UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )

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o Preliminary Proxy Statement þ Definitive Proxy Statement o Definitive Additional Materials o Soliciting Material Pursuant to §240.14a-12		o  Confidential, for Use of the Commission       Only (as permitted by Rule 14a-6(e)(2))

Newmont Mining Corporation

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Notice of 2011 Annual Meeting of Stockholders

 

 

Under the Securities and Exchange Commission rules, we have elected to use the Internet for delivery of annual meeting materials to our stockholders, enabling us to provide them with the information they need, while lowering the costs of delivery and reducing the environmental impact associated with our annual meeting.

 

All stockholders are cordially invited to attend the meeting in person. It is important that your shares be represented at the meeting whether or not you are personally able to attend. If you are unable to attend, please promptly vote your shares by telephone or Internet or by signing, dating and returning the enclosed proxy card at your earliest convenience. Voting by the Internet or telephone is fast, convenient, and enables your vote to be immediately confirmed and tabulated, which helps Newmont reduce postage and proxy tabulation costs. Your vote is important so that your shares will be represented and voted at the meeting even if you cannot attend.

 

By Order of the Board of Directors

 

Jeffrey K. Reeser
Vice President and Secretary

 

March 4, 2011

 

 

2011 Proxy Statement
Table of Contents

 

 

PROXY STATEMENT

 

 

 

On or about March 10, 2011, we will furnish a Notice of Internet Availability of Proxy Materials to most of our stockholders containing instructions on how to access the proxy materials and to vote online. In addition, instructions on how to request a printed copy of these materials may be found on the Notice. For more information on voting your stock, please see “Voting Your Shares” below. If you received a Notice by mail, you will not receive a paper copy of the proxy materials unless you request such materials by following the instructions contained on the Notice. Your vote is important no matter the extent of your holdings.

 

The holders of record of the following securities at the close of business on February 18, 2011 are entitled to vote at Newmont Mining Corporation’s (“Newmont” or the “Company”) 2011 Annual Meeting of Stockholders to be held on Tuesday, April 19, 2011 (the “Annual Meeting”):

 

 

Newmont Common Stock. Each share of common stock that you own entitles you to one vote. Your Notice or proxy card shows the number of shares of common stock that you own. You may elect to vote in one of three methods:

 

 

If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, the organization that holds your shares may generally vote on “routine” matters such as ratification of auditors but cannot vote on “non-routine” matters, which now include matters such as votes for the election of directors and the Say-on-Pay and Say-When-On-Pay proposals. Thus, if the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, that organization will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”

 

Newmont Exchangeable Shares.  Each Newmont exchangeable share that you own has economic rights (such as the right to receive dividends and other distributions) that are, as nearly as practicable, equivalent to rights of shares of Newmont common stock. Holders of exchangeable shares have a right through a Voting and Exchange Trust Agreement (the “Voting Agreement”) to vote at stockholders’ meetings of Newmont. The exchangeable shares, however, are not shares issued by Newmont and, therefore, a holder of exchangeable shares is not a registered stockholder of Newmont, but is a registered stockholder of Newmont Canada. The exchangeable shares are exchangeable at the option of the holders into the Company’s common stock on a one-for-one basis. There are two ways to vote your exchangeable shares:

 

 

Quorum.  The holders of a majority of the outstanding shares of capital stock of the Company entitled to vote at the Annual Meeting must be present in person or represented by proxy in order to constitute a quorum for all matters to come before the meeting. For purposes of determining the presence of a quorum, “shares of capital stock of the Company” include all shares of common stock and the maximum number of shares of common stock that the Trustee of the Newmont exchangeable shares is entitled to vote at the Annual Meeting.

 

Tabulating Votes and Voting Results.  Votes at the Annual Meeting will be tabulated by two inspectors of election who will be appointed by the Chairman of the meeting and who will not be candidates for election to the Board of Directors. The inspectors of election will treat shares of capital stock represented by a properly signed and returned proxy as present at the Annual Meeting for purposes of determining a quorum, without regard to whether the proxy is marked as casting a vote or abstaining.

 

Broker Non-Votes and Abstentions.  Abstentions and broker “non-votes” as to particular matters are counted for purposes of determining whether a quorum is present at the Annual Meeting. Abstentions are counted in tabulations of the votes cast on proposals presented to stockholders, whereas broker non-votes are not counted for purposes of determining whether a proposal has been approved. Abstentions have the same effect as votes against

proposals presented to stockholders. A “broker non-vote” occurs when a nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the nominee does not have discretionary voting power and has not received instructions to do so from the beneficial owner.

 

 

Election of Directors.  Beginning January 1, 2010, brokers, banks and other financial institutions can no longer vote your stock on your behalf for the election of directors if you have not provided instructions on your voting instruction form, by telephone or internet. For your vote to be counted, you must submit your voting instructions to your broker or custodian.

 

Ratify PricewaterhouseCoopers LLP as the Company’s Independent Auditors for 2011.  The affirmative vote of a majority of the shares present and entitled to vote, in person or by proxy, at the Annual Meeting is required to ratify the Audit Committee’s appointment of PricewaterhouseCoopers LLP as the Company’s independent auditors for 2011.

 

Advisory Votes.  Because the votes on these proposals are advisory in nature, they will not (1) affect any compensation already paid or awarded to any named executive officer, (2) be binding on or overrule any decisions by the Board of Directors, (3) create or imply any additional fiduciary duty on the part of the Board of Directors, and (3) restrict or limit the ability of stockholders to make proposals for inclusion in proxy materials related to executive compensation. See Proposal No. 3 — Advisory Vote on the Compensation of the Named Executive Officers and Proposal No. 4 — Advisory Vote on the Frequency of Stockholders Votes on Executive Compensation for a description of these proposals.

 

Other Items.  If any other items are presented at the Annual Meeting, they must receive an affirmative vote of a majority of the shares present and entitled to vote, in person or by proxy, in order to be approved.

 

Revocation of Newmont Common Stock Proxy.  A stockholder who executes a proxy may revoke it by delivering to the Secretary of the Company, at any time before the proxies are voted, a written notice of revocation bearing a later date than the proxy, or by attending the Annual Meeting and voting in person (although attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy). A stockholder also may substitute another person in place of those persons presently named as proxies. Written notice revoking or revising a proxy should be sent to the attention of the Secretary, Newmont Mining Corporation, at 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA.

 

Revocation of Newmont Exchangeable Shares Voting Instruction Form.  A registered holder of Newmont exchangeable shares who has submitted a Voting Instruction Form may revoke the Voting Instruction Form by completing and signing a Voting Instruction Form bearing a later date and depositing it with the Trustee. No notice of revocation or later-dated Voting Instruction Form, however, will be effective unless received by the Trustee prior to 5:00 p.m., Toronto time, on April 18, 2011.

A non-registered holder of Newmont exchangeable shares may revoke a Voting Instruction Form at any time by written notice to the intermediary, except that an intermediary is not required to act on a revocation of a Voting Instruction Form that is not received by the intermediary at least ten days prior to the Annual Meeting.

 

The cost of preparing and mailing the Notice of Internet Availability of Proxy Materials, requests for proxy materials, and the cost of solicitation of proxies on behalf of the Board of Directors will be borne by the Company. The proxy materials will be mailed to the holders of the Company’s common stock, and Newmont exchangeable shares, on March 10, 2011. In addition, solicitation of proxies and voting instruction forms may be made by certain officers and employees of the Company by mail, telephone or in person. The Company has retained Georgeson Inc. to aid in the solicitation of brokers, banks, intermediaries and other institutional holders in the United States and Canada for a fee of $15,000. All costs of the solicitation will be borne by the Company. The Company also will reimburse brokerage firms and others for their expenses in forwarding proxy materials to beneficial owners of common stock and exchangeable shares.

