What We Value Annual Report 2012 Our Charter
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What we value Annual Report 2012 Our Charter We are BHP Billiton, a leading global resources company. Our purpose is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources. Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversified by commodity, geography and market. Our Values Sustainability Putting health and safety first, being environmentally responsible and supporting our communities. Integrity Doing what is right and doing what we say we will do. Respect Embracing openness, trust, teamwork, diversity and relationships that are mutually beneficial. Performance Achieving superior business results by stretching our capabilities. Simplicity Focusing our efforts on the things that matter most. Accountability Defining and accepting responsibility and delivering on our commitments. We are successful when: Our people start each day with a sense of purpose and end the day with a sense of accomplishment. Our communities, customers and suppliers value their relationships with us. Our asset portfolio is world-class and sustainably developed. Our operational discipline and financial strength enables our future growth. Our shareholders receive a superior return on their investment. Marius Kloppers Chief Executive Officer September 2011 BHP Billiton Limited. ABN 49 004 028 077. Registered in Australia. Registered office: 180 Lonsdale Street, Melbourne, Victoria 3000, Australia. BHP Billiton Plc. Registration number 3196209. Registered in England and Wales. Registered office: Neathouse Place, London SW1V 1BH, UK. Each of BHP Billiton Limited and BHP Billiton Plc are members of the BHP Billiton Group, which is headquartered in Australia. Contents 1 Key information 3 4 Board of Directors and information Key 1 1.1 Our business 3 Group Management Committee 106 1.2 Chairman’s Review 4 4.1 Board of Directors 106 1.3 Chief Executive Offi cer’s Report 5 4.2 Group Management Committee 109 1.4 Selected key measures 6 5 Corporate Governance Statement 110 1.5 Our risks 7 5.1 Governance at BHP Billiton 110 1.6 Forward looking statements 13 5.2 Shareholder engagement 111 2 Information on the Company 14 5.3 Role and responsibilities of the Board 111 2.1 BHP Billiton locations 14 5.4 Board membership 112 Information on the Company 2 2.2 Business overview 16 5.5 Chairman’s role 113 2.2.1 History and development 16 5.6 Senior Independent Director 113 2.2.2 Petroleum Customer Sector Group 16 5.7 Director skills, experience and attributes 113 2.2.3 Aluminium Customer Sector Group 22 5.8 Director induction training and development 116 2.2.4 Base Metals Customer Sector Group 24 5.9 Independence 117 2.2.5 Diamonds and Specialty Products 5.10 Board evaluation 118 Customer Sector Group 27 5.11 Board meetings and attendance 120 2.2.6 Stainless Steel Materials Customer Sector Group 29 5.12 Director re-election 120 2.2.7 Iron Ore Customer Sector Group 30 5.13 Board committees 120 2.2.8 Manganese Customer Sector Group 34 5.14 Risk management governance structure 128 and prospects review and fi 3 Operating 2.2.9 Metallurgical Coal Customer Sector Group 35 5.15 Management 129 2.2.10 Energy Coal Customer Sector Group 37 5.16 Business conduct 130 2.3 Production 40 5.17 Diversity at BHP Billiton 130 2.4 Marketing 44 5.18 Market disclosure 131 nancial 2.5 Minerals exploration 44 5.19 Remuneration 131 2.6 Group Resource and Business Optimisation 44 5.20 Directors’ share ownership 131 2.7 Government regulations 44 5.21 Company secretaries 132 2.8 Sustainability 46 5.22 Conformance with corporate governance standards 132 2.9 Employees 51 5.23 Additional UK disclosure 132 2.10 Organisational structure 52 Management Committee Group and of Directors 4 Board 2.11 Material contracts 53 6 Remuneration Report 133 2.12 Constitution 54 6.1 Message from the Remuneration Committee Chairman 133 2.13 Reserves and resources 57 6.2 Remuneration at a glance 134 6.3 Remuneration governance 136 3 Operating and fi nancial review and prospects 80 6.4 Our remuneration strategy 137 3.1 Introduction 80 6.5 Setting Total Remuneration for the GMC 139 3.2 Our strategy 81 6.6 How performance impacts remuneration outcomes 141 3.3 Key measures 81 6.7 Statutory remuneration disclosures for the GMC 148 3.4 External factors and trends affecting our results 83 6.8 Equity awards 150 Corporate Governance Statement Corporate 5 3.5 Application of critical accounting policies 88 6.9 Aggregate Directors’ remuneration 157 3.6 Operating results 88 6.10 Non-executive Director arrangements 157 3.7 Liquidity and capital resources 99 3.8 Off-balance sheet arrangements and contractual commitments 105 3.9 Subsidiaries and related party transactions 105 3.10 Signifi cant changes 105 Remuneration Report Remuneration 6 BHP BILLITON ANNUAL REPORT 2012 | 1 Contents continued 7 Directors’ Report 160 8 Legal proceedings 