RNS Number:1773S
National Australia Bank Ld
18 November 2003
National Australia Bank Limited
ABN 12 004 044 937
Registered Office:
24th Floor, 500 Bourke Street
Melbourne, Victoria 3000
Australia
Notice of Annual General Meeting 2003
Your Annual Report will follow in approximately one week, unless you have
elected not to receive an Annual Report.
National Australia Bank Limited Page 2
Notice is hereby given that the Annual General Meeting of
National Australia Bank Limited ("the National") will be held
at the Melbourne Concert Hall, 100 St Kilda Road,
Melbourne, Victoria, Australia, on Friday 19 December 2003
at 10.00am.
1. Chairman's Address and presentation by the
Managing Director & Chief Executive Officer
2. Financial Statements
To lay before the Annual General Meeting the Financial
Report and the Report of Directors for the year ended
30 September 2003, together with the Independent Audit
Report to the Members of the National, for Shareholders to
receive and consider.
3. Re-election and election of Directors
To re-elect and elect Directors of the Company:
Mr PJB Duncan retires in accordance with Article 10.3 of the
National's Constitution and, being eligible, offers himself for
re-election.
Dr ED Tweddell retires in accordance with Article 10.3 of the
NationalOs Constitution and, being eligible, offers himself for
re-election.
Mrs CM Walter retires in accordance with Article 10.3 of the
National's Constitution and, being eligible, offers herself for
re-election.
Mr JM Stewart, who was appointed as a Director since the
last Annual General Meeting, retires in accordance with
Article 10.13 of the NationalOs Constitution and, being
eligible, offers himself for election.
Mr JG Thorn, who was appointed as a Director since the last
Annual General Meeting, retires in accordance with Article
10.13 of the National's Constitution and, being eligible,
offers himself for election.
4. Shares, options and performance rights - Managing
Director, National Australia Group Europe Limited
To consider and, if thought fit, pass the following resolution
as an ordinary resolution:
"THAT approval be given to the grant of options,
performance rights and shares to the Managing Director
of National Australia Group Europe Limited, Mr JM Stewart,
as described in the Explanatory Notes under the National
Australia Bank Executive Share Option Plan No 2,
National Australia Bank Performance Rights Plan and
Share Incentive Plan, respectively."
5. Shares, options and performance rights - Managing
Director and Chief Executive Officer
To consider and, if thought fit, pass the following resolution
as an ordinary resolution:
"THAT approval be given to the grant of options,
performance rights and shares to the Managing Director and
Chief Executive Officer, Mr FJ Cicutto, as described in the
Explanatory Notes under the National Australia Bank
Executive Share Option Plan No.2, National Australia Bank
Performance Rights Plan, National Australia Bank Staff Share
Ownership Plan and National Australia Bank Staff Share
Allocation Plan, respectively."
6. Non-executive Directors' retirement benefits scheme
discontinuation
To consider and, if thought fit, pass the following resolution
as an ordinary resolution:
"THAT approval be given to:
(a) the amendment to the retirement benefits schemes for
non-executive Directors of the National and its controlled
entities as described in the Explanatory Notes; and
(b) the acquisition of an interest in securities of the National
by or on behalf of such non-executive Directors as
determined by the National, who would otherwise have
become entitled to a payment when they ceased to be a
director under the relevant retirement benefits scheme."
7. Non-executive Directors' Remuneration
To consider and, if thought fit, pass the following resolution
as an ordinary resolution:
"THAT the maximum remuneration provided by the National
to non-executive Directors of the National for their services
both to the National and to entities with which the National
is associated, be increased by A$1,300,000 per annum to a
maximum of A$3,500,000 per annum, such increase to be
effective from 1 January 2004."
8. Non-executive Directors' Share Plan
To consider and, if thought fit, pass the following resolution
as an ordinary resolution:
"THAT approval be given to the acquisition of an interest in
securities of the National by or on behalf of non-executive
Directors under the NED (Non-Executive Directors') Share
Plan as described in the Explanatory Notes."
9. Confirming member approval for the selective
buy-back arrangements relating to preference shares
associated with the TrUEPrS(SM)
To consider and, if thought fit, to pass the following
resolution as a special resolution:
"THAT the terms of the buy-back agreements under the
selective buy-back scheme relating to the 0% Preference
Shares, and the 8% Preference Shares into which the 0%
Preference Shares may in certain circumstances convert, as
described in the Explanatory Notes, be approved."
By Order of the Board
Garry F Nolan
Company Secretary
11 November 2003
TrUEPrS SM - is a service mark of Merrill Lynch and Co., Inc.
Notice of Annual General Meeting
Page 3 National Australia Bank Limited
Information for Shareholders
General
The Corporations Act 2001 (Cth) requires the Financial Report, Report of
Directors and the Independent Audit Report to be received and considered at the
Meeting.
Neither the Corporations Act nor the National's Constitution requires
Shareholders to vote on such Reports. However, Shareholders will be given ample
opportunity to raise questions on the Reports at the Meeting.
Questions relating to the private affairs of any individual Shareholder who is
also a customer of the National may be directed to staff at the Customer Service
Desk or the Shareholder Service Desk in the foyer on the day of the Meeting.
Members of the National
Persons holding shares of the National which are listed for quotation on the
Australian Stock Exchange at 7.00 pm in Melbourne on Thursday 18 December 2003
will be treated as Shareholders of the National for the purposes of the Meeting.
Proxy Votes
A Shareholder entitled to attend and vote at the Meeting is entitled to appoint
no more than two proxies to attend and vote on behalf of the Shareholder. Where
two proxies are appointed, each proxy must be appointed to represent a specified
number of votes or proportion of the Shareholder's voting rights. If no number
or proportion is specified, each proxy may exercise half of the votes.
A proxy need not be a Shareholder of the National.
A proxy form and a return envelope to a Locked Bag are enclosed. To be
effective, the completed proxy form and the power of authority (if any) under
which the proxy form is signed or a certified copy of the relevant authority
must be received by or faxed to the National at least 48 hours before the start
of the Meeting.
