Origin Energy has agreed with the Managing Director, Grant King, on the extension of his service agreement for a further five years from July 1, 2009.
The Chairman of Origin, Kevin McCann, said, "Grant King has led the Company since its establishment in 2000. Over this time, the Company has delivered significant value for shareholders. More recently, the Company identified the prospects of Coal Seam Gas production in Queensland and this investment culminated in the Joint Venture with ConocoPhillips to develop a LNG project at Gladstone based on these gas reserves. Origin is in a strong competitive position, with significant financial capacity as a result of the completion of this transaction. The Board is pleased that he will continue to lead the Company for the next five years."
King's fixed remuneration for the current year which is $2.1 million, will remain unchanged. Under the service agreement it is reviewed annually on July 1 each year.
The Board has decided to increase King's "at risk" remuneration to take account of the increased responsibilities following the substantial growth of Origin over the past calendar year.
King will now be entitled to a short term incentive (STI) up to 120% of fixed remuneration. Seventy five percent of the STI award will be based on the achievement of financial objectives and 25% on non-financial objectives as set by the Board each year. Twenty percent of the STI awarded will be deferred for a period of three years and will be invested in Origin shares acquired on market.
The agreement also provides for a long term incentive (LTI) of up to 120% of fixed remuneration. The LTI award will be based on achievement of financial and non-financial objectives also set by the Board on an annual basis. The LTI will comprise Options and Performance Share Rights under the existing equity plans and will be subject to shareholder approval.
Other terms of King's employment (including termination arrangements) are unchanged from those disclosed in the remuneration report for the Financial Year 2008.
Commenting on King's contract, McCann said, "The Origin Board recognises the importance of setting executive remuneration which appropriately rewards for performance. We consider that the contract appropriately rewards the contribution King makes to Origin and it weights remuneration to Company performance, good risk management and aligns it with long-term shareholder interests."
McCann added, "Mr. King is well supported by a very capable executive team in the most senior roles within Origin and Contact Energy. We see many opportunities ahead of us. This together with the continued development of the management team's experience and capabilities is important to the Company's ongoing success and a number of other key changes have been made at this time with these factors in mind."
Karen Moses, currently Chief Operating Officer will be appointed Executive Director, Finance and Strategy. In this role, Moses will be appointed as a director of Origin following the release of the half year results in February 2009.
Frank Calabria, currently Chief Financial Officer will be appointed Executive General Manager, Energy Markets Australia, reporting to the Managing Director. He will be responsible for Origin’s integrated Generation and Retail Business in Australia.
David Baldwin, currently seconded as Managing Director of Contact Energy, will remain in his role.
Paul Zealand who is responsible for Origin’s upstream oil and gas activities has been appointed Executive General Manager, Upstream Oil and Gas reporting directly to the Managing Director.
These and other consequential changes to Origin's management will be made and progressively implemented between now and early in the new year.
King said, "These appointments and other changes we are making to our organization are designed to ensure that we have the appropriate management structure and executive group to continue to effectively develop and grow our business."
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