG, EBITwas up by 26 per cent; Base Metals was up by an extraordinary 88 per cent; andCarbon Steel Materials, which of course comprises iron ore and coking coal, wasup by 148 per cent. Diamonds and Speciality Products' EBIT was up by eight per cent; Energy Coalincreased by 163 per cent and Stainless Steel Materials increased EBIT by 33 percent. These increases are not simply a result of high prices. To appreciate whatdifferentiates BHP Billiton from others, it is important to understand what thecompany has done to actively capture the benefits of the high demand and priceclimate. During the year we achieved record volumes in eleven commodities. Thosecommodities were: natural gas; aluminium; alumina; copper; silver; lead; ironore; coking coal; manganese ore; manganese alloy; and nickel. It is great to hitproduction records in high price environments. If we look at volume growth over the last four years, we have seen more than 50per cent growth in nickel and silver production, more than 40 per cent growth iniron ore, manganese ore and alumina and more than 30 per cent growth in copper,aluminium and natural gas. The increases in our volumes are the result of two important actions over thelast several years. First, there are the improvements made at individualoperations through what we call 'business excellence' initiatives. Let me giveyou a few examples of these. The manganese we produce from our Gemco operation on Groote Eylandt in theNorthern Territory is an important component of steel-making. A team of ourpeople got together with the aim of increasing the rate at which ore could befed to the concentrator where the ore is processed. First of all, the team identified and analysed the reasons why the concentratorhad unscheduled stoppages and variable feed rate. Then they generated more than130 viable solutions and began implementing them. The result during the '05 financial year was increased production of manganesefrom Gemco that translated into a $10.6 million increase in earnings. At our Tintaya copper operation in Peru, a team of our people looked at how theycould increase the amount of ore being processed through the oxide plant. Theyidentified several causes of stoppages and put in place solutions as simple asprotecting one of the conveyors from rain. The increase in the amount of orecrushed through the measures they implemented resulted in an increase toearnings of $3.4 million. Projects like this are being conducted across all our operations. They rely onthe energy, enthusiasm and determination of our people to constantly improve ouroperations and find better ways of doing things at the grass roots level. Thesesorts of improvements can't be made by the company's executives or corporatefunctions; they depend on all our people working together to come up withcreative solutions to challenging problems. And they result in increased profitsfor the company and greater returns to you, the shareholders. The second reason for the increase in volumes of our commodities during the yearis the expansion in capacity that we are creating through our growth projects.Since June 2001, we completed 24 major projects, bringing on new capacity acrossa range of commodities and ensuring we had additional product available to meetthe growing demand for natural resources. Demand continues to be strong and we expect demand growth to continue as Chinaundergoes its large-scale urbanisation and countries like India follow the sametrend of a burgeoning middle-class. During the '05 financial year we approved another four projects - two inPetroleum and one each in copper and iron ore - and we continue to give the goahead to new projects, such as the expansion of our Western Australian iron oreoperations and development of the Stybarrow oil field off the north westAustralian coast, which we announced just yesterday. Our current project pipeline includes 26 projects in either development orfeasibility and represents $11.9 billion of capital expenditure. And there aremany more projects that sit behind this pipeline, in earlier stages ofassessment, that, ultimately, we can bring on line if we believe market demandwarrants those investments. In addition, we expect our exploration andtechnology activities to continue to identify opportunities. I would like to emphasise the quality of each of these projects. Despite thesheer quantity of projects being assessed and developed, we remain absolutelyfocused on our strategy of developing tier one, or long-life, low-cost assets.With our solid track record of project delivery, many of our projects will beamongst the best in the industry, whether from a capital or operating costperspective. Also central to our strategy is our focus on financial and capital disciplineand we will not compromise this to rush through any of our projects. We remainclearly focused in this area at a time when there is not only increased pressureto deliver growth, but also significantly increasing pressure on costs andschedules brought about by the tight market situation. Increased costs will impact some of our projects - that is a fact of life in ourindustry at the moment - but we are diligently managing these cost pressures;our rigorous project approval processes will stand us in good stead. Again, we are fortunate to have excellent teams of people who have extensiveexperience in project development, working around the world as they complete oneproject and move on to the next. As you know, we completed the acquisition of WMC Resources during the year. WMC's assets have assisted to position BHP Billiton as one of the industryleaders in nickel through the addition of their extensive Western Australianassets to our existing Queensland and Colombian nickel operations and our growthprojects in Western Australia. We have a positive view of the nickel outlook andare excited about being able to develop these assets further. Likewise, through the acquisition of Olympic Dam in South Australia, we havebeen able to augment our copper position and gain prime opportunities forexpansion in future years. We have effectively completed the WMC integration process, with those assets nowpart of our existing Customer Sector Groups and many of the WMC people now partof the BHP Billiton family. I'd like to take this opportunity to thank all our people at BHP Billiton. It isa very exciting but demanding