Proxies must either be received by the National at the registered office at 24th
Floor, 500 Bourke Street, Melbourne, Victoria 3000, Australia or can be faxed to
(61 3) 9473 2461.
Voting Exclusion Statement
The National will disregard any vote cast on:
(a) resolutions 3, 4, 5, 7 and 8 by any Director of the National or any of their
associates;
(b) resolution 6 by any Director of the National or its controlled entities or
any of their associates; and
(c) resolution 9 by any person who holds preference shares and whose shares may,
therefore, be bought back or by any of those persons' associates,
unless the vote is cast by such a person as proxy for another person who is
entitled to vote and the vote is cast in accordance with the directions on the
proxy form, or the vote is cast by the person chairing the meeting as a proxy
for a person who is entitled to vote in accordance with a direction on the proxy
form to vote as the proxy decides.
Chairman's Comments & Explanatory Notes
Resolution 3: Re-election and election of Directors
Under Article 10.3 of the National's Constitution, one-third of the current
Directors (excluding the Managing Director) must retire by rotation at each
Annual General Meeting. Accordingly, Mr Peter Duncan, Dr Edward Tweddell, and
Mrs Catherine Walter, being among the longest serving Directors since their last
election, retire at the end of the Meeting and, being eligible, present
themselves for re-election.
Under Article 10.13 of the National's Constitution, a Director appointed either
to fill a casual vacancy or in addition to the existing Directors, holds office
until the next Annual General Meeting, and is then eligible for election.
Accordingly Messrs John Stewart and John Thorn as new Directors, retire in
accordance with Article 10.13 and, being eligible, offer themselves for
election.
The Nomination Committee has in place a formal process whereby each Director
(other than the Director standing for re-election in relation to his/her own
position) evaluates the performance of the Directors standing for re-election.
The written evaluations are provided to the Chairman on a confidential basis.
The Nomination Committee then makes the determination, in relation to each
Director standing for re-election, as to whether or not to recommend to the
Board, and in turn to the Shareholders, that the re-election of the Director be
supported. This process has been undertaken in relation to all of the Directors
standing for re-election at the Annual General Meeting to be held on 19 December
2003 and the Nomination Committee and the Board (other than each person in
respect of his or her own re-election) support the re-election of Mr Duncan, Dr
Tweddell and Mrs Walter. In addition, the Nomination Committee and the Board
(other than each person in respect of their own election) support the election
of Mr Stewart and Mr Thorn.
National Australia Bank Limited Page 4
The Nomination Committee also has a formal process to determine if each non-
executive Director is independent. In judging whether a Director is independent,
the Nomination Committee and the Board has regard to requirements under
applicable laws, rules and regulations including the Australian Stock Exchange
Corporate Governance Council Principles of Good Corporate Governance and Best
Practice Recommendations and the United States Sarbanes-Oxley Act of 2002.
Directors are required to provide all relevant information to allow a regular
assessment of independence. The fundamental premise is that an independent
Director must be independent of management and free to exercise his/hers
unfettered independent judgement.
Following are details in relation to the Directors standing for re-election or
election.
Mr Peter JB Duncan BE (Chem) (Hons), DBS (with Distinction), MAICD
An independent non-executive Director appointed in 2001. Mr Duncan is 62 years
of age.
He is a member of the Audit Committee, a member of the Risk Committee and a
member of the Nomination Committee.
He has had 36 years experience with the Royal Dutch/Shell Group of companies in
a diverse range of finance, marketing and general management positions in South
America, Europe, South East Asia, New Zealand and Australia.
Mr Duncan's international business experience includes a period as the Chief
Executive of Deutsche Shell, and as a member of the advisory board of
Commerzbank in Germany. He returned to Australia in 1997 and was subsequently
appointed Chairman of the Shell Group of Companies in Australia until 2001.
He is a director of Orica Limited, CSIRO and Gas Net Australia Trust and is
Chairman of Scania Australia Pty Limited.
Dr Edward D Tweddell BSc, MBBS(Hons), FRACGP, FAICD
An independent non-executive Director appointed in 1998. Dr Tweddell is 62 years
of age.
He is a member of the Compensation Committee, a member of the Risk Committee and
a member of the Nomination Committee.
Dr Tweddell has had 25 years experience in the pharmaceutical and health care
industries and was Group Managing Director and Chief Executive Officer of FH
Faulding & Co Limited from 1993 to 2001. He worked in the international
pharmaceutical industry in North America, Africa, the Middle East and Asia.
Dr Tweddell is currently the Chairman of Ansell Limited and a director of
Australian Postal Corporation and CSIRO.
Mrs Catherine M Walter AM, LLB (Hons), LLM, MBA, FAICD
An independent non-executive Director appointed in 1995. Mrs Walter is 51 years
of age.
Mrs Walter is Chairman of the Audit Committee and a member of the Nomination
Committee.
Mrs Walter has had 20 years experience as a solicitor and 8 years as a partner
in the firm Clayton Utz, including a period as Managing Partner of the Melbourne
Office, until 1994. She also served a term as Commissioner of the City of
Melbourne. She is Chairman of the Australian Federal Government's Business
Regulation Advisory Group and a member of the Financial Reporting Council.
Mrs Walter is a director of the Australian Stock Exchange Limited, Orica
Limited, Australian Foundation Investment Company Limited, Melbourne Business
School Limited and The Walter and Eliza Hall Institute of Medical Research.
Mr John M Stewart BA, FCIB, ACII
An executive Director appointed in 2003. Mr Stewart is 54 years of age.
Mr Stewart is a member of the Nomination Committee.
Mr Stewart is the Managing Director of National Australia Group Europe Limited
and is a director of Clydesdale Bank PLC, Northern Bank Limited, National Irish
Bank Limited and Yorkshire Bank PLC.
He has 26 years experience in banking and finance in the United Kingdom
including 4 years as Group Chief Executive of Woolwich PLC. On Woolwich's
acquisition by Barclays PLC in 2000, he was appointed Deputy Group Chief
Executive of Barclays PLC, a position he retained until his resignation in 2003.