 

Participants in the Retirement Savings Plan of Newmont and Retirement Savings Plan for Hourly-Rated Employees of Newmont.  If you are a participant in the Retirement Savings Plan of Newmont or Retirement Savings Plan for Hourly-Rated Employees of Newmont (401(k) Plans) and hold the Company’s common stock under either of the 401(k) Plans, you will be furnished a Notice of Internet Availability of Proxy Materials containing instructions on how to access the proxy materials and to vote online. In addition, instructions on how to request a printed copy of these materials may be found on the Notice. The 401(k) Plans are administered by Vanguard, as trustee. The trustee, as the stockholder of record of the Company’s common stock held in the plans, will vote the shares held for you in accordance with the directions you provide. If you do not vote your shares by 11:59 p.m. Eastern time on April 15, 2011, the Trustee will vote your common shares in the 401(k) Plans in the same proportion as it votes shares as to which directions have been received.

 

For a stockholder proposal, including a proposal for the election of a director, to be included in the proxy statement and form of proxy for the 2012 Annual Meeting, the proposal must have been received by us at our principal executive offices no later than November 11, 2011. Proposals should be sent to the attention of the Secretary of the Company at 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA. We are not required to include in our proxy statement and form of proxy a stockholder proposal that was received after that date or that otherwise fails to meet the requirements for stockholder proposals established by SEC regulations.

 

In addition, under our By-Laws, stockholders must give advance notice of nominations for directors or other business to be addressed at the 2012 Annual Meeting no later than the close of business on February 17, 2012. The advance notice must be delivered to the attention of the Secretary of the Company at 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA.

 

The results of the voting at the 2011 Annual Meeting of Stockholders will be reported on Form 8-K and filed with the Securities and Exchange Commission within four business days after the end of the meeting.

 

If you hold your Newmont stock through a broker, bank or other financial institution, your Newmont stock will no longer be voted on your behalf on the election of directors unless you complete and return the voting instruction form or follow the instructions provided to you to vote your stock via telephone or the internet. If you do not instruct your broker, bank or other financial institution how to vote, your votes will be counted as “broker non-votes” and your shares will not be represented in the election of directors vote at the Annual Meeting.

 

Our By-Laws were amended to require that in an uncontested election each director will be elected by a vote of the majority of the votes cast, which means the number of votes cast “for” a director’s election exceeds 50% of the number of votes cast with respect to that director’s election. Votes cast shall include votes to withhold authority, but shall exclude abstentions. Votes will not be deemed cast if no authority or direction is given.

 

If a nominee for director does not receive the vote of at least a majority of votes cast at the Annual Meeting, it is the policy of the Board of Directors that the director must tender his or her resignation to the Board. In such a case, the Corporate Governance and Nominating Committee will make a recommendation to the Board whether to accept or reject the tendered resignation, or whether other action should be taken, taking into account all of the facts and circumstances. The director who has tendered his or her resignation will not take part in the deliberations. For additional information, our Corporate Governance Guidelines are available on our website at www.newmont.com/our-investors/our-governance.

 

In addition to meeting the minimum qualifications set out by the Board of Directors under “Director Nomination Process and Review of Director Nominees,” each nominee also brings a strong and unique backgrounds and set of skills to the Board, giving the Board, as a whole, competence and experience in a wide variety of areas, including board service, corporate governance, compensation, executive management, private equity, finance, mining, operations, manufacturing, marketing, government, law, international business and health, safety, environmental and social responsibility. The unique background, skills and qualifications that led the Board of Directors and the Corporate Governance and Nominating Committee to the conclusion that each of the nominees should serve as a director for Newmont are set forth in the “Nominees” section below.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” ALL OF THE FOLLOWING NOMINEES AND, UNLESS A STOCKHOLDER GIVES INSTRUCTIONS ON THE PROXY CARD TO THE CONTRARY, THE PROXIES NAMED THEREON INTEND SO TO VOTE.

 

Each of the 10 persons named below is a nominee for election as a director at the Annual Meeting for a term of one year or until his/her successor is elected and qualifies. Unless authority is withheld, the proxies will be voted for the election of such nominees. All such nominees are currently serving as directors of the Company. All such nominees were elected to the Board of Directors at the last Annual Meeting. If any such nominees cannot be a candidate for election at the Annual Meeting, then the proxies will be voted either for a substitute nominee designated by the Board of Directors or for the election of only the remaining nominees.

The following table sets forth information as to each nominee for election, including his or her age (as of the Record Date), and background, including his or her principal occupation during the past five years, current directorships, and skills and qualifications, of each nominee:

 

 

Glen A. Barton, 71, Retired Chairman and Chief Executive Officer of Caterpillar Inc., having served in that position from 1999 to 2004. Vice Chairman thereof from 1998 to 1999 and Group President from 1990 to 1998.

 

Director Qualifications:

 

 

Board Experience:

 

Service on the Company’s Board of Directors since 2001, including prior service as Lead Director during 2004 to 2007. Prior service on the boards of several other companies, including Inco Limited and Caterpillar Inc., and current director of Valmont Industries, Inc.

 

 

Vincent A. Calarco, 68, Non-Executive Chairman of Newmont Mining Corporation from 2008 to present. Former Chairman of Crompton Corporation (now known as Chemtura Corporation), a specialty chemical company, having served in that position from 1996 to 2004. President and Chief Executive Officer thereof from 1985 to 2004.

 

Director Qualifications:

 

 

Board Experience:

 

Service on the Company’s Board of Directors since 2000, as well as on the boards of several other companies, including as a current director of Consolidated Edison, Inc. and CPG International Inc., and prior service as a director at Asarco Corporation.

 

Joseph A. Carrabba, 58, Chairman, President and Chief Executive Officer of Cliffs Natural Resources Inc., formerly Cleveland-Cliffs Inc, since May 2007. Served as the Company’s President and Chief Executive Officer from 2006 to 2007 and as President and Chief Operating Officer from 2005 to 2006. Previously served as President and Chief Operating Officer of Diavik Diamond Mines, Inc. from 2003 to 2005.

 

Director Qualifications:

 

 

Board Experience:

 

Service on the Company’s Board of Directors since 2007, as well as on the boards of several other companies, including as a current director of Cliffs Natural Resources Inc. and KeyCorp.

 

 

Noreen Doyle, 61, Retired First Vice President of the European Bank for Reconstruction and Development (“EBRD”), having served in that position from 2001 to 2005, and in other executive positions with the EBRD since 1992.

 

Director Qualifications:

 

 

Board Experience:

 

Service on the Company’s Board of Directors since 2005, as well as on the boards of several other companies, including as a current director of Credit Suisse Group, QinetiQ plc and Rexam PLC. Member of advisory panels for Macquarie European Infrastructure Fund and Macquarie Renaissance Infrastructure Fund.

 

Veronica M. Hagen, 65, Chief Executive Officer of Polymer Group, Inc. since April 2007. President and Chief Executive Officer of Sappi Fine Paper North America from 2004 to 2007. Executive positions with Alcoa, Inc. since 1998, including Vice President and Chief Customer Officer from 2003 to 2004 and Vice President, Alcoa North American Extrusions from 2001 to 2003.

 

Director Qualifications:

 

 

Board Experience:

 

Service on the Company’s Board of Directors since 2005, as well as on the boards of several other companies, including as a current director of Southern Company. Former director of Jacuzzi Brands, Inc.

 

 

Michael S. Hamson, 70, Chairman, Hamson Consultants Pty Ltd, a consulting company, since 1987; Joint Chairman and Chief Executive Officer of McIntosh Hamson Hoare Govett Limited (now Merrill Lynch Australia) from 1972 to 1986 and Director and Deputy Chairman of Normandy Mining Limited from 1987 to 2002.

 

Director Qualifications:

 

 

Board Experience:

 

Service on the Company’s Board of Directors since 2002, as well as on the boards of several other companies, including as a current director of Genesis Emerging Markets Fund Ltd.

 

Richard T. O’Brien, 56, President and Chief Executive Officer of Newmont since July 2007. President and Chief Financial Officer of Newmont from April 2007 to July 2007; Executive Vice President and Chief Financial Officer during 2006 and 2007 and Senior Vice President and Chief Financial Officer from 2005 to 2006. Executive Vice President and Chief Financial Officer and Senior Vice President and Chief Financial Officer of AGL Resources from 2001 to 2005.

 

Director Qualifications:

 

 

Board Experience:

 

Service on the Company’s Board of Directors since 2007, as well as on the boards of several other companies, including as a current director of Inergy Holdings, L.P. and Vulcan Materials Company.