time in our industry. To achieve the sort ofresults we are discussing here today requires enormous effort by all of ourpeople to ensure we do make the most of the opportunities presented to us. I'll now hand back to Don. Don Argus, Chairman, BHP Billiton Thanks Chip. This year we again invited shareholders to send in questions ahead of themeeting to give us some guidance on the issues you would like to see covered andI want to thank those shareholders who responded. I will now address the issues that were raised most frequently. Turning first to dividends. We have received queries around why our finaldividend for the year of 14.5 cents wasn't higher, given the strong financialresults and record profit. Dividends are one of the two components of your investment. The other componentis increases in the share price. We have always said, and continue to hold the view, that our top priority forcash flow is to finance value-driven growth opportunities. It is the company'sinvestment in the growth projects that Chip and I have discussed today, that isdriving both the Group's market capitalisation and the increasing dividendpay-outs. As long as we continue to see opportunities for adding value, we will reinvestin the business. Our next priority is to maintain our capital structure in line with our A creditrating. Next, we commit to returning cash to shareholders, either through ourprogressive dividend policy or by other means - and you are aware of the $1.78billion share buy-back we successfully completed last year. In the 2005 financial year, BHP Billiton returned nearly $1.7 billions individends alone. The final dividend for the year of 14.5 cents was 53 per centhigher than the final dividend declared the year before. And it represented theseventh consecutive increase in our dividend payments. Your Board firmly believes that our progressive dividend policy is the rightone. You can be assured that the Board will continue to carefully assess thecompany's position and, if we believe we cannot better invest our cash invalue-driven growth, we will consider how best to return cash to shareholders. A number of shareholders also asked about a dividend reinvestment plan. I understand how attractive DRPs can be to some shareholders, however they arenot an efficient way for BHP Billiton to raise capital. In the future we may look to raise capital through a DRP but we do not requireadditional capital at the moment. In fact, we have been returning capital toshareholders through the share buy-back. The next subject that was raised by a number of shareholders is uranium. BHPBilliton acquired WMC Resources in August 2005. That gives BHP Billiton accessto around one third of the world's economically recoverable uranium resourcesand we currently supply eight per cent of the world market for uranium. Nuclear power capacity world-wide is increasing steadily with over 30 reactorsunder construction in eleven countries. Most reactors on order or planned are inthe Asian region. In addition, significant capacity is being created byupgrading the performance of existing plants. It is not unreasonable to expect the operating lives of upgraded plants toextend out from 40 years to 60 years. We also expect that the gap betweenprimary supply and demand for uranium in commercial power generation, is likelyto persist for many years. As you will have seen in media reports, there is increasing recognition of therole that uranium can play in helping to meet the world's energy demands, whilealso addressing the issue of climate change. We recognise that in entering the uranium business, we will be dealing with acommodity about which the community has some specific concerns. Our willingnessto participate in this sector is based on the following three facts: First, the nuclear power industry is one of the most highly regulated industriesin the world with stringent licensing requirements for the construction,operation and decommissioning of all facilities involved in the nuclear fuelcycle. Secondly, Australian mines can only supply uranium to those states that havesigned the Treaty for non-proliferation of nuclear weapons and where safeguardstandards are ratified in accordance with the Treaty. Thirdly, the Australian Government has extended the Treaty requirements throughbi-lateral agreements with customer countries that reinforce the safeguardrequirements of the International Atomic Energy Agency. Issues that emerged from the questions submitted are the handling and storage ofwaste and the potential for radio-active material to be diverted to countriesthat have not signed the Treaty. As I have mentioned, the safeguards on the useof uranium are robust. As a miner of uranium we do not have direct responsibility for the storage ofwaste, however, as a responsible member of the industry, we are of courseconcerned with the handling processes from an industry perspective. We will work with others involved in the life cycle of the nuclear powerindustry to optimise the effectiveness of management procedures and safeguards. Another issue that shareholders have expressed interest in is the FederalGovernment's proposed Industrial Relations legislation. We are a global company with operations and projects throughout the world. Thesuccess of each one of these operations and projects depends largely on ourrelationship with our workforce. That means we take the initiative at each individual business to put in placethe best process to ensure we attract and retain the highest quality people. We are proud of our relationship with our employees in Western Australia andthroughout the world. We believe that we would not have performed sosuccessfully over the last few years if it wasn't for our employees and theirefforts. BHP Billiton has participated in the Government's consultation process aroundthe proposed industrial relations reforms, and we support any reforms that makeAustralia more competitive internationally and enhance productivity. The fifth issue raised by a significant number of shareholders was executiveremuneration. As I did last year, I would like to take you through how BHPBilliton remunerates its executives by addressing the key questions we thinkshareholders should be asking. This is the fourth year that we have put theRemuneration Report to a vote. Some of you will have seen these questions last year. They are: • Is the remuneration package made up of fixed and at-risk components? • What is the split between the fixed and at-risk components? • How is the fixed amount set? • What performance conditions attach to the at-risk component? • Are the performance conditions robust and will they create long-term value? • How has the company performed against the performance conditions? and finally • What payments would be made when a contract comes to an end? I will use the CEO's package as an example. In 2005 Chip earned $4.9 million. This was made up of fixed and at-riskcomponents. 