Page 5 National Australia Bank Limited
Mr Stewart brings valuable international banking experience and insights into
European banking to the National. He has extensive knowledge of and a successful
track record in, retail banking in the United Kingdom. His appointment will
strengthen the National's management depth and he will lead the implementation
of the National's retail banking strategy in the United Kingdom.
Mr John G Thorn FCA, MAICD
An independent non-executive Director appointed in October 2003. Mr Thorn is 55
years of age.
Mr Thorn is a member of the Audit Committee, the Compensation Committee and the
Nomination Commitee.
Mr Thorn has had 37 years experience in the professional services industry with
PricewaterhouseCoopers, including over 20 years as a Partner responsible for
significant international and Australian clients. He has experience in the
fields of audit, client audit committees, accounting practice and standards,
mergers, due diligence and risk management. He was the Australian National
Managing Partner of PricewaterhouseCoopers and a member of the Global Audit
Management Group until 2003.
Mr Thorn's skills and experience ideally complement those of other members of
the Board. His accounting expertise, international experience and the skills he
has developed in managing and growing a major professional services firm are
most valuable to the National.
Recommendation
The Board of the National, other than Mr Duncan, Dr Tweddell, Mrs Walter, Mr
Stewart and Mr Thorn all being subject to election or re-election, recommend
that Shareholders vote in favour of all five Directors standing for re-election
or election.
Resolution 4. Shares, options and performance rights - Managing Director,
National Australia Group Europe Limited
Mr John Stewart, an Executive Director of the National and Managing Director of
National Australia Group Europe Limited, is eligible to participate in offers of
securities under certain of the NationalOs employee incentive schemes in the
next 12 months. The ASX Listing Rules require Shareholders to approve the
acquisition of National securities by Directors of the National. Accordingly,
Shareholders are asked to approve the equity component of Mr Stewart's
remuneration package. The non-executive Directors of the National have formed
the view that Mr StewartOs remuneration package, which includes the proposed
grant of options and performance rights and allocation of shares, is reasonable,
having regard to the circumstances of the National and the duties and
responsibilities of the Managing Director, National Australia Group Europe
Limited.
If approved by Shareholders, any securities acquired by Mr Stewart pursuant to
this resolution will be allocated within 12 months of the date of this meeting.
The relevant formula under the applicable employee equity plan used for
calculating the number of securities to be acquired and the maximum number of
options, performance rights and shares that may be acquired by Mr Stewart are
set out below:
Plan Maximum number of securities(1)
National Australia Bank Executive Share Option 150,000 options
Plan No. 2 ("Option Plan")(2,3)
National Australia Bank Performance Rights Plan 37,500 performance rights
("Performance Rights Plan")(2)
Share Incentive Plan (National EVA* (Economic Value Added) Ordinary shares to a maximum value of A$1,250 at
Share offer)(4) no cost to Mr Stewart. The actual number of shares
offered will depend on the weighted average price
at which National shares were traded on the ASX in
the one week up to and including the date of
allocation of the shares. The offer will be for the
same number of shares as that offered to all
employees eligible to participate in the National
EVA Share offer.
Share Incentive Plan (Partnership Shares program)(4) Ordinary shares to a maximum value of #1,500
(Sterling) in any United Kingdom tax
year subject to a limit of 10% of salary in the
relevant period. The actual number of shares
acquired will depend on the weighted average price
at which National shares were traded on the ASX in
the one week period ending on the day immediately
before the day of acquisition of the shares. The UK
Sterling/$A exchange rate on the day of acquisition
is used.
(1)The number of securities described in this table are maximums and the total
number actually allocated to Mr Stewart may be less than the maximum or nil.
(2)The options and performance rights granted to all executives under the Option
Plan and Performance Rights Plan only become exercisable if certain performance
conditions are met. It is the current intention of the Board that the exercise
of options and performance rights is subject to a vesting schedule that depends
on the percentile ranking of the total shareholder return for National shares.
The current vesting schedule does not reward below median performance. Under
the vesting schedule, the total shareholder return of the National is given a
percentile ranking in comparison with the total shareholder return of a group of
50 companies in the S&P ASX 100 (excluding the National). This group is
determined at the time of grant (or such other date determined by the Board)
during the 'performance period'.
National Australia Bank Limited Page 6
Currently, the 'performance period' commences on the third anniversary of the
date of grant of the option or performance right (or such other date determined
by the Board) and ends three months short of the eighth anniversary of that
date. If the National's percentile ranking does not reach 50 during the
performance period, none of the options or performance rights will become
exercisable. 50% of the options become exercisable if the percentile ranking
reaches 50 exactly. A pro-rata percentage of options and performance rights
becomes exercisable when the National's percentile ranking reaches between 51
and 74. All of the options and performance rights become exercisable if the
ranking reaches the 75th percentile.
(3)It is the current intention of the Board to amend the Option Plan to
facilitate the introduction of an Inland Revenue approved sub-plan for the
benefit of employees in the United Kingdom. This sub-plan will be substantially
similar to the existing Option Plan, with appropriate amendments
to reflect applicable UK regulatory requirements. It is intended that, if the
new sub plan is approved and implemented and Shareholders approve
this resolution, Mr Stewart (as with other UK executives) will receive a number
of his options under the UK sub plan.
(4)The Share Incentive Plan is only available to employees of the National Group
in the United Kingdom.
EVA* is a registered trademark of Stern Stewart and Co.
For further information on the National's employee incentive schemes, including
the various plans referred to above, refer to Note 39 in the National's Annual
Financial Report for the year ended 30 September 2003.
The price, or the formulae for calculating the price, for each security is set
out below:
Security and relevant plan Price or relevant formula
Options granted under the Option Plan No price is payable for the grant of options.
If the applicable performance hurdle is met,
and Mr Stewart wishes to exercise
his options, he must pay the exercise price.
The exercise price is the market price
of a National share on the date the option was
granted, or such other date determined
by the Board. The market price is the weighted
average price at which National shares
were traded on the ASX in the one week up to
and including the relevant day.
