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CHARTER HALL GROUP — AGM Information 2009
Oct 8, 2009
64645_rns_2009-10-08_c2a1001c-17dd-4238-8c37-85ec7b7abcb0.pdf
AGM Information
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9 October 2009
Luxmy Wigneswaran Advisor, Issuers (Sydney) ASX Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2000
Level 11, 333 George Street Sydney NSW 2000 GPO Box 2704 Sydney NSW 2001 Tel +61 2 8908 4000 Fax +61 2 8908 4040 www.charterhall.com.au Charter Hall Limited ABN 57 113 531 150 Charter Hall Funds Management Limited ABN 31 082 991 786
Dear Ms Wigneswaran
NOTICE OF MEETING
We enclose Charter Hall Group’s Notice of Meeting and Proxy Form for its Annual General Meeting to be held on Wednesday, 11 November 2009 at 2.30pm (Sydney time) at the Westin Hotel, Ballroom 4, 1 Martin Place, Sydney NSW 2000.
We confirm that the attached documents are being dispatched to securityholders today.
Please do not hesitate to contact the undersigned if you require further information.
Yours faithfully
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Nathan Francis Deputy CFO & Company Secretary
.
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Charter Hall Limited
(ACN 113 531 150)
Charter Hall Property Trust (ARSN 113 339 147)
NOTICE OF MEETINGS
and
EXPLANATORY MEMORANDUM
For a meeting to be held on Wednesday, 11 November 2009 At the Westin Hotel, Ballroom 4
No. 1 Martin Place
Sydney at 2.30 pm
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CONTENTS
| Page | |
|---|---|
| Letter to Securityholders from the Chairman | 3 |
| Meetings and how to vote | 4 |
| Notice of Meetings (setting out the proposed resolutions) | 5 |
| Explanatory Memorandum (explaining the resolutions) | 10 |
This is an important document. Please read it carefully.
If you are unable to attend the AGM please complete the form of proxy and return it in accordance with the instructions.
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9 October 2009
Level 11, 333 George Street Sydney NSW 2000 GPO Box 2704 Sydney NSW 2001 Tel +61 2 8908 4000 Fax +61 2 8908 4040 www.charterhall.com.au Charter Hall Limited ABN 57 113 531 150 Charter Hall Funds Management Limited ABN 31 082 991 786
Dear Securityholder,
Charter Hall Limited and Charter Hall Property Trust (Charter Hall Group) - Annual General Meetings
It is with pleasure that I invite you to the 2009 Annual General Meetings (AGM) of the Charter Hall Group.
The AGM will be held on Wednesday, 11 November 2009 at 2.30pm (Sydney time) at the Westin Hotel, Ballroom 4, No. 1 Martin Place, Sydney NSW 2000.
Please find enclosed the Notice of Meetings, Explanatory Memorandum, Proxy Form and business reply envelope. Could you please complete and return your Proxy Form to Link Market Services Limited or the Charter Hall Group at the address or facsimile number specified in the Notice of Meetings by no later than 2.30pm (Sydney time) on Monday, 9 November 2009.
The last page provides Securityholders with the opportunity to address questions to our Auditor, PricewaterhouseCoopers, prior to the AGM. The Auditor will be present at the AGM to respond to the questions received and to any additional questions. Please note that written questions for PricewaterhouseCoopers must be received no later than 5pm on Tuesday, 3 November 2009.
We will let you know when the 2009 Annual Report becomes available and, if you have requested that we send a copy, it will be posted or e-mailed by no later than Friday, 16 October 2009.
I look forward to your attendance at the AGM.
Yours sincerely
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Kerry Roxburgh
CHAIRMAN
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MEETