The Company is a designated foreign issuer as defined by Canadian National Instrument 71Ͳ102 - 'Continuous Disclosure and Other Exemptions Relating to Foreign Issuers' and is subject to Australian law and the regulatory requirements of the Australian Securities and Investments Commission.
This Notice of Meeting and Explanatory Statement should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser without delay.
The Annual General Meeting of the Shareholders to which this Notice of Meeting relates will be held at 3.00pm (WST) on Wednesday, 25 November 2015 at:
The business of the Annual General Meeting affects your shareholding and your vote is important.
To vote in person, attend the Annual General Meeting on the date and at the place set out above.
Notice is given that the Annual General Meeting (AGM) of Western Areas Ltd (Company) will be held at Fraser's Function Room 1, Fraser Avenue, Kings Park, Western Australia, 6005 on 25 November 2015 commencing at 3.00pm (WST).
The Explanatory Statement to this Notice of Meeting provides additional information on matters to be considered at the AGM. The Explanatory Statement, Schedule and the enclosed Proxy Form are part of this Notice of Meeting.
Terms and abbreviations used in this Notice of Meeting, Schedule and Explanatory Statement are defined in the Glossary.
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WELCOME ADDRESS
By Mr Ian Macliver, Independent NonͲExecutive Chairman.
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FINANCIAL STATEMENTS AND REPORTS
To receive and consider the Annual Financial Report of the Company for the financial year ended 30 June 2015 together with the Declaration of the Directors, the Directors' Report, the Remuneration Report and the Auditor's Report.
Note: There is no requirement for Shareholders to approve these reports.
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RESOLUTIONS
ORDINARY BUSINESS
Resolution 1 - ReͲelection of Independent NonͲExecutive Director - Mr Richard Yeates
To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
'That Mr Richard Yeates, who retires by rotation in accordance with clause 17.4 of the Constitution and Listing Rules 14.4 and 14.5 and, being eligible for reͲelection, be reͲelected as a Director of the Company.'
Resolution 2 - ReͲelection of NonͲExecutive Director - Mr Julian Hanna
To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
'That Mr Julian Hanna, who retires by rotation in accordance with clause 17.4 of the Constitution and Listing Rules 14.4 and 14.5 and, being eligible for reͲelection, be reͲelected as a Director of the Company.'
Resolution 3 - Adoption of Remuneration Report
To consider and, if thought fit, to pass, with or without amendment, the following resolution as a nonͲbinding resolution:
'That, for the purpose of section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the Remuneration Report as contained in the Company's Annual Financial Report for the financial year ended 30 June 2015.'
Note: the vote on this Resolution is advisory only and does not bind the Directors or the Company.
Voting exclusions on Resolution 3 are set out under the heading 'Entitlement to Vote' below.
SPECIAL OR OTHER BUSINESS
Resolution 4 Ͳ Issue of Performance Rights to Daniel Lougher
To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
'That, for the purposes of Listing Rule 10.14, sections 200B and 200E of the Corporations Act and for all other purposes, Shareholders approve the issue of 299,750 Performance Rights to Mr Daniel Lougher under the terms of the Company's Performance Rights Plan (including the issue of Shares on the vesting of those Performance Rights), as detailed in the Explanatory Statement accompanying this Notice of Meeting.'
Voting exclusions on Resolution 4 are set out under the heading 'Entitlement to Vote' below.
Resolution 5 Ͳ Issue of Performance Rights to David Southam
To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
'That, for the purposes of Listing Rule 10.14, sections 200B and 200E of the Corporations Act and for all other purposes, Shareholders approve the issue of 168,640 Performance Rights to Mr David Southam under the terms of the Company's Performance Rights Plan (including the issue of Shares on the vesting of those Performance Rights), as detailed in the Explanatory Statement accompanying this Notice of Meeting.'
Voting exclusions on Resolution 5 are set out under the heading 'Entitlement to Vote' below.