The same position applies to all executives of
the National to whom options are granted.
Under the proposed new UK Inland Revenue
approved sub-plan, it is intended that
the exercise price will be not manifestly less
than the market value of a National share on
the relevant date. Market value will be agreed
with the UK Inland Revenue.
Performance Rights granted under the Performance Rights Plan No price is payable for the grant of
performance rights.
If the applicable performance hurdle is met,
and Mr Stewart wishes to exercise his
performance rights, he must pay a nominal
exercise price to acquire the shares.
The total exercise price payable on the
exercise of any performance rights on a
particular day will be $1.00, irrespective of
the number of performance rights exercised on
that day.
The same position applies to all executives of
the National to whom performance right share
granted.
Share Incentive Plan (National EVA* Share offer) No price is payable by employees for shares
allocated.
Share Incentive Plan (Partnership Shares program) The price at which shares are acquired is the
weighted average price at which National
shares were traded on the ASX in the one week
period ending on the day immediately
before the day of acquisition of the shares.
Mr Cicutto is the only Director (or associate of a Director) who has received
securities under the Option Plan or the Performance Rights Plan since the 2002
Annual General Meeting. The acquisition of these securities was approved by
Shareholders at the 2002 Annual General Meeting. Since that meeting, Mr Cicutto
was allocated:
Number of securities Acquisition price
300,000 options under the Option Plan No acquisition price
100,000 performance rights under the Performance Rights Plan No acquisition price
Mr Stewart was, however, granted securities under the Option Plan and the
Performance Rights Plan prior to his appointment to the Board.
No Director or their associates has acquired any shares under the Share
Incentive Plan since the 2002 Annual General Meeting. Mr Cicutto was, however,
allocated 30 shares as part of the 2002 EVA Share offer (through the National
Australia Bank Staff Share Allocation Plan, which is the plan through which the
EVA Share offer is administered in Australia for most employees).
Apart from Mr Cicutto and Mr Stewart, no other Directors or their associates are
entitled to participate in the Option Plan or the Performance Rights Plan. Mr
Stewart is the only Director who is entitled to participate in the Share
Incentive Plan.
Page 7 National Australia Bank Limited
Mr Stewart will not be able to participate in the loan scheme that may otherwise
be available in relation to payment of the exercise price of options granted
under the Option Plan. There is no loan scheme in relation to the Performance
Rights Plan.
Recommendation
Each Director, except Mr Stewart, recommends that Shareholders vote in favour of
the proposed resolution. As the resolution relates directly to him, Mr Stewart
does not make a recommendation.
Resolution 5: Shares, Options and Performance Rights - Managing Director and
Chief Executive Officer
The ASX Listing Rules require Shareholders to approve the acquisition of
National securities by Directors of the National. Accordingly, Shareholders are
being asked to approve the equity components of Mr Cicutto's remuneration
package.
Mr FJ Cicutto became the NationalOs Managing Director and Chief Executive
Officer in 1999. This year, your Board renewed
Mr Cicutto's service contract for the next three years. In accordance with the
Listing Rules, Shareholder approval is being sought for the acquisition of
certain National securities by Mr Cicutto over the next three years. The
approval relates to the acquisition of shares, options and performance rights in
respect of Mr Cicutto's performance during the most recent financial year and
his future performance during the financial years ending 30 September 2004 and
30 September 2005 (apart from his short term incentive arrangements).
Shareholder approval will be sought for the provision of any future rewards in
National shares for Mr Cicutto's short term incentive arrangements under his new
employment agreement as and when such rewards are determined.
The key terms and conditions of employment for Mr Cicutto under his new service
contract were disclosed by the National in a release to the ASX dated 23 October
2003, including his short term incentive arrangements.
The National is one of the fifty largest banks in the world and the largest and
most international bank in Australia. The National has an established and
respected presence in major markets overseas.
Since his appointment as Managing Director & Chief Executive Officer, Mr Cicutto
has demonstrated great skill in both managing and divesting difficult businesses
while concurrently identifying development opportunities for the National. He
has also been pro-active in leading and adding value to the National's core
businesses and assets. This has been achieved through major improvements in
efficiency and product offerings while upgrading customer service.
The National has kept pace with its peers while balancing its expansion.
Structural adjustments to accommodate projected growth have been achieved with
minimum disruption to the NationalOs asset base and return to Shareholders.
Under these circumstances, the Board has examined carefully the totality of Mr
Cicutto's remuneration, particularly with regard to the growth of the National
and the increase in the complexity of Mr Cicutto's role. The remuneration
negotiated in 1999 was reflective of his promotion to the position of Managing
Director & Chief Executive Officer. The National's growth and increasing
business complexity, together with Mr Cicutto's standing, required that the
Board review its Managing Director and Chief Executive Officer's reward
arrangements to ensure they are reflective of the National's local and
international standing.
The review commissioned by the Board has enabled the non-executive Directors to
conclude that the general structure of the Managing Director's reward is locally
competitive and that the practice of annual equity grants and prevailing
performance hurdles is acceptable in the marketplace. It has also enabled the
non-executive Directors to conclude that Mr Cicutto's remuneration package,
which includes the proposed grant of options, performance rights and shares, is
reasonable, for an executive with more than 35 years service, having regard to
the international reach of the National and the duties and responsibilities of
the Managing Director.
The proposed equity grants to Mr Cicutto reflect in part his performance over
the past year. Insofar as they relate to future years, however, they have been
designed to achieve performance and retention as well as motivation to grow the
National and Shareholder return. It is important that continuity of management
be maintained during the next phase of the National's development. The team now
in place is a major element in the continued progress the National has made in a
challenging and volatile environment. Accordingly, in relation to Mr Cicutto's
future performance, it has been determined that incentives aimed at rewarding
outstanding achievement are appropriate at this stage.