41 per cent was fixed as his base salary. 59 per cent was at-risk.In other words, over half of Chip's pay was assessed and paid as a result of howthe company performed. The fixed amount is set by reference to the market, that is, what do we have topay to attract and retain a highly talented CEO in Australia. From time to time the Remuneration Committee checks that our pay level is inaccordance with the prevailing market rate. The Committee did this again lastyear. It is also typical for pay for all workers to be reviewed each yearagainst cost of living changes. The increase in the cost of living varies across the regions of the world wherewe operate, and for last year it ranged from two to seven per cent. The increasein Chip's base salary, which reflected the cost of living changes in the regionapplicable to him, was five per cent. The at risk remuneration is different and will vary depending on the performanceof the group. So how is the at risk amount determined? The 59 per cent that waspaid for performance was assessed by reference to short and long termincentives. The short term performance conditions included: our performance on health,safety and the environment; how much shareholder value was created; and how muchnet present value was added. The Board signs off on these performance conditions at the beginning of everyyear and then on how the executives have performed at the end of the year. The next question is: will the conditions create long-term value? This can bebest illustrated by looking at the long term incentives. This year we are asking you to approve the grant of 600,000 performance sharesto Chip. The performance conditions run over five years, so for Chip to receivethose shares in 2010, the total shareholder return (that is the total of theamount by which the share price has increased and the dividends that have beenpaid) must exceed the TSR of the companies in our comparator group by acompounded annual rate of 5.5 per cent. You can see from this slide what would have to happen to your share price anddividends over the next five years for Chip to receive all those shares. Thecumulative amount equates to exceeding the average total shareholder return ofthe comparator group over a period of five years by 30 per cent. Keep in mind that the Board has limited the total number of Performance Sharesthat can be granted to a value that is no more than two times the executive'sannual base salary. You can see how the company has been performing against these conditions fromthese slides. First, you can see from the orange line how we have performedagainst our comparator group and the market over the last year. And second, howwe have performed over the last five years. It is reassuring that a majority of our shareholders think that we have theright incentives to attract, retain and motivate quality executives around theworld. The final question to ask is what arrangements are in place to minimise theamount that is paid when a contract comes to an end. Our policy is to make surewe can terminate contracts on 12 months' notice and that we don't have to paymore than 12 months' salary. While we still have one or two old executive contracts that require us to paymore than 12 months' salary, Chip's contract can be terminated by giving 12months' notice which would require a payment of one year's base salary, plus theamount paid instead of superannuation, which was $630,000 based on his salary at30 June 2005. The shares Chip would be entitled to retain if his contract comesto an end are detailed in the Annual Report. I've outlined the process BHP Billiton has adopted to set executiveremuneration, a process that is well described in the Annual Report. But thereal issue in understanding our remuneration policy is this: BHP Billiton is acomplex company of 37,000 employees mining, processing and marketing productsranging from iron ore to diamonds at around 100 operations in 25 countries. We are the world's largest diversified resources company and the 33rd largestcompany in the world, according to FT Global 500 ranking in September this year.That means we face competition for talent not only from other resourcecompanies, but from other similar sized companies around the world. The senior executive team is responsible for making judgements about highlycomplex, long life projects where the pay-off is often not seen for 10 to 15years and the asset's life may be up to 40 years. Finally, it is hard to put a precise value on executive remuneration but whatall of us know is that good executives create real value and bad ones destroyvalue, and cause enormous long term damage to the companies they run. Ladies and gentlemen, the issues I have covered were those raised mostfrequently by shareholders ahead of the meeting. The Chairman then conducts the formal items of business. In closing the meeting, let me say again that the results for the 2005 financialyear are an indication of the strength of the BHP Billiton Group. BHP Billiton is in strong financial shape. We have strong cash flows andmargins, professional and capable leadership, a committed workforce and animpressive pipeline of growth projects. All of us are focussed on ensuring thatshareholders, our employees and the community share in our success. - Ends - BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209Registered in Australia Registered in England and WalesRegistered Office: Level 27, 180 Lonsdale Street Melbourne Registered Office: Neathouse Place London SW1V 1BH UnitedVictoria 3000 KingdomTelephone +61 1300 554 757 Facsimile +61 3 9609 3015 Telephone +44 20 7802 4000 Facsimile +44 20 7802 4111 The BHP Billiton Group is headquartered in Australia This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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