Resolution 6 Ͳ Issue of Shortfall Performance Rights to David Southam
To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:
'That, for the purposes of Listing Rule 10.14, sections 200B and 200E of the Corporations Act and for all other purposes, Shareholders approve the issue of 94,363 Shortfall Performance Rights to Mr David Southam under the terms of the Company's Performance Rights Plan (including the issue of Shares on the vesting of those Performance Rights), as detailed in the Explanatory Statement accompanying this Notice of Meeting.'
Voting exclusions on Resolution 6 are set out under the heading 'Entitlement to Vote' below.
Resolution 7 - Adoption of Proportional Takeover Provisions To consider and, if thought fit, to pass the following resolution as a special resolution:
'That, for the purposes of section 648G of the Corporations Act and all other purposes, the Company adopt and reinsert the proportional takeover provisions in the Constitution, to have effect for a period of three years after the date of the Annual General Meeting.'
ENTITLEMENT TO VOTE
Voting exclusions Resolution 3 - Adoption of Remuneration Report
Pursuant to section 250R(4) of the Corporations Act, the Company is required to disregard any votes cast on Resolution 3 (in any capacity) by or on behalf of either:
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a member of key management personnel (KMP) of the Company, details of whose remuneration are included in the remuneration report; or
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a closely related party of such a member, (each a Prohibited Person). However, the Company will not disregard a vote if:
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the Prohibited Person does so as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution, and the vote is not cast on behalf of a Prohibited Person; or
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that vote is cast by the person chairing the meeting as proxy for a person entitled to vote and their appointment does not specify a voting direction but expressly authorises the Chairman to exercise the proxy even though Resolution 3 is connected with the remuneration of the KMP of the Company.
If you are KMP or a closely related party of KMP (or are acting on behalf of any such person) and purport to cast a vote that will be disregarded by the Company (as indicated above), you may contravene the voting restrictions that apply to you under the Corporations Act.
KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, whether directly or indirectly. Members of KMP include its Directors and certain senior executives.
Resolutions 4, 5 and 6 - Issue of Performance Rights to Messers Lougher and Southam
The Company will disregard any votes cast on Resolutions 4, 5 and 6 by or on behalf of any Director (on the basis they are eligible to participate in the Company's Performance Rights Plan), any of their associates (as defined in the Corporations Act) respectively, and any votes cast as a proxy on Resolutions 4, 5 and 6 by a KMP or a KMP's closely related party, unless the vote is cast:
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by a person as proxy for a person who is entitled to vote in accordance with a direction on the proxy form; or
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by the person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides.
A vote must not be cast on Resolutions 4, 5 and 6 (as the case may be) by a KMP, or a closely related party of a KMP, acting as proxy if their appointment does not specify the way the proxy is to vote on Resolutions 4, 5 and 6 (as the case may be). However, the Company will not disregard any proxy votes cast on that resolution by a KMP if the KMP is the chair of the meeting acting as proxy and their appointment expressly authorised the chair to exercise the proxy even though the resolution is connected with the remuneration of the KMP for the Company.
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CORPORATE PRESENTATION
By Daniel Lougher, Managing Director & CEO.
BY ORDER OF THE BOARD OF DIRECTORS
Daniel Lougher Managing Director Western Areas Ltd 23 October 2015
NOTES
EXPLANATORY STATEMENT
The Explanatory Statement accompanying this Notice of Meeting is incorporated in and comprises part of this Notice of Meeting.
Shareholders are specifically referred to the Glossary in the Explanatory Statement which contains definitions of capitalised terms used both in this Notice of Meeting and the Explanatory Statement.
PROXIES
Please note that:
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a member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy;
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a proxy need not be a member of the Company; and
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a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes.
The enclosed Proxy Form provides further details on appointing proxies and lodging proxy forms.
CORPORATE REPRESENTATIVE
Any corporate Shareholder who has appointed a person to act as its corporate representative at the meeting should provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that company's representative. The authority may be sent to the Company and/or registry in advance of the meeting or handed in at the meeting when registering as a corporate representative. An appointment of corporate representative form is available at the Computershare website, if required.
'SNAP SHOT' TIME
The Directors have determined, pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth), that the persons eligible to vote at the AGM are those who are registered Shareholders of the Company at 4.00pm (WST) on Monday, 23 November 2015.
EXPLANATORY STATEMENT
This Explanatory Statement has been prepared for the information of Shareholders in relation to the business to be conducted at the Company's Annual General Meeting to be held on Wednesday, 25 November 2015 at 3.00pm (WST).
The purpose of this Explanatory Statement is to provide Shareholders with all information known to the Company which is material to a decision on how to vote on the Resolutions.
This Explanatory Statement should be read in conjunction with the Notice of Meeting and Proxy Form. Capitalised terms in this Explanatory Statement are defined in the Glossary.
FINANCIAL STATEMENTS AND REPORTS
In accordance with the Corporations Act, the business of the Annual General Meeting will include receipt and consideration of the Annual Financial Report of the Company for the financial year ended 30 June 2015 together with the declaration of the Directors, the Directors' Report, the Remuneration Report and the Auditor's Report.
There is no requirement for Shareholders to vote on these reports and no vote will be taken on the reports. However, the Chairman will allow a reasonable opportunity for Shareholders to ask questions or make comments about those reports and the management of the Company. The Company's auditor, Crowe Horwath, will be present at the AGM and Shareholders will be given a reasonable opportunity to ask the auditor questions about the conduct of the audit and the preparation and content of the Auditor's Report.
In addition to the taking of questions at the AGM, written questions to the Chairman about the management of the Company or to the Company's auditor about:
x the preparation and content of the auditor's report;
x the conduct of the audit;
x accounting policies adopted by the Company in relation to the preparation of the financial statements; and
x the independence of the auditor in relation to the conduct of the audit,
may be submitted no later than five business days before the Meeting date (that is, by 5.00pm (WST) on Wednesday, 18 November 2015) to the Company Secretary.
ORDINARY BUSINESS
RESOLUTIONS 1 AND 2 - REͲELECTION OF DIRECTORS - MR RICHARD YEATES AND MR JULIAN HANNA
Background to resolution
Clause 17.4(a) of the Constitution and Listing Rule 14.4 provides that no Director may hold office for longer than three years or the third annual general meeting following their election, whichever is longer, without retiring and resubmitting themselves for reͲelection. As such, both Mr Yeates and Mr Hanna retire from office as at this Annual General Meeting and, being eligible, submit themselves for reͲelection as Directors.
About the Directors Mr Richard Yeats
Mr Yeates is a geologist with more than 30 years' mining industry experience in various roles, and has significant experience across a wide range of resource projects around the world. He is familiar with the ASX regulatory environment and has had exposure to international resource funds and financial institutions.
Mr Yeates has been a Board member since 2009. Further details about Mr Yeates are set out in the Company's 2015 Annual Report.
Mr Julian Hanna
Mr Hanna is a geologist with over 35 years' mining industry experience both locally and internationally. Mr Hanna was a founding Director of Western Areas at its incorporation in 1999, and has been continually associated with the Company since that time. Mr Hanna held the position of Managing Director until January 2012, and was instrumental in the exploration success and project development of the Forrestania Nickel Operation, which has turned Western Areas into one of Australia's largest nickel mining companies.
Mr Hanna has been a Board Member since 2000. Further details about Mr Hanna are set out in the Company's 2015 Annual Report.
Board recommendation
The Board (other than Mr Yeates because of his interest in this resolution) unanimously recommends that Shareholders vote in favour of Resolution 1.
The Board (other than Mr Hanna because of his interest in this resolution) unanimously recommends that Shareholders vote in favour of Resolution 2.
RESOLUTION 3 - ADOPTION OF REMUNERATION REPORT
NonͲbinding resolution to approve the Remuneration Report Background to resolution
A considerable amount of time has been spent defining the Company's remuneration framework which has been overwhelmingly passed by vote at all recent AGMs. There has been no material change to the remuneration structures or incentive programmes during the current year. It is noted that financial year 2016 (FY16) base salaries have been frozen at the same level as financial year 2015 (FY15).