 

 

John B. Prescott, 70, Chairman of QR National Limited (“QR”) (formerly known as QR Limited and Queensland Rail since 2006). Retired Chairman of ASC Pty Ltd from 2000 to 2009. Retired executive of The Broken Hill Proprietary Company Limited (now BHP Billiton Ltd (“BHP”)), and Managing Director and Chief Executive Officer thereof from 1991 to 1998.

 

Director Qualifications:

 

 

Board Experience:

 

Service on the Company’s Board of Directors since 2002, as well as on the boards of several other companies, including prior service as a director at ASC Pty Ltd, BHP and Normandy Mining Limited.

 

 

Donald C. Roth, 67, Managing Partner of EMP Global LLC, an international private equity firm, since 1992. Member of Advisory Committee to the National Treasury Management Agency, Republic of Ireland, since 1990. Vice President and Treasurer of the World Bank from 1988 to 1992.

 

Director Qualifications:

 

 

Board Experience:

 

Service on the Company’s Board of Directors since 2004, as well as on the boards of several other companies, including as a current director of ISEQ Exchange Traded Fund Public Limited Company (Ireland).

 

 

Simon R. Thompson, 51, Executive for the Anglo American group from 1995 to 2007; Executive Director of Anglo American plc from 2005 to 2007; Non-Executive Director of AngloGold Ashanti Ltd (South Africa) from 2004 to 2008; and Non-Executive Director of United Company Rusal (Russia) from 2007 to 2009.

 

Director Qualifications:

 

 

Board Experience:

 

Service on the Company’s Board of Directors since 2008, as well as on the boards of several other companies, including as the current Non-Executive Director of AMEC plc (United Kingdom) and Sandvik AB (Sweden).

 

 

We have established a process for identifying and nominating director candidates that has resulted in the election of a highly-qualified and dedicated Board of Directors. The following is an outline of the process for nomination of candidates for election to the Board: (a) the Chief Executive Officer, the Corporate Governance and Nominating Committee or other members of the Board of Directors identify the need to add new Board members, with careful consideration of the mix of qualifications, skills and experience represented on the Board of Directors; (b) the Chairman of the Corporate Governance and Nominating Committee coordinates the search for qualified candidates with input from management and other Board members; (c) the Corporate Governance and Nominating Committee engages a candidate search firm to assist in identifying potential nominees, if it deems such engagement necessary and appropriate; (d) selected members of management and the Board of Directors interview prospective candidates; and (e) the Corporate Governance and Nominating Committee recommends a nominee and seeks full Board endorsement of the selected candidate, based on its judgment as to which candidate will best serve the interests of Newmont’s stockholders.

 

The Board of Directors has determined that directors should possess the following minimum qualifications: (a) the highest personal and professional ethics, integrity and values; (b) commitment to representing the long-term interest of the stockholders; (c) broad experience at the policy-making level in business, government, education, technology or public interest; and (d) sufficient time to effectively fulfill duties as a Board member. The Corporate Governance and Nominating Committee considers any candidates submitted by stockholders on the same basis as any other candidate. Any stockholder proposing a nomination should submit such candidate’s name, along with curriculum vitae or other summary of qualifications, experience and skills to the Secretary, Newmont Mining Corporation, 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA.

 

Newmont considers diversity, age and skills in deciding on nominees. The Corporate Governance and Nominating Committee considers a broad range of diversity, not limited to merely race, gender or national origin, but considering all relevant background and experience. We consider this through discussions at the Corporate Governance and Nominating Committee meetings. In evaluating a director candidate, the Corporate Governance and Nominating Committee considers factors that are in the best interests of the Company and its stockholders.

 

The Board affirmatively determines the independence of each director and each nominee for election as director. For each individual deemed to be independent, the Board has determined (a) that there is no relationship with the Company, or (b) the relationship is immaterial. The Board has considered the independence standards of the New York Stock Exchange and adopted more stringent categorical independence standards described below.

 

The Board has determined that the relationships that fall within the standards described in its independence standards are categorically immaterial. As such, provided that no law, rule or regulation precludes a determination of independence, the following relationships are not considered to be material relationships with the Company for purposes of assessing independence: service as an officer, director, employee or trustee or greater than five percent beneficial ownership in (i) a supplier of goods or services to the Company if the annual sales to the Company are less than $1 million or two percent of the gross revenues or sales of the supplier, whichever is greater; (ii) a lender to the Company if the total amount of the Company’s indebtedness is less than one percent of the total consolidated assets of the lender; (iii) a charitable organization if the total amount of the Company’s total annual charitable contributions to the organization is less than $1 million or two percent of that organization’s total annual gross receipts (excluding any amounts received through the Company’s employee matching program for charitable contributions), whichever is greater; or (iv) any relationship arising out of a transaction, or series of transactions, in which the amount involved is less than $60,000.

 

In making its independence determinations, the Board considered the circumstances described below.

 

Mr. Hamson is a director of Genesis Emerging Markets Ltd. The committee administering the investment of Company funds for its pension plan selected one of the Genesis Emerging Market funds as one investment in its portfolio in 2010. This relationship meets categorical independence standard (i) above.

Mr. Thompson is a director of Sandvik AB, an international engineering group that provides certain products to the Company including certain mining equipment for rock excavation. Mr. Thompson also is a director of AMEC plc, an international engineering and project management company, which provides certain consulting services to the Company. These relationships both meet the categorical independence standard (i) above.

 

Based on the foregoing analysis, the Board determined that the following directors are independent:

 

 

In addition, based on these standards, the Board has affirmatively determined that Richard T. O’Brien is not independent because he is President and Chief Executive Officer of the Company.

 

As of February 18, 2011, the directors and executive officers of the Company as a group beneficially owned, in the aggregate, 1,482,561 shares of the Company’s outstanding capital stock, constituting, in the aggregate, less than 1% of the Company’s outstanding capital stock.

 

No director or executive officer beneficially owned (a) more than 1% of the outstanding shares of the Company’s common stock or the exchangeable shares, or (b) shares voting power in excess of 1% of the voting power of the outstanding capital stock of the Company. Each director and executive officer has sole voting power and dispositive power with respect to all shares beneficially owned by them, except as set forth below.

 

The following table sets forth the beneficial ownership of common stock as of February 18, 2011 held by (a) each current director and nominee; (b) the Chief Executive Officer, the Chief Financial Officer and each of the other highly compensated executive officers (the “Named Executive Officers”); and (c) all current directors and executive officers as a group. The address for each of the named individuals below is c/o Newmont Mining Corporation, 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA.

 

 

 

 

The following table sets forth information with respect to each person known by the Company to be the beneficial owner of more than 5% of any class of the Company’s voting securities. The share information contained herein is based on investor filings with the SEC pursuant to Section 13(d) of the Securities Exchange Act of 1934.

 

 

 

 

Effective January 1, 2011, the annual compensation for non-employee directors for their service on the Board of Directors is as follows:

 

During 2010, the annual compensation for non-employee directors for their service on the Board of Directors was the same as set forth above, except for:

 

 

The following table summarizes the total compensation paid or earned by the Company’s non-employee directors during 2010:

 

2010 Directors Compensation

 

 

 

 

Retirement.  The Company has no current retirement plan for non-employee directors. The retirement payments included in the “All Other Compensation” column of the table above paid to Gov. Miller and Dr. Taranik were grandfathered under the previous plan, which provided that on retirement from the Board of Directors at any time after attaining age 65, a non-employee director who was serving on the Board of Directors on January 27, 1999 and who has served for at least ten consecutive years as a Director is entitled to be paid an annual sum of $50,000 for life.

Outstanding Awards.  The following table shows outstanding equity compensation for all non-employee directors of the Company as of December 31, 2010:

 

Share Ownership Guidelines. All directors are encouraged to have a significant long-term financial interest in the Company. To encourage alignment of the interests of the directors and the stockholders, each director is expected to own, or acquire within three years of becoming a director, shares of the Company’s common stock having a market value of five times the annual cash retainer payable under the Company’s director compensation policy. All directors meet the share ownership guidelines.