Approval is being sought for the maximum number of securities that may be
granted to Mr Cicutto over the next three years to reflect his performance in
the most recent financial year. The actual number of securities granted in any
particular year may be less than the relevant maximum, or nil. If these numbers
of securities are approved by Shareholders, there will be no additional grants
of securities to Mr Cicutto unless there is an extension of his contract, apart
from any grant of securities in connection with his short term incentive
arrangements.
The relevant formula under the applicable employee equity plan used for
calculating the number of securities to be acquired and the maximum number of
options, performance rights and shares that may be acquired by Mr Cicutto are
set out below:
National Australia Bank Limited Page 8
Plan Maximum number of securities(1)
National Australia Bank Executive Share Each year for the 3 years from the 440,000 options
Option Plan No 2 ("Option Plan")(2) date of this Annual General Meeting
National Australia Bank Performance
Rights Plan During the next 12 months 160,000 performance rights
("Performance Rights Plan")(2)
Each year for the 2 years following 110,000 performance rights
19 December 2004
National Australia Bank Staff Share
Ownership During the next 12 months Deferred Shares(1)
Plan ("Ownership Plan") Ordinary shares equal to one half of
Mr Cicutto's short term incentive
reward for the year ended 30
September 2003.
Mr Cicutto's short term incentive
for the year is A$2,586,000 and
accordingly, the maximum value of
the reward that may be provided in
Deferred Shares is A$1,293,000.
The actual number of Deferred Shares
acquired will depend on the weighted
average price at which
National shares traded on the ASX in
the one week period up to and
including the date of allocation of
the shares.
Matching Shares(3)
Ordinary shares to a maximum value
of one half of Mr Cicutto's short
term incentive reward for the year.
Accordingly, the maximum value of
the reward that may be provided in
Matching Shares is A$1,293,000.
Dividends earned on Matching Shares
will be applied toward the
acquisition of further National
shares.
National Australia Bank Staff Share Each year for the 3 years from Ordinary shares to a maximum value of
Allocation Plan (National EVA Share offer) the date of this Annual General A$1,250. In each case, the actual
("Allocation Plan") Meeting number of shares offered will depend
on the value of the reward
in each year and the weighted average
price at which National shares were
traded on the ASX in the one week up
to and including the date of
allocation of the shares.
In each case, the offer will be for
the same number of shares as that
offered to all employees eligible to
participate in the National EVA Share
offer.
(1)The number of securities described in this table are maximums and the total
number actually allocated to Mr Cicutto may be less than the maximum or nil.
(2)The options and performance rights only become exercisable if certain
performance conditions are met. Refer to the explanatory notes relating
to resolution 4 for further information on the performance conditions applicable
to options and performance rights proposed to be granted to Mr Cicutto. If
approved by Shareholders, it is the current intention that all options and
performance rights granted to Mr Cicutto under this approval will have a common
expiry date of early 2012.
(3)For further details of Mr Cicutto's short term incentive under his new terms
and conditions of employment refer to the disclosure released to the
ASX by the National on 23 October 2003.
If approved by Shareholders, any securities acquired by Mr Cicutto pursuant to
this resolution will be allocated within 3 years of the date of this meeting.
Details of any securities acquired by Mr Cicutto pursuant to this resolution
will be published in each annual report of the National relating to the period
in which the securities were acquired and that approval for the acquisition of
those securities by Mr Cicutto was obtained under the ASX Listing Rules.
For further information on the National's employee incentive schemes, including
the various plans referred to above, refer to Note 39 in the National's Annual
Financial Report for the year ended 30 September 2003.
Page 9 National Australia Bank Limited
The price or the formulae for calculating the price for each security is set out
below:
Security and relevant plan Price or relevant formula
Options granted under Option Plan No price is payable for the grant of
options.
If the applicable performance hurdle is
met, and Mr Cicutto wishes to exercise
his options, he must pay the exercise
price. The exercise price is the market
price of a National share on the date
the option was granted, or such other
date determined by the Board. The
market price is the weighted average
price at which National shares were
traded on the ASX in the one week up to
and including the relevant day.
The same position applies to all
executives of the National to whom
options are granted.
Performance rights granted under Performance Rights Plan No price is payable for the grant of
performance rights.
If the applicable performance hurdle is
met, and Mr Cicutto wishes to exercise
his performance rights, he must pay a
nominal exercise price to acquire the
shares. The total exercise price
payable on the exercise of any
performance rights on a particular
day will be $1.00, irrespective of the
number of performance rights exercised
on that day.
The same position applies to all
executives of the National to whom
performance rights are granted.
Shares issued under the Ownership Plan The shares represent the value of Mr
(Deferred Shares and Matching Shares) Cicutto's short term incentive reward
for the relevant year provided in the
form of shares. The number of shares
acquired is a function of the amount of
Mr Cicutto's short term incentive
reward and the value of that reward to
be provided as Deferred Shares and
Matching Shares divided by the weighted
average price at which National shares
were traded on the ASX in the one week
up to and including the date that
shares are allocated. No price is
payable by employees for the shares
allocated.
Shares issued under the Allocation Plan No price is payable by employees for
(National EVA Share Offer) shares allocated under the Allocation
Plan.
Mr Cicutto is the only Director who received securities under the Option Plan,
the Performance Rights Plan or the Allocation Plan since the 2002 Annual General
Meeting. The acquisition of these securities was approved by Shareholders at the
2002 Annual General Meeting. Details of these securities are set out on pages 6
and 8 of this Notice of Meeting. Mr Stewart was, however, granted securities
under the Option Plan and the Performance Rights Plan prior to his appointment
to the Board.
Apart from under the NED Share Plan (details of which are set out on pages 11
and 12 of this Notice of Meeting), no Director or their associates has acquired
any shares under the Ownership Plan since the 2002 Annual Meeting. Apart from Mr
Stewart, no other Directors or their associates are entitled to participate in
the Option Plan or the Performance Rights Plan. No other Director is entitled to
participate in the Allocation Plan. Approval is being sought separately at this
meeting in connection with Mr Stewart's participation in certain of the
NationalOs employee incentive schemes. No Director will be entitled to
participate in any of the Option Plan, the Performance Rights Plan, the
Ownership Plan or the Allocation Plan unless approved by Shareholders.