A summary of the framework is provided below. Full details of the remuneration outcomes can be found in the Remuneration Report contained in the Company's 2015 Annual Report.
Executive remuneration framework
The remuneration framework is structured to align the Company closely to current market practice, most significantly around long term incentive (LTI). As such, the components of total annual remuneration for senior executives in FY15 included fixed remuneration (comprised of base salary, superannuation and nonͲmonetary benefits, including salary sacrifice), target STIs and target LTIs. The annual LTI grant serves to place a larger portion of an executive's remuneration atͲrisk and to focus the executives on longͲterm Shareholder value generation.
Fixed remuneration
The Company is Australia's second largest nickel sulphide company (the first being BHP Billiton) with extensive operations in the Forrestania region including mining, processing, marketing and export of nickel concentrates. The fixed remuneration levels of senior executives for the 2015 financial year remained comparable to market peers, furthermore executive remuneration levels have been frozen at FY15 levels for the coming year. The FY16 salary freeze will result in a single base salary increase for the past 4 financial years.
ShortͲterm incentive
Despite challenging commodity market conditions, the Company maintained a strong operational performance during FY15 with a reduction in unit costs, increase in profitability despite a reduction in nickel price, increase in dividends and high level of safety and environmental performance. While strong operational performance was achieved, only one member of KMP achieved 100% of their target short term incentive (STI) opportunity, reflecting the challenging nature of the target performance indicators (KPI). Above budget levels of performance were achieved for KPIs relating primarily to operational and financial KPI targets for the period.
The Remuneration Report for FY15 includes considerable detail on the KPIs that were used to assess performance and the rationale for their choice.
LongͲterm incentive
The Company's Performance Rights Plan was initially approved by Shareholders at the 2011 Annual General Meeting and overwhelmingly reͲapproved at the 2014 Annual General Meeting, with annual grants being made under the Performance Rights Plan since the 2012 financial year. The intention of the LTI scheme is for executives to receive a grant of Performance Rights each year, ensuring that LTI forms a key component of executives' total annual remuneration so as to ensure that executives are focussed on longͲterm Shareholder value generation.
LTI grants for FY16 will be on the following basis:
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The LTI dollar value of grants made to KMP is set at a fixed percentage of their base salary, ranging from 50% to 100% (100% is applicable solely to the Managing Director), depending on the KMP's position within the Company. This level of LTI remains in line with market practice.
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The Performance Rights will vest subject to a relative total shareholder return (TSR) hurdle, with the Company's TSR performance being assessed against a customised peer group of companies of a similar nature. No Performance Rights will vest unless the percentile ranking of the Company's TSR for the relevant performance period, as compared to the TSR results for the peer group companies, is at or above the 50th percentile.
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The FY16 grants are measured over a three year period which aligns with common market practice.
Executive service agreements
All senior executives are employed under executive service agreements that broadly align with current market practices and are in accordance with current laws. The executive service agreements include notice periods ranging from 6 months up to the standard maximum of 12 months. There were no material changes to these agreements during the financial year.
NonͲExecutive Director remuneration
FY16 NonͲExecutive Directors fees have been frozen at FY15 levels.
NonͲbinding Resolution and consequence of voting against Resolution 3
Shareholder approval is being sought to adopt the Remuneration Report under section 250R(2) of the Corporations Act. Shareholders are advised that pursuant to section 250R(3) of the Corporations Act, this Resolution is advisory only and does not bind the Directors or the Company. However, the Corporations Act provides that if the Company's Remuneration Report resolution receives an 'against' vote of 25% or more of votes cast at the AGM, the Company's subsequent Remuneration Report must explain the Board's proposed action in response or, if the Board does not propose any action, the Board's reasons for not making any changes. The Board will take into account the outcome of the vote when considering the Company's remuneration policy, even if a 25% 'against' vote is not received.