 

Compensation Consultant. The Board of Directors has engaged Frederic W. Cook & Co. (“Cook & Co.”) during 2010 to assist in the evaluation of independent director compensation. For a description of executive compensation consulting services provided by Cook & Co. to the Compensation Committee of the Board of Directors, see pages 25-26 of the Compensation, Discussion and Analysis.

 

Attendance at Meetings. During 2010, the Board of Directors held eight meetings. Each incumbent director attended 75% or more of all meetings of the Board of Directors and committees of the Board of Directors on which he or she served. It is the policy and practice of the Company that nominees for election at the Annual Meeting of Stockholders attend the meeting. All of the Board members at the time of the 2010 Annual Meeting of Stockholders held on April 23, 2010, attended the meeting.

 

Board Committees. The Board of Directors has, in addition to other committees, Audit, Compensation, Corporate Governance and Nominating, Operations and Safety, and Environmental and Social Responsibility Committees. All members of these five committees are independent, as defined in the listing standards of the New York Stock Exchange and the Company’s Corporate Governance Guidelines. Each Committee functions under a written charter adopted by the Board which are available on our website at http://www.newmont.com/our-investors/our-governance. The current members of these Committees and the number of meetings held in 2010 are shown in the following table:

Committees of the Board of Directors

 

 

 

 

 

 

 

 

Corporate Governance Guidelines and Charters. The Company has adopted Corporate Governance Guidelines that outline important policies and practices regarding the governance of the Company. In addition, each of the committees has adopted a charter outlining responsibilities and operations. The Corporate Governance Guidelines and the charters are available on our website at http://www.newmont.com/our-investors/our-governance.

Board Leadership and Independent Chairman. The Board of Directors selects the Chairman of the Board in the manner and upon the criteria that it deems best for the Company at the time of selection. The Board of Directors does not have a prescribed policy on whether the roles of the Chairman and Chief Executive Officer should be separate or combined. At all times, the Board of Directors has either a Non-Executive Chairman or lead director of the Board, which Chairman or lead director will meet the Company’s independence criteria and will be elected annually by the independent members of the Board of Directors.

 

Before 2008, the positions of Chairman of the Board and Chief Executive Officer were held by a single person. Due to the potential efficiencies of having the Chief Executive Officer also serve in the role of Chairman of the Board and the long tenure of the Chief Executive Officer, the Board of Directors determined that the interests of the Company and its stockholders were best served by the leadership and direction provided by a single person as Chairman and Chief Executive Officer. In 2007, the Board of Directors considered a shareholder proposal included in the 2007 Proxy Statement regarding the separation of such roles. The Board agreed to separate the roles as of January 1, 2008 in response to the stockholder vote and the Board’s determination regarding what was in the best interest of the Company at such time. The Board will continue to evaluate whether this leadership structure is in the best interests of the stockholders on a regular basis.

 

In January 2008, the independent members of the Board of Directors elected Vincent A. Calarco an independent Non-Executive Chairman of the Board. Mr. Calarco has been re-elected each year since 2008 as Non-Executive Chairman. He presides at independent directors sessions scheduled at each regular Board meeting. The Non-Executive Chairman serves as liaison between the Chief Executive Officer and the other independent directors, approves meeting agendas and schedules and notifies other members of the Board of Directors regarding any significant concerns of stockholders or interested parties of which he or she becomes aware. The Non-Executive Chairman presides at stockholders meetings and provides advice and counsel to the Chief Executive Officer.

 

Board Oversight of Risk Management. The Board of Directors is engaged in company-wide risk management oversight. Directors are entitled to rely on management and the advice of the Company’s outside advisors and auditors, but must at all times have a reasonable basis for such reliance. The Board of Directors relies upon the Chief Executive Officer and Chief Financial Officer to supervise the day-to-day risk management, each of whom provides reports directly to the Board of Directors and certain Board Committees, as appropriate. The Company has a global Enterprise Risk Management team, led by the Company’s Vice President and Treasurer. The Enterprise Risk Management team’s objectives include conducting the compensation risk assessment and reporting the process and findings to the Audit Committee and the Compensation Committee regularly, and to the full Board of Directors on at least an annual basis.

 

The Board of Directors also delegates certain oversight responsibilities to its Board Committees. For a description of the functions of the various Board Committees, see “Board Committees” above. For example, while the primary responsibility for financial and other reporting, internal controls, compliance with laws and regulations, and ethics rests with the management of the Company, the Audit Committee provides risk oversight with respect to the Company’s financial statements, the Company’s compliance with legal and regulatory requirements and corporate policies and controls, the independent auditor’s selection, retention, qualifications, objectivity and independence, and the performance of the Company’s internal audit function. Additionally, the Compensation Committee provides risk oversight with respect to the Company’s compensation program. For a discussion of the Compensation Committee and Enterprise Risk Management team’s assessments of compensation-related risks, see “Compensation Discussion and Analysis — Risk Assessment.” The Operations and Safety Committee provides oversight and direction with regard to safety and operating risks. The Environmental and Social Responsibility Committee provides oversight and direction with respect to environmental, social responsibility and community relations risks.

 

Communications with Stockholders or Interested Parties. Any stockholder or interested party who desires to contact the Company’s Chairman, the non-management directors as a group or the other members of the Board of Directors may do so by writing to the Secretary, Newmont Mining Corporation, 6363 South Fiddlers Green Circle, Greenwood Village, Colorado 80111 USA. Any such communication should state the number of shares owned, if applicable. The Secretary will forward to the Chairman any such communication addressed to him, the non-management directors as a group or to the Board of Directors generally, and will forward such communication to other Board members, as appropriate, provided that such communication addresses a legitimate business issue. Any communication relating to accounting, auditing or fraud will be forwarded immediately to the Chairman of the Audit Committee.

Majority Voting Policy. At the 2010 Annual Meeting of Stockholders, the stockholders approved a proposal submitted by United Brotherhood of Carpenters and Joiners of America to initiate the appropriate process to amend the Company’s governance documents to provide that director nominees be elected by the affirmative vote of the majority of votes cast at an Annual Meeting in a non-contested election. As a result, the Board of Directors amended the Company’s By-Laws to require that in an uncontested election each director will be elected by a vote of the majority of the votes cast, which means the number of votes cast “for” a director’s election exceeds 50% of the number of votes cast with respect to that director’s election. Notwithstanding the foregoing, in the event of a “contested election” of the directors (as defined in the Company’s By-Laws), directors shall be elected by the vote of a plurality of the votes cast at any meeting for the election of directors at which a quorum is present.

 

If a nominee for director does not receive the vote of at least a majority of votes cast at an Annual Meeting, it is the policy of the Board of Directors that the director must tender his or her resignation to the Board. In such a case, the Corporate Governance and Nominating Committee will make a recommendation to the Board, whether to accept or reject the tendered resignation, taking into account all of the facts and circumstances. The director who has tendered his or her resignation will not take part in the deliberations. For additional information, our Corporate Governance Guidelines describing this policy are available on our website at www.newmont.com/our-investors/our-governance.

 

Retirement Age. The Company’s retirement policy for non-employee directors provides that, except at the request of the Board of Directors, no non-employee director may stand for re-election to the Board after reaching age 72.

 

Code of Business Ethics and Conduct. Newmont has adopted a Code of Business Ethics and Conduct (the “Code”) applicable to all of its directors, officers and employees, including the Chief Executive Officer, the Chief Financial Officer, the Chief Accounting Officer and other persons performing financial reporting functions. The Code is available on our website at http://www.newmont.com/our-investors/our-governance. The Code is designed to deter wrongdoing and promote (a) honest and ethical conduct; (b) full, fair, accurate, timely and understandable disclosures; (c) compliance with laws, rules and regulations; (d) prompt internal reporting of Code violations; and (e) accountability for adherence to the Code. The Company will disclose any amendments to, or waivers from, certain provisions of the Code that apply to the Company’s directors or executive officers within four days of such event on Form 8-K.