Mr Cicutto will not be able to participate in the loan scheme that is available
in relation to the payment of the exercise price of options granted under the
Option Plan. Further, loans will not be made available to Mr Cicutto under the
Ownership Plan in connection with Deferred Shares or Matching Shares. There is
no loan scheme in relation to the Performance Rights Plan.
Recommendation
Each Director, except Mr Cicutto and Mr Stewart, recommends that shareholders
vote in favour of the proposed resolution. As the resolution relates directly to
him, Mr Cicutto does not make a recommendation. Mr Stewart makes no
recommendation as Mr Cicutto is the Managing Director and Chief Executive
Officer and Mr Stewart is an executive Director.
Resolution 6: Non-executive Directors' retirement benefits schemes ("Schemes")
At the 2002 Annual General Meeting, the Board announced the withdrawal of the
Schemes for new non-executive Directors of the National and its controlled
entities. That is, after that time, no new non-executive Director will be
entitled to a retirement allowance benefit. In October 2003, this decision was
extended to all non-executive Directors of the National and its controlled
entities, effective from 1 January 2004, subject to Shareholders' approval of
the arrangements for discontinuation of the existing schemes at the 2003 Annual
General Meeting. Effectively this will mean that for all current non-executive
Directors at the time of last year's Annual General Meeting, their current
entitlements under the Schemes will be frozen and preserved, in the form set out
below, until each such Director retires.
National Australia Bank Limited Page 10
The following non-executive Directors of the National were elected as Directors
when the Schemes were in existence and will be affected by these arrangements:
Mr Charles Allen, Dr Brian Clark, Mr Peter Duncan, Mr Graham Kraehe, Dr Kenneth
Moss, Mr Geoffrey Tomlinson, Dr Edward Tweddell and Mrs Catherine Walter. In
addition, there are non-executive Directors of controlled entities who were
appointed when the Schemes were in existence and who will also be affected. If
the Schemes were not to be discontinued, those Directors would on retirement
have become entitled to a payment under the Schemes.
The proposal is to determine the amount of the benefit that would have been
payable by the National, or its controlled entities, under the relevant Scheme
in the event that each Director retired on 1 January 2004 and amend that Scheme
to allow the Directors the flexibility to choose to provide an equivalent
benefit by way of:
* an employer contribution to a regulated superannuation fund for the benefit of
the relevant non-executive Director; and/or
* the acquisition of National shares to be held as set out below; and/or
* a payment to the relevant Director on the date of retirement equal to the
equivalent benefit plus an additional amount. This additional amount represents
the amount that would have been payable had the benefit been invested in a cash
management account chosen by the National for the period from 1 January 2004
until the applicable retirement date.
A Director will have no right to receive any payment before their retirement
date nor will they be able to deal in any National shares acquired (or request
such a dealing) before this date. In the case of any superannuation benefit, a
Director, while holding office, can only receive that benefit before their
retirement date if the Director satisfies a condition of release under the
Superannuation Industry (Supervision) legislation.
Directors will not be provided with any benefits under the Schemes after 31
December 2003 other than those discussed above.
If approved, any benefit in the form of National shares will be provided under
the National's share plan known as the National Australia Bank Staff Share
Ownership Plan ("Ownership Plan") and will be allocated no later than 12
months after the date of this meeting. The number of shares to be allocated will
be based on the weighted average share price at which National shares were
traded in the week up to and including the date of allocation, rounded down to
the nearest whole number.
The total aggregate number of shares which may be acquired by Directors of the
National cannot be precisely calculated, as it depends on the extent to which
DirectorsO benefits (if any) will be applied to the acquisition of National
shares and the price at which the shares are allocated to participants. The
maximum dilutionary effect if all Directors' retirement benefits are applied to
the acquisition of shares, is 0.00595%, at share prices and total capitalisation
levels current at the date of preparation of this notice. To the extent that
shares are acquired on market, rather than issued by the National, the
dilutionary effect will be lower than as set out above.
Under the terms of the Ownership Plan, the shares to be provided will be held in
trust until the relevant directorship ceases. If a benefit is provided as
National shares, Directors will agree that any dividends will be applied to the
acquisition of further shares under the NationalOs Dividend Reinvestment Plan.
For further information about the terms of the Ownership Plan, refer to Note 39
in the NationalOs Annual Financial Report for the year ended 30 September 2003.
If approved, all relevant Directors will enter into amended arrangements with
the National consistent with the arrangements described above.
Recommendation
As the resolution relates directly to them, the non-executive Directors do not
make a recommendation.
Resolution 7: Non-executive Directors' Remuneration
Three years ago, Shareholders fixed at A$2,200,000 the maximum aggregate amount
which may be provided as remuneration to all non-executive Directors of the
National for their services as Directors of the National and its controlled
entities. This amount does not include the non-executive Directors' retirement
allowance benefit described above as such benefits were separately approved by
Shareholders. In addition, this amount does not include the reimbursement of any
travelling, accommodation and other expenses a Director may incur whilst engaged
in the business of the National.
This is an amount which is divided among all of the non-executive Directors and
is not the amount payable to each Director. The remuneration provided to each
non-executive Director for the year ended 30 September 2003 is detailed in the
Report of the Directors in the National's Concise Annual Report and in the
Annual Financial Report 2003. The total value of remuneration provided to all
non-executive Directors during the last financial year was A$1,899,244 before
retirement allowance benefits separately approved by Shareholders, compulsory
superannuation and the reimbursement of expenses.
The proposed increase of A$1,300,000 in the maximum aggregate amount to
A$3,500,000 is not intended to be fully utilised in the immediate future.
Page 11 National Australia Bank Limited
Based on independent actuarial advice, the increase in non-executive Directors'
fees required to compensate for the discontinuation of the retirement allowance
benefit is 30%. This generally appears to be in line with the findings of other
Australian companies. Based on the total fees paid during the year ended 30
September 2003, such an increase would take the maximum aggregate required to
just under $2,500,000. In addition, allowance needs to be made for the
additional work involved with the newly established Risk Committee, to allow for
Mr Thorn who joined the Board in October 2004 and who will stand for election at
this meeting and it is also appropriate to allow for the future possible
expansion in the size of the Board.