In addition, the Corporations Act sets out a 'two strikes' reͲelection process. Under the 'two strikes' reͲelection process, if the Company's Remuneration Report receives an 'against' vote of 25% or more of all votes cast at two consecutive annual general meetings (that is, 'two strikes'), a resolution (the 'spill resolution') must be put to the second AGM, requiring Shareholders to vote on whether the Company must hold another General Meeting (known as the 'spill meeting') to consider the appointment of all of the Directors who must stand for reͲappointment (other than the Managing Director). If the spill resolution is approved at the second AGM by a simple majority of more than 50% of the eligible votes cast, the spill meeting must be held within 90 days of that second AGM (unless none of the Directors, other than the Managing Director, stand for reͲappointment).
The Company's remuneration report did not receive an 'against' vote of 25% or more at the Company's previous Annual General Meeting held on 20 November 2014. At that 2014 Annual General Meeting, 99% of votes cast on the resolution to adopt the Remuneration Report were cast in favour of adopting the report.
A reasonable opportunity will be given to Shareholders at the meeting to ask questions about, or make comments on, the remuneration report.
Board recommendation
The NonͲExecutive Directors recommend that Shareholders vote in favour of the Resolution to approve the Remuneration Report. The Executive Directors whose remuneration has been disclosed in the Remuneration Report are interested in the outcome of this Resolution and therefore do not consider it appropriate to make a recommendation to Shareholders.
The Chairman of the Meeting intends to vote all available proxies to the extent expressly authorised in favour of this Resolution.
SPECIAL OR OTHER BUSINESS
RESOLUTIONS 4, 5 & 6 - ISSUE OF PERFORMANCE RIGHTS TO MR DANIEL LOUGHER AND MR DAVID SOUTHAM
Background to Resolutions
At the Company's 2014 Annual General Meeting, Shareholders overwhelmingly reapproved the Western Areas Performance Rights Plan for senior executives of the Company. For the purposes of making FY16 grants, Resolutions 4, 5 and 6 seek Shareholder approval for the issue of 299,750 Performance Rights to Mr Lougher and 263,003 Performance Rights to Mr Southam in accordance with the Performance Rights Plan.
ASX Listing Rules
Listing Rule 10.11 provides a general restriction against issuing equity securities (including Performance Rights) to 'related parties' (which include directors) without shareholder approval.
Listing Rule 10.14 provides that a Company must not issue equity securities to a director of the Company under an employee incentive scheme unless the issue has been approved by holders of ordinary securities. If approval is given by shareholders under Listing Rule 10.14, separate shareholder approval is not required under either Listing Rule 7.1 or 10.11.
Under Resolutions 4, 5 and 6, the Company seeks approval, for the purposes of Listing Rule 10.14, from Shareholders for the issue of Performance Rights to Messers Lougher and Southam which constitute the issue of equity securities to directors under an employee incentive scheme.
Chapter 2E of the Corporations Act
Chapter 2E of the Corporations Act regulates the provision of 'financial benefits' to 'related parties' by a public company.
For the purposes of Chapter 2E of the Corporations Act, Messers Lougher and Southam, being Directors, are 'related parties' of the Company and the grant of Performance Rights pursuant to the Performance Rights Plan will constitute the giving of 'financial benefits'.
The Board (other than Mr Lougher because of his interest in Resolutions 4, and Mr Southam because of his interest in Resolutions 5 and 6) considers that the grant of Performance Rights to Messers Lougher and Southam is an appropriate and reasonable component of their remuneration, and that the financial benefit represented by the grant of the Performance Rights falls within the 'reasonable remuneration' exception in section 211 of the Corporations Act. For this reason, the Company is not seeking Shareholder approval of Resolutions 4, 5 and 6 for the purposes of Chapter 2E of the Corporations Act.
Sections 200B and 200E of the Corporations Act
The Corporations Act provides that the Company may only give a person a benefit in connection with their ceasing to hold a 'managerial or executive office' if it is approved by Shareholders or an exemption applies (for example, where the benefit together with other benefits does not exceed the payment limits set out in the Corporations Act, including where the aggregate benefits do not exceed one year's average base salary).