 

Related Person Transactions. The Board has adopted written policies and procedures for approving related person transactions. Any transaction with a related person, other than transactions available to all employees generally or involving aggregate amounts of less than $120,000 must be approved or ratified by the Audit Committee, the Compensation Committee for compensation matters or disinterested members of the Board. The policies apply to all executive officers, directors and their family members and entities in which any of these individuals has a substantial ownership interest or control.

 

With approval of the Board of Directors, Gov. Miller, who retired from the Board of Directors in April 2010, was appointed the Newmont Chairman of a Nevada Advisory Panel, for a two-year term effective April 23, 2010 through April 22, 2012. Gov. Miller has provided and will continue to provide high-level strategic advice on Nevada political and operational issues to the Company. For his services, Newmont will pay him an annual fee of $215,000, $147,519 of which was paid to Gov. Miller in 2010 for services rendered.

 

The Compensation Committee of the Board of Directors (the “Compensation Committee”) is composed entirely of directors who are not officers or employees of the Company or any of its subsidiaries, and are independent, as defined in the listing standards of the New York Stock Exchange and the Company’s Corporate Governance Guidelines. The Compensation Committee has adopted a Charter that describes its responsibilities in detail, and the Compensation Committee and Board review and assess the adequacy of the Charter on a regular basis. The Compensation Committee has the responsibility of taking the leadership role with respect to the Board’s responsibilities relating to compensation of the Company’s key employees, including the Chief Executive Officer, the Chief Financial Officer and the other executive officers. Additional information about the Compensation Committee’s role in corporate governance can be found in the Compensation Committee’s Charter, available on the Company’s web site at www.newmont.com under the Our Investors section.

 

The Compensation Committee has reviewed and discussed with management the Company’s Compensation Discussion and Analysis section of this Proxy Statement. Based on such review and discussions, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis section be included in this Proxy Statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

 

Submitted by the following members of the Compensation Committee of the Board of Directors:

 

Donald C. Roth, Chairman
Glen A. Barton
Veronica M. Hagen

 

Our Compensation Discussion and Analysis (“CD&A”) describes Newmont’s executive compensation programs and compensation decisions in 2010 for our Named Executive Officers (“Officers”), who for 2010 includes:

 

 

The information is presented in the CD&A as follows:

 

 

Company Overview and Summary of 2010 Business Results. Newmont is one of the world’s largest gold producers and is the only gold company included in the S&P 500 Index and Fortune 500, and was the first gold company included in the Dow Jones Sustainability Index-World. We are engaged in the exploration for and acquisition of gold, copper and certain base metals properties. We have significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico.

 

During 2010 the Company continued on its journey of transformation and evolution. In our drive to be the most valued and respected mining company through industry-leading performance, we have successfully executed on the key benchmarks that we set out for the Company at the beginning of the year.

 

Delivered strong operating and financial performance.

 

 

 

Implemented Business Excellence initiatives to further drive continuous improvement and business efficiencies in our organization.

 

 

Our executive compensation programs support the achievement of the results stated above, as further described in our CD&A.

 

Compensation Structure. Our executive compensation program — composed of salary, short-term incentives and long-term incentives — is intended to align the interests of our Officers with those of our stockholders. This program accomplishes this by rewarding performance that is designed to, over time, result in an increase in the value of our stockholder’s investments in Newmont. We believe that the proportion of at-risk, performance-based compensation should rise as an employee’s level of responsibility increases. As such, short- and long-term incentives made up approximately 80% of 2010 target total compensation (as noted in the charts below) with long-term and equity compensation representing a significant portion of total pay. Overall, approximately two-thirds of targeted compensation for our Officers is based on the long-term financial and stock price performance of Newmont. The incentive compensation actually received by Officers varies based upon the Company’s short-term and long-term performance and Newmont’s stock price. While incenting performance, the design of our program is intended to mitigate excessive risk taking by executives. The mix and structure of compensation as described in this CD&A strike an appropriate balance to promote sustained performance without motivating or rewarding excessive risk.

 

 

Managing Executive Compensation in the Commodities Industry. Our stock price is heavily influenced by gold, copper and other commodity prices, which are in turn primarily driven by macroeconomic factors that are outside of the Company’s control. Since our stock price is significantly influenced by these external factors, Newmont’s compensation program is designed to focus management’s efforts in areas where they have the most influence on driving business performance, as well as to motivate and retain outstanding leadership through various economic and commodity price cycles. We believe this approach aligns the incentive structure with business performance elements that support the goal of providing long-term performance gains for our stockholders. To achieve this, the Company utilizes a comprehensive performance-based compensation structure, ensuring an appropriate balance of operational, financial and share price incentives based on:

 

 

This structure is illustrated in the following chart.

Newmont’s Executive Compensation Structure

 

 

Company Performance and Relationship to Officer Compensation for 2010. In 2010, management delivered solid results on operational, financial and stockholder return measures, and these results had direct linkages to our incentive compensation plans. The measures used in incentive compensation are what we believe to be the key drivers of Newmont’s long-term success and stock price performance, and are directly correlated to the pay received by the Company’s Officers. Components of Officer compensation increased or decreased in 2010 based on the level of achievement of these goals as shown in the chart below.

 

(See the “2010 Compensation” section of this Proxy Statement for additional information on the measures, results and payments.)

 

Incentive Plan Measures, Overall Company Performance and Resulting Compensation. The metrics listed below are general indicators of the Company’s overall performance in 2010 which results from the performance on the incentive plan measures. The Compensation Committee believes the incentive plan measures are the key drivers of the metrics below and support sustained, long-term performance. As noted previously, the Compensation Committee prefers to use a balance of operational and financial measures, rather than only high-level financial measures, to provide a more direct “line of sight” and to incent management’s performance on the key performance drivers. Again, this balanced approach also helps to manage commodity price volatility, such as the record gold price experienced in 2010, by incorporating measures that are not significantly influenced by commodity prices.

 

 

 

 

Summary of Key Compensation Committee Actions. The following highlights some of the key actions by the Compensation Committee, as well as the changes in Officer compensation, in 2010.

 

Policy changes:

 

 

 

 

These policy changes build upon our strong governance model and other policies that are in place, including:

 

 

 

Summary of Changes in Compensation, Performance Results and Corresponding Compensation Plan Payments (further details are provided in the “2010 Compensation” section of this CD&A):

 

 

Compensation Philosophy. Newmont’s executive compensation programs are designed to effectively link the actions of our executives to business outcomes that drive value creation for stockholders. In designing these programs, we are guided by the following principles:

 

 

As a core component of Newmont’s values, we are committed to transparency and open disclosure. We hope this information provides insight into the process that we follow in designing and implementing our executive compensation programs.

 

Compensation Objectives. We believe that executive compensation should be directly linked to continuous improvements in corporate performance and increases in stockholder value. Newmont’s executive compensation programs are designed to:

 

 

The components of target total direct compensation for our Officers are described in the Executive Summary and stated below. As noted in our Philosophy section, we emphasize performance-based “at-risk” compensation, based on operational, financial and share price performance.

 

 

Developing Our Executive Compensation Program. Each year the Compensation Committee conducts a detailed analysis of executive compensation designed to:

 

 

The Compensation Committee meets on a regular basis with the Chief Executive Officer, representatives from the Company’s Human Resources, Corporate Legal, and Finance Departments. The role of management is to provide the Compensation Committee with perspectives on the business context and individual performance to assist the Compensation Committee in making its decisions. The Company’s Human Resources Department support the Compensation Committee by providing data and analyses on compensation levels and trends. In addition, external independent compensation experts consult with the Compensation Committee regarding specific topics as further described in the following paragraph. An executive session, without management present, is generally held at the end of each Compensation Committee meeting. The independent members of the Board of Directors make all decisions regarding the Chief Executive Officer’s compensation in executive session, upon the recommendation of the Compensation Committee. The Committee Chairman provides regular reports to the Board of Directors regarding actions and discussions at Compensation Committee meetings.

 

The Compensation Committee, which has the authority to retain special counsel and other experts, including compensation consultants, has engaged Cook & Co. to assist the Compensation Committee in making its decision

and to provide (1) advice regarding trends in executive compensation, (2) independent review of management proposals and (3) an independent review and recommendation on Chief Executive Officer compensation, as well as other items that come before the Compensation Committee. Cook & Co. has reviewed the compensation philosophy, objectives, strategy, benchmark analyses and recommendations regarding Officer compensation. Cook & Co. is engaged solely by the Compensation Committee and does not provide any services or advice directly to management.