167 7.1 Principal activities, state of affairs and business review 160 9 Financial Statements 168 7.2 Share capital and buy-back programs 161 9.1 Consolidated Financial Statements 169 7.3 Results, fi nancial instruments and going concern 162 9.2 BHP Billiton Plc 246 7.4 Directors 162 9.3 Directors’ declaration 251 7.5 Remuneration and share interests 162 9.4 Statement of Directors’ Responsibilities in respect 7.6 Secretaries 162 of the Annual Report and the Financial Statements 252 7.7 Indemnities and insurance 162 9.5 Lead Auditor’s Independence Declaration under Section 307C of the Australian Corporations Act 2001 253 7.8 Employee policies and involvement 163 9.6 Independent auditors’ reports 254 7.9 Environmental performance 163 9.7 Supplementary oil and gas information – unaudited 256 7.10 Corporate Governance 163 7.11 Dividends 163 10 Glossary 262 7.12 Auditors 163 10.1 Non-mining terms 262 7.13 Non-audit services 164 10.2 Mining and mining-related terms 264 7.14 Value of land 164 10.3 Chemical terms 266 7.15 Political and charitable donations 164 10.4 Units of measure 266 7.16 Exploration, research and development 164 7.17 Creditor payment policy 164 11 Shareholder information 267 7.18 Class order 164 11.1 Markets 267 7.19 Proceedings on behalf of BHP Billiton Limited 164 11.2 Share ownership 267 7.20 Directors’ shareholdings 165 11.3 Dividends 270 7.21 GMC members’ shareholdings (other than Directors) 165 11.4 Share price information 270 7.22 Performance in relation to environmental regulation 166 11.5 American Depositary Receipts fees and charges 272 7.23 Share capital, restrictions on transfer of shares 11.6 Taxation 272 and other additional information 166 11.7 Ancillary information for our shareholders 276 2 | BHP BILLITON ANNUAL REPORT 2012 1 Key information Key information Key 1 1.1 Our business We are BHP Billiton, a leading global resources company. Our purpose is to create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources. Our strategy is to own and operate large, long-life, low-cost, expandable, upstream assets diversifi ed by commodity, geography and market. This strategy means more predictable business performance over time which, in turn, underpins the creation of value for our shareholders, customers, employees and, importantly, the communities Information on the Company 2 in which we operate. We are among the world’s top producers of major commodities including, iron ore, metallurgical coal, conventional and non-conventional oil and gas, copper, energy coal, aluminium, manganese, uranium, nickel and silver. The Group is headquartered in Melbourne, Australia, and consists We operate eight businesses, called Customer Sector Groups (CSGs): of the BHP Billiton Limited Group and the BHP Billiton Plc Group • Petroleum as a combined enterprise, following the completion of the Dual • Aluminium (1) Listed Company (DLC) merger in June 2001. • Base Metals (including Uranium) and prospects review and fi 3 Operating BHP Billiton Limited and BHP Billiton Plc have each retained their • Diamonds and Specialty Products separate corporate identities and maintained their separate stock • Stainless Steel Materials (1) exchange listings, but they are operated and managed as a single • Iron Ore unifi ed economic entity, with their boards and senior executive management comprising the same people. • Manganese • Metallurgical Coal nancial BHP Billiton Limited has a primary listing on the Australian Securities • Energy Coal Exchange (ASX) in Australia. BHP Billiton Plc has a premium listing on the London Stock Exchange (LSE) in the United Kingdom and (1) In May 2012, we announced that our Stainless Steel Materials and a secondary listing on the Johannesburg Stock Exchange (JSE) in Aluminium CSGs would consolidate into a single CSG named Aluminium South Africa. In addition, BHP Billiton Limited American Depositary and Nickel. In this Report, Aluminium and Stainless Steel Materials are reported separately. Receipts (ADRs) and BHP Billiton Plc ADRs trade on the New York Stock Exchange (NYSE) in the United States. Management Committee Group and of Directors 4 Board As at 30 June 2012, we had a market capitalisation of approximately US$160.6 billion. For FY2012, we reported net operating cash fl ow of US$24.4 billion, revenue of US$72.2 billion and profi t attributable to shareholders of US$15.4 billion. We have approximately 125,000 employees and contractors working in more than 100 locations worldwide. Corporate Governance Statement Corporate 5 Remuneration Report Remuneration 6 BHP BILLITON ANNUAL REPORT 2012 | 3 1 Key information continued 1.2 Chairman’s Review Dear Shareholder BHP Billiton also remains committed to making a positive contribution The past year was characterised by continued high levels of volatility to our communities through capital investment, supporting local and uncertainty in the world’s economy.