The level of the maximum aggregate amount also recognises the size and
complexity of the National, being the second largest company in Australia by
stock market capitalisation with extensive international operations and onerous
responsibilities in many regulatory environments. It also recognises the need
for the Directors to maintain a more frequent and closer overview of the
National's significant and growing assets in the Northern Hemisphere.
Recommendation
As the resolution relates directly to them, the non-executive Directors do not
make a recommendation.
Resolution 8: Non-executive Directors' Share Plan ("NED Share Plan")
At the 2000 Annual General Meeting and in accordance with the ASX Listing Rules,
Shareholders approved the acquisition of National shares ("NED Shares") by non-
executive Directors of the National under the NED Share Plan for a period of 3
years. Shareholders are now asked to refresh that approval for an additional 3
years.
There has been no material change to the terms of the NED Share Plan as
described to Shareholders in 2000. The provision of NED Shares does not involve
any additional remuneration for the non-executive Directors.
The NED Share Plan allows the National the flexibility to provide non-executive
Directors with part of their remuneration in National shares rather than
providing all of their annual Directors fees in cash. NED Shares are normally
acquired on a six monthly basis, and may either be issued as new shares or
purchased on the Australian Stock Exchange ("ASX").
The NED Share Plan operates through the existing trust structure of the National
Australia Bank Staff Ownership Plan and the trustee is National Australia
Trustees Limited ("Trustee"). If the Trustee is prevented by law from
allocating NED Shares to a participant, the National may provide the
remuneration in cash.
Nothing in the NED Share Plan restricts in any way the right of the Shareholders
of the National to remove a Director from his or her office or in any way
qualifies the provisions of the law or the National's Constitution relating to
the termination of office of non-executive Directors.
For further information on the NED Share Plan refer to Note 39 in the National's
Annual Financial Report and the Report of Directors for the year ended 30
September 2003.
The maximum number of NED Shares that may be acquired and the relevant formula
for calculating that number is set out below.
* All participants are provided with 10% of their annual remuneration in the
form of NED Shares.
* The National may provide up to a further 30% of a participantOs remuneration
for a year in the form of NED Shares.
Accordingly, the maximum proportion of a participantOs remuneration which may be
provided in the form of NED Shares is 40%.
* The number of shares to be allocated to participants is based on the weighted
average price at which National shares were traded on the ASX in the one week
period up to and including the day of allocation. The number of shares which may
be acquired by non-executive Directors cannot be precisely calculated, as it
depends on the extent to which each Director participates in the NED Share Plan
and the price at which the shares are allocated to participants.
The maximum dilutionary effect of the acquisitions that may be made in the first
year of allocations under the NED Share Plan, if all Directors are provided 40%
of remuneration in NED Shares, is 0.00224%, at current share prices and total
capitalisation levels. To the extent that shares are acquired on market, rather
than issued by the National, the dilutionary effect will be lower than as set
out above.
If resolution 8 is approved by Shareholders, NED Shares will not be issued at
any stage after 3 years from the date of this meeting without obtaining further
Shareholder approval.
Participation is open only to non-executive Directors of the National.
Currently, the following persons are non-executive Directors of the National and
are entitled to participate in the NED Share Plan: Mr Charles Allen, Dr Brian
Clark, Mr Peter Duncan, Mr Graham Kraehe, Dr Kenneth Moss, Mr John Thorn, Mr
Geoffrey Tomlinson, Dr Edward Tweddell and Mrs Catherine Walter.
The table below sets out the names of all non-executive Directors who were
provided with NED Shares since December 2000, the number of NED Shares provided
and the price at which NED Shares were allocated.
National Australia Bank Limited Page 12
Name Issue No.of Allocation
Date shares Price
Mr Charles Allen 21 March 2001 786 $28.81
Mr Graham Kraehe 417
Dr Kenneth Moss 261
Mr Mark Rayner 409
Mr Geoffrey Tomlinson 579
Dr Edward Tweddell 216
Mrs Catherine Walter 464
Mr Charles Allen 2 August 2001 873 $33.05
Mr Graham Kraehe 459
Mr Mark Rayner 476
Dr Kenneth Moss 312
Mr Geoffrey Tomlinson 224
Dr Edward Tweddell 628
Mrs Catherine Walter 513
Mr Charles Allen 27 March 2002 1,773 $34.48
Dr Brian Clark 566
Mr Peter Duncan 309
Mr Graham Kraehe 309
Dr Kenneth Moss 325
Mr Geoffrey Tomlinson 156
Dr Edward Tweddell 602
Mrs Catherine Walter 492
Mr Charles Allen 26 August 2002 1,772 $34.51
Dr Brian Clark 612
Mr Peter Duncan 332
Mr Graham Kraehe 332
Dr Kenneth Moss 349
Mr Geoffrey Tomlinson 173
Dr Edward Tweddell 625
Mrs Catherine Walter 506
Mr Charles Allen 27 February 2003 2,434 $29.23
Dr Brian Clark 722
Mr Peter Duncan 577
Mr Graham Kraehe 392
Dr Kenneth Moss 596
Mr Geoffrey Tomlinson 204
Dr Edward Tweddell 738
Mrs Catherine Walter 597
Mr Charles Allen 26 September 2003 2,337 $30.45
Dr Brian Clark 693
Mr Peter Duncan 430
Mr Graham Kraehe 396
Dr Kenneth Moss 592
Mr Geoffrey Tomlinson 196
Dr Edward Tweddell 753
Mrs Catherine Walter 445
No loan will be made available by the National in connection with the
acquisition of NED Shares. Details of any NED Shares provided will be published
in each annual report of the National relating to any period in which NED Shares
are provided, and that approval for the provision of NED Shares was obtained in
accordance with the ASX Listing Rules.