 

When making compensation decisions for Officers, the Compensation Committee considers factors beyond market data and the advice of consultants. The Compensation Committee considers the individual’s performance, tenure and experience, the overall performance of the Company, any retention concerns, the individual’s historical compensation and the compensation of the individual’s peers within the Company and market. While the Compensation Committee does have certain guidelines, goals, and tools that it uses to make its decisions, as explained below, the compensation process is not an exact science but incorporates the reasoned business judgment of the Compensation Committee. In making decisions for executives other than the Chief Executive Officer, the input and perspective of the Chief Executive Officer is considered by the Compensation Committee.

 

Compensation Components and Alignment to Compensation Philosophy.

 

The components of our executive compensation program contain six main elements as shown in the chart above. We explain the philosophy and key features of each below.

 

Determining the Proper Mix of Different Pay Elements. In determining how we allocate an executive’s total compensation package among various components, we emphasize compensation elements that reward performance on measures that align closely with business success, underscoring the pay-for-performance philosophy. A significant portion of our executive compensation is performance-based or “at-risk.” Our Chief Executive Officer and other Officers have a higher percentage of at-risk compensation relative to other employees. We believe this is appropriate because our Officers have the greatest influence on Company performance. Stock-based long-term incentives represent the largest component of pay, in order to encourage sustained long-term performance and ensure alignment with stockholders. In the graphs below, we show the emphasis on at-risk or stockholder aligned compensation through performance-based short-term and long-term incentives compared to base salary.

 

 

Components of Compensation and Alignment to Goals. The Company recognizes that its share price is heavily influenced by the price of gold, copper and other commodities, which are outside of the control of the Company. Thus, as a way to balance the commodity fluctuation, the Company grants a mix of incentives including stock options, financial performance stock bonuses (common stock and restricted stock units) and performance leveraged stock units (based on share return measures) to align the interests of management with the long-term interests of stockholders. This balanced approach means that management needs to achieve specific performance goals to earn the common stock and restricted stock units even in periods of positive gold/copper price movement, and that the equity package continues to motivate performance in down-cycles as the common stock and restricted stock units retain value and have motivational impact even when gold/copper prices are falling. At the same time, the use of stock options ensures that the highest rewards will only occur with an increasing share price.

The components of the compensation structure are:

 

 

Determination of Target Total Compensation. We consider a variety of factors when determining target Officer compensation to ensure we have a comprehensive understanding of alignment of goals, reasonableness of pay, internal equity, pay for performance, and ability to attract and retain executive talent. The primary items are discussed in detail below, and include:

 

 

 

Competitive Considerations (Market information).

 

Peer Group. We strive to compensate our Officers competitively relative to industry peers. To evaluate the reasonableness and competitiveness of Newmont’s position in the industry, the Compensation Committee spent considerable time in 2009 selecting a relevant peer group with the aid of its independent consultant, Cook & Co., and with input from management. The resulting peer group consists of mining and extractive industry companies. This peer group was reviewed again in 2010 and reaffirmed as an appropriate benchmark reference. To create the peer group, the Compensation Committee’s analysis included a review of each potential peer company’s industry, complexity of their business and organizational size information, including revenue, net income, total assets, market capitalization and number of employees. This approach ensures each company’s industry and size provide a reasonable basis of comparison. Below is the peer group selected by the Compensation Committee:

 

 

The companies included in the comparator group differ from those listed in the General Industry Classification Standard (“GICS”), a grouping commonly used by advisory services, as the Compensation Committee does not believe the GICS comparator group appropriately represents the mining and extractive industry companies, which constitute a directly relevant industry and labor peer group.

 

The table below compares Newmont’s 2010 company scope metrics versus the peer group. While Newmont tends to be larger than the companies in the peer group (and has outperformed the peers on several key measures as noted in the table below), which is a conservative approach for pay comparison, the Compensation Committee believes that those selected are appropriate reference points based on the industry. Additionally, the Compensation Committee recognizes that Newmont is one of the world’s largest gold companies, and therefore, will be by default one of the larger companies in the gold mining peer group. Newmont’s relative size and performance is considered by the Compensation Committee when determining an appropriate compensation market reference point, as described in the following section.

 

 

 

Positioning of Pay Relative to Peers. Upon completing an in-depth analysis of executive compensation in 2009, the Company determined that Newmont’s Officer pay was below the historical target positioning. Specifically, the results of the 2009 peer group comparison found that base salaries, targeted annual cash compensation, long-term incentives and target total direct compensation were below the 50th percentile of the peer group.

 

Because executive pay was well below its targeted position in 2009, the Compensation Committee decided to take a measured approach and target compensation between the 50th and 75th percentile, gradually moving compensation back into this range over time as performance, scope and other key criteria warranted. In 2010, the Compensation Committee again reviewed our pay philosophy and determined that for 2011, it would be appropriate to target the 62.5 percentile of the market and to use the broader philosophy of “market median up to the 75th percentile as the reasonable range for target compensation, considering Company and peer group metrics, individual and Company performance, and the industry labor market context.” This philosophy was formulated with input from the Compensation Committee’s consultant, Cook & Co. Under this more general approach, the Compensation Committee retains flexibility in determining the appropriate target for compensation each year based on a variety of factors such as performance, company size, changes in peer group, competition for talent, year-over-year changes in market pay, and other factors.

 

Material Differences Among Officers. With the exception of the Chief Executive Officer, the Company has set the same target percentages of base salary for each compensation component for all of the Officers for 2010. The Chief Executive Officer’s target percentage for each incentive compensation component is greater than the other Officers due to his position as the top executive officer of the Company. Market pay levels for top executives are in general significantly higher than the pay levels for other executives, as indicated by general survey and peer group data utilized by the Compensation Committee and described above. Additionally, the pay mix for the Chief Executive Officer typically includes a greater emphasis on at-risk pay, commensurate with the level of responsibility of the Chief Executive Officer position and the greater degree of impact that this executive can have on overall business results.

 

Other Factors Used to Determine Compensation.

 

Effect of Individual Performance. The Compensation Committee takes into consideration subjective elements, such as the Officer’s skill set, individual achievements and role with Newmont during the relevant fiscal year. Additionally, an assessment of each Officer’s progress against their stated Strategic Objectives (discussed later in this CD&A) is completed by the Compensation Committee based on input provided by the Chief Executive Officer. The Compensation Committee ultimately makes the compensation decisions for all of the Officers, based on the Committee members’ own collective experience and business judgment.

 

Effect of Compensation Previously Received on Future Pay Decisions. We consider actual compensation received in determining whether our compensation programs are meeting their pay-for-performance and retention objectives. Adjustments to future awards may be considered based on results. However, the Compensation Committee generally does not reduce compensation plan targets based on compensation received in the past to avoid creating a disincentive for exceptional performance.

Other analyses used in determining appropriate levels of compensation include:

 

 

While the amount of compensation may differ among our Officers, the compensation policies and factors affecting the amounts, as considered by the Compensation Committee, are generally the same for each of our Officers, including our Chief Executive Officer. In this section, we discuss the Compensation Committee’s considerations with respect to each element of compensation paid in 2010.

 

Base Salary. The Compensation Committee considered the compensation levels of comparable positions in the survey data as a general guidepost in setting base salaries, but also considered individual performance, tenure and experience, the overall Company performance, any retention concerns, individual historical compensation and input from other Board members. Based on these considerations, the Compensation Committee implemented certain salary adjustments in 2010 to more closely align the salaries of our Officers with base salaries offered to similarly positioned senior executives at our peer companies. While the Compensation Committee has not adopted a policy with regard to the internal relationship of compensation among the Officers or other employees, this relationship is reviewed and discussed when the Compensation Committee determines total compensation for our Officers. The increases in base salaries earned in 2010 from those earned in 2009 were as follows:

 

 

With the exception of Randy Engel and Brian Hill, the salary increases ranged from 3% to 5%. Because Randy Engel serves in a unique role that incorporates various company functions, the Compensation Committee determined that an above average increase was appropriate in recognition of the added scope of his role and his sustained performance. Brian Hill transferred from Australia to the U.S. in 2009 and the reduction in the pay rate is primarily related to him becoming eligible for the U.S. Pension Plan, rather than the superannuation benefits in Australia.

Short-Term Non-Equity Incentive Compensation.

 

Short-Term Incentive Compensation Highlights

 

 

 

Short-term non-equity incentives include a Corporate Performance Bonus and a Strategic Objectives Bonus. Each is expressed as a percentage of base salary. The Corporate Performance Bonus has a target level and the Strategic Objectives Bonus has a maximum level, leaving the Board full discretion to decrease the maximum level. The total of the target Corporate Performance Bonus and 50% of the maximum Strategic Objectives Bonus is designed to achieve between the 50th and 75th percentile of the peer data for total short-term compensation, as described above.

 

2010 Short-Term Non-Equity Incentives

 

 

 

 

Corporate Performance Bonus.

 

Corporate Performance Bonus Highlights

 

 

The Corporate Performance Bonus provides an annual reward based on seven publicly-reported measures¹ designed to balance short-term and long-term factors, business performance and successful investment in and development of Company assets. The Compensation Committee reviews and approves the performance metrics and target levels of performance annually. The amounts of 2010 Corporate Performance Bonuses earned by the Officers are shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. The metrics that the Compensation Committee established for 2010 are listed below.

 

 

 

 

Calculation of Corporate Performance Bonuses. The 2010 targets were a mix of demanding financial, production, and reserve/non-reserve mineralization targets derived from the annual business planning process. It is the Compensation Committee’s perspective that the target should be challenging, yet achievable, and the target is structured accordingly. Over the past 10 years, the Company bonus plan has paid below target in four years, which we consider as one measure of the level of difficulty of achieving a target award.

 

If the Company achieves its targeted performance for each of the metrics, the payout percentage for the Corporate Performance Bonus is 100%. If the minimum amounts are not achieved for a particular metric (the “threshold”), no Corporate Performance Bonus is payable for that metric. For performance between the threshold and maximum for any metric, the amount is prorated to result in a payout percentage between 50% and 200%. The slope of the bonus payout range increases upon reaching target performance in an effort to provide a stronger

incentive and reward for outperforming the targets. Below target performance, upon reaching the threshold level, the incremental payout for each increment of performance remains moderate, ensuring an appropriate incentive and reward while not compensating beyond the reasonable amount for the given level of performance.

 

2010 Corporate Performance Bonus Metrics and Calculation

 

The structure of the Corporate Performance Bonus as well as the performance and bonus results for 2010 are provided in the table below:

 

 

While the Compensation Committee may exercise discretion regarding cash bonus awards under the Corporate Performance Bonus Plan, all of the Officers received cash bonus awards based solely on the formula funding results prescribed by the bonus structure as stated above.

 

To calculate the Corporate Performance Bonus for each of the Officers, the relevant target percentage of base salary was multiplied by 124.3%.

 

The targets for 2011 Corporate Performance Bonus had not been finalized as of the date of filing of this Proxy Statement.

 

Strategic Objectives Bonus.

 

Strategic Objectives Bonus Highlights

 

The purpose of the Strategic Objectives Bonus is to align personal performance with key individualized strategic objectives that will support the long-term sustainability and performance of the Company. The strategic objectives encompass the broad spectrum of responsibilities inherent in senior leadership roles and in many cases, do not have immediate or tangible measures. The Strategic Objectives component of the executive compensation program provides for a well-rounded assessment of executive performance, resulting in an improved correlation of pay and performance. Specifically, the program serves to provide the ability to:

 

 

The Strategic Objectives Bonus is not formulaic given the difficulty in explicitly quantifying the aggregate performance. Accordingly, payments under this program are awarded at the discretion of the Compensation Committee pursuant to the qualified business judgment of its members. The Compensation Committee can award payments out of a total bonus opportunity assigned to each Officer based upon their overall performance on the variety of business objectives. To assist the Compensation Committee’s understanding of each individual’s achievements, the Compensation Committee receives a year-end performance assessment and recommendation for each of the Officers (except for the Chief Executive Officer) from the Chief Executive Officer. For the Chief Executive Officer, the Board of Directors determines the Strategic Objectives Bonus based on his performance against the stated strategic objectives for the year, as well as other factors potentially not contemplated prior to the start of the year. While the Strategic Objectives Bonus is based on pre-established individual Strategic Objectives, these pre-established individual Strategic Objectives do not constitute performance measures the achievement of which automatically results in specific payout levels, but instead provide a context for the Board and Compensation Committee to evaluate each Officer’s performance and contributions to the Company’s success when making the bonus payout determinations.

 

The Board designated several common Strategic Objectives for each Officer in 2010, and also designated Strategic Objectives tailored to each Officer’s specific role. The common Strategic Objectives for the Officers in 2010 included:

 

 

Regarding the common Strategic Objectives, the efforts of the Officers resulted in the following achievements: targets in areas of performance management and talent development were exceeded; good progress was made on implementation of safety and Community Relationships Review programs; operating targets were generally met or exceeded; excellent liquidity and balance sheet strength were achieved; cost savings, productivity and efficiency were enhanced through business process improvements.

 

While no single Strategic Objective is either material to an understanding of the Company’s compensation policies relating to the Strategic Objective Bonus program or dispositive in the Compensation Committee’s decisions regarding the specific payout levels, in determining the awards for 2010, the Compensation Committee considered the following key accomplishments of each Officer, in each case concluding that the Officer had successfully achieved and often exceeded the stated Strategic Objectives:

 

 

The Compensation Committee considered each Officer’s performance and key accomplishments listed above in determining his bonus amount. In most cases, each of the Officers successfully achieved and often exceeded the stated objectives. Based on these reviews, the overall performance of the Company, and recommendations from Richard O’Brien in the case of Russell Ball, Randy Engel, Brian Hill and Guy Lansdown, each of the Officers received the following amounts:

 

 

Long-Term Equity Incentive Compensation.

 

Long-term Equity Incentive Compensation Highlights

 

 

 

Mix of Equity Incentive Components. Each component of the long-term equity incentive represents one-third of the total equity opportunity. Three elements are used to balance long-term financial, operational and share price performance, as well as to balance incentives for company and peer group performance.

 

Equity Award Target Values. The Compensation Committee designed target values of equity incentives for each Officer based upon competitive market data to achieve the target range as discussed above. The Compensation Committee has determined that all of the Officers, with the exception of the Chief Executive Officer, should have the same target as a percentage of salary for 2010 to balance competitiveness of compensation with teamwork and relative contributions to Newmont’s success. These target values are expressed as a percentage of base salary as follows:

 

2010 Target Long-Term Equity Incentives

 

 

Determination of Awards. Equity awards are granted by the Board of Directors, based upon the recommendation of the Compensation Committee. In addition to the targets discussed above, the Compensation Committee is responsible for determining who should receive awards, when the awards should be made, the exercise price/purchase price per share and the number of shares to be granted for each award, in accordance with Newmont’s policy with Respect to the Granting of Equity Compensation (as described below). The Compensation Committee considers grants of long-term incentive awards to the Officers each fiscal year, usually at meetings scheduled shortly after the release of quarterly earnings, in which case, financial performance and potentially other material items have already been disclosed publicly, prior to the granting of any awards.

 

Criteria Considered in Determining the Amount of Equity-Based Compensation Awards. The Compensation Committee considers several factors in its determination as to the amount of equity awards to grant to our Officers, including market practice, projected business needs, the projected impact on stockholder dilution, and the associated compensation expense that will be included in our financial statements. Based on these

considerations, the Compensation Committee has managed stockholder dilution well within the norms of our peers and stated guidelines from proxy advisory services and institutional investors. For 2010, Newmont’s net dilution (net annual use of shares as a percentage of shares outstanding) was 0.4%, well below the median of our peer group of 1.0%.