Recommendation
As the resolution relates directly to them, the non-executive Directors do not
make a recommendation.
Resolution 9: Confirming member approval to the selective buy-back arrangements
relating to preference shares associated with the TrUEPrS SM
In 1998, the National issued 36,008,000 fully-paid preference shares as part of
the raising of approximately US$450,100,000 Tier 1 capital in connection with
the issue of Trust Units Exchangeable for Preference SharesTM
("TrUEPrS SM") to predominantly retail investors based in the United States.
The preference shares initially have no entitlement to dividends ("0%
Preference Shares") however, on 31 December 2047 or earlier on the occurrence
of certain events, the preference shares will convert into dividend paying
preference shares at an annual rate of 8% ("8% Preference Shares")
(together, the ("Preference Shares").
The National wishes to have the flexibility to redeem the TrUEPrS SM if it no
longer considers that the instrument offers a cost effective source of Tier 1
Capital. The National has various options available to effect the redemption of
the TrUEPrS SM. In particular, the terms of the Preference Shares give the
National the right to repay the capital by making buy-back offers for all the
Preference Shares subject to certain conditions ("Buy-back Scheme").
At the 1998 Annual General Meeting, Shareholders resolved by special resolution
to approve the National effecting a buy-back (or a capital reduction) of the
Preference Shares. Given the length of time since that approval was given, the
National is now seeking to refresh that approval. Fresh approval is not,
however, being sought to effect a return of capital by way of a capital
reduction of the Preference Shares.
Further details
Further details concerning the Preference Shares and the TrUEPrS SM were
contained in the notice of meeting that convened the 1998 Annual General
Meeting. A copy of that notice will be provided to you free of charge if you
contact the office of the Company Secretary on (61 3) 8641 4170. Copies of the
terms of issue of the Preference Shares are also available free of charge from
the office of the Company Secretary.
Page 13 National Australia Bank Limited
Information for Shareholders
The following information may be material to your decision to vote in favour of
resolution 9:
(a) The number of shares affected
There are currently 36,008,000 0% Preference Shares on issue. Currently, there
are no 8% Preference Shares on issue. Ordinary shares in the National would not
be affected. Following a Buy-back Scheme, all the Preference Shares will be
cancelled.
(b) The Buy-back Scheme price
The purchase price for each Preference Share under the Buy-back Scheme would
have been the issue price per share, being US$12.50 for each Preference Share
then on issue, plus any accrued but unpaid dividends. This price was prescribed
in the terms of issue of the TrUEPrS SM.
As at 30 September 2003, the cost of the Buy-back Scheme would be
US$450,100,000.
(c) The terms of the Buy-back Scheme
The other terms of the Buy-back Scheme are set out in the notice of meeting that
convened the 1998 Annual General
Meeting. A copy of that notice will be provided to you free of charge if you
contact the office of the Company Secretary on
(61 3) 8641 4170.
(d) The interests of directors
No Director holds or has any interest in the Preference Shares.
(e) The financial effect of the Buy-back Scheme on the Company
Consistent with the Corporations Act, the National considers that the Buy-back
Scheme would be fair and reasonable to Shareholders as a whole given that the
scheme is proposed as an alternative to an existing right of redemption. The
National will not effect the Buy-back Scheme if there were to be any material
prejudice to its creditors.
(f) The source of funds for the Buy-back Scheme
The National maintains significant reserves of cash and other funding
alternatives that could be implemented to effect the Buy-back Scheme. The
Directors would, at the relevant time, consider the best alternative or
combination of alternatives for funding the Buy-back Scheme.
(g) The effect of the Buy-back Scheme on the control of the National
The 0% Preference Shares only entitle the holder to very limited voting rights.
If the 0% Preference Shares convert to the 8% Preference Shares and dividends
are not paid on the 8% Preference Shares, the preference shareholders have a
right to vote with ordinary shareholders on the basis of one vote per Preference
Share. In these circumstances, the total number of votes capable of being
exercised by the preference shareholders would be 36,008,000 or approximately
2.4% of the National's total issued share capital as at 30 September 2003.
(h) The identity of the affected shareholders
The 0% Preference Shares are directly owned by Cuzzano (Investments) Limited, a
special purpose company incorporated under the laws of, and domiciled in,
Jersey, Channel Islands.
In the event of a Buy-back Scheme of all the 0% Preference Shares for cash, the
cash will ultimately be distributed to the holders of the TrUEPrS SM in exchange
for cancellation of the TrUEPrS SM.
Alternatively, on the occurrence of an 'exchange event', the 0% Preference
Shares will convert into 8% Preference Shares and the 8% Preference Shares will
ultimately be distributed to the holders of the TrUEPrS SM in exchange for the
TrUEPrS SM. In the event of a Buy-back of all the 8% Preference Shares for cash,
the cash will ultimately be distributed to the holders of the 8% Preference
Shares.
The holders of the TrUEPrS SM are predominantly retail investors based in the
United States.
(i) The advantages and disadvantages of approving the Buy-back Scheme Approving
the Buy-back Scheme will give the National the flexibility to redeem the TrUEPrS
SM if it considers the capital is no longer required and/or the instrument no
longer offers a cost effective source of Tier 1 Capital.
The National does not consider there to be any material disadvantage in
approving the Buy-back Scheme, given that the Buy-back Scheme is proposed as an
alternative to an existing right of redemption and that the Scheme would not be
implemented were there to be any material prejudice to the National's creditors.
National Australia Bank Limited Page 14
(j) The current share market price
While listed on the New York Stock Exchange, the Preference Shares cannot be
traded at this time. In the event of an exchange event, other than redemption,
buy-back or reduction of capital of the Preference Shares, the TrUEPrS SM may be
exchanged for American Depositary Shares each representing two Preference
Shares. American Depositary Receipts representing those American Depositary
Shares would then be traded on the New York Stock Exchange.
Recommendation
The Directors recommend Shareholders vote in favour of resolution 9.
@2003 National Australia Bank Limited ABN 12 004 044 937
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The company news service from the London Stock Exchange
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