 

Equity Awards Granted in 2010. In 2009, the Compensation Committee conducted an in-depth analysis of the Company’s executive pay positioning with the assistance of its independent consultant, Cook & Co. The data indicated a significant gap in long-term incentive compensation versus our peer group. Based on these findings, the Compensation Committee designed a new long-term incentive equity vehicle for 2010 in an effort to bridge the gap to the targeted pay position and further align executive compensation to long-term Company and share price performance. This new program, Performance Leveraged Stock Units, rewards executives for absolute share price growth over the measurement period and for total shareholder return (“TSR”) performance relative to the TSR peer group.

 

Awards granted in 2010 were determined in accordance with the terms of each long-term incentive plan as approved by the Compensation Committee. In the case of stock options, the awards were also based upon each Officer’s individual performance.

 

Newmont’s Policy with Respect to the Granting of Equity Compensation. Equity awards are granted by the Board of Directors, based upon the recommendation of the Compensation Committee.

 

Financial Performance Stock.

 

Financial Performance Share Highlights

 

 

The Financial Performance Stock Bonus is tied to overall Company performance in two ways:

 

 

 

 

For the 2010 Financial Performance Stock Bonus, the payout factor was 126.7%, calculated as shown below:

 

 

 

 

2010 Financial Performance Stock Bonuses

 

On February 28, 2011, the Company awarded Financial Performance Stock Bonuses for 2010 performance in the following amounts:

 

 

One third of the Financial Performance Stock Bonus was paid in common shares on the date of actual grant (February 28, 2011) and two-thirds of the Financial Performance Stock Bonus will be paid in restricted stock units that vest in equal annual increments on the second and third anniversaries from the date of grant (February 28, 2012 and 2013).

 

The Company accrues cash dividend equivalents on restricted stock units and pays them upon vesting when common stock is issued.

 

Stock Option Awards.

 

Stock Option Highlights

 

 

The stock option vehicle rewards executives for growth in the value of Company stock over the long-term. This is the high-risk, high-return component of the executive total compensation program because stock options deliver value to an executive only if the share price is above the grant price after the date of vesting. Therefore, stock price volatility will have a greater impact on total compensation results delivered from stock options as compared to restricted stock units.

 

Each Officer has a target percent of base salary to be awarded in options. The Compensation Committee has discretion to grant above or below the target, with management’s recommendation that individuals with high personal performance should receive a grant above target. In April 2010, all of the Officers received at least the targeted amount of stock options, as well as additional options in recognition of high personal performance during 2009. The Compensation Committee makes recommendations regarding the amount of option grants, and such recommendations are ratified by the full Board. The 2010 option grants were based upon the Compensation Committee’s subjective evaluation of each Officer’s performance as measured against 2009 Strategic Objectives. In this context, the Compensation Committee considered the following key accomplishments of each Officer, in each case concluding that the Officer had successfully achieved and often exceeded the stated Strategic Objectives:

 

To determine the exact number of options to grant, the Company divides the percentage of base salary for the grant by the Black Scholes value on the date of grant, which was $20.01 for 2010.

 

The stock option exercise price granted by Newmont (i.e. not an option assumed or granted in relation to an acquisition) is the average of the high and low sales share price on the date of grant.

 

2010 Stock Option Awards

 

 

 

 

The numbers and grant date fair values of stock options granted to the Officers in 2010 are shown in the 2010 Grants of Plan-Based Awards Table. The awards for 2010 performance were not yet determined as of the filing of this Proxy Statement.

2010 Performance Leveraged Stock Units (PSUs).

 

PSU Compensation Highlights

 

 

 

 

The Performance Leveraged Stock Units (“PSUs”) align Officer compensation to long-term Company and stock price performance. The number of PSUs earned is determined at the end of a three-year performance period based upon the change in Newmont’s stock price and the relative performance of Newmont’s stock price versus the peer group. Payment for the PSU program can range from 50% to 200% in total, as detailed below.

 

Determining PSU Awards. The calculation of the PSU awards is based on the Target Stock Bonus, Market Payout Factor and the TSR Payout Factor:

 

PSU Award = Target Stock Bonus x (Market Payout Factor + TSR Payout Factor)

 

• Target Stock Bonus. The target stock bonus for each Officer is calculated by multiplying the Officer’s base salary by their target PSU award percentage. This value is then divided by the average daily closing price for the fourth quarter prior to the performance period (the “baseline”).

 

Target Stock Bonus = (base salary x target %) / baseline

 

• Market Payout Factor (“MPF”). The MPF is based on the absolute stock price change versus the baseline over the three year performance period. The baseline is compared to the average daily closing price of the last quarter of the performance period to determine the overall stock price change.

 

The payment for the MPF can range from a minimum of 50% to a cap of 150% of target based on the absolute stock price performance during the performance period. A minimum award of 50% of target is provided for retention, succession and competitive pay purposes. The minimum award is also provided in recognition that significant stock price declines may be related to changes in commodities prices which are outside of the Company’s control. Conversely, Officers can earn up to 150% of target to incent performance. The award is capped at 150% in recognition that significant stock price appreciation may be related to changes in commodities prices. This range of payment is believed to strike an appropriate balance between retention, incentive and mitigation of excessive risk. The performance range is displayed in the graph below.

 

 

• TSR Payout Factor (“TPF”). The TPF is based on the relative Total Shareholder Return (“TSR”) of Newmont over the three- year performance period versus the TSR of an index of gold mining peer companies. The stock prices used in the TPF calculation are based on the same approach as noted for the MPF, however the calculation also adjusts for dividends paid during the period.

The payment for the TPF can range from 0 to 50% of target based on Newmont’s relative share price performance. Newmont’s stock price must reach at least threshold performance for Officers to receive any level of payment. Threshold performance under the TPF is defined as the median (50th percentile) TSR of the peer group index. Upon exceeding the peer group median TSR, each percent increase above the median TSR corresponds to a payment equal to 2% of target, up to a maximum of 50%. This 2% multiplier is used to incent over-achievement yet make the maximum award realizable without incenting excessive risk taking. For example, if Newmont’s TSR percentile ranking reaches the 60th percentile (10% above the median), the resulting payment would be 20% of target (10% above the median X 2% multiplier).

 

 

In sum, the maximum PSU payout of 200% of the target PSUs would be awarded if the Company’s stock price at the end of the performance period equals 150% of the baseline and if the Company’s TSR reaches the 75th percentile of the peer group. If the Company’s TSR is at or below the median of the peer group, there will be no payout of PSUs for the TPF (TSR) metric.

 

Implementation of PSUs in 2010. In addition to the three-year PSU target set in 2010 which will result in payouts in 2013, in 2010 the Company set one-time target PSU awards for each participant equal to the value of the 2010 target award. The Compensation Committee implemented initial one- and two-year periods (“feather-in awards”; award values were weighted at one-third and two-thirds of the three-year values) to provide a transition into the new long-term program, allowing executives the opportunity to earn PSUs prior to early 2013, which is the payout date of the first full three-year PSU performance period.

 

PSU Peer Group. The companies in the TSR peer group are listed below, and may be altered from time to time due to mergers, acquisitions or at the discretion of the Compensation Committee:

 

 

The TSR peer group varies from the total compensation peer group because the TSR peer group is comprised of only companies with large gold mining operations and irrespective of comparable company size. The Compensation Committee determined that a relative TSR peer group should focus on gold operations entities, as those are the Company’s direct competitors for investors. The total compensation peer group includes companies without gold operations, but those entities are more similar in revenue, net income, total assets, market capitalization and number of employees. The Compensation Committee determined that the total compensation peer group is a superior peer group for total compensation, rather than the TSR peer group, because the entities in the total compensation peer group are the Company’s competitors for employees and whose business operations are of a relatively comparable size.

PSU results for 2010. The Company experienced solid stock price growth and stock price growth versus its peer group in 2010. With respect to the PSU components, Newmont’s stock price increase (“MPF”) was 25.31% or 125.31% of the baseline. Newmont’s relative TSR versus peers (“TPF”) ended the year at the 75th percentile. This stock price performance resulted in an overall PSU payout for 2010 of 174.7%. The chart below shows the payments for each Officer, based on the results of the PSU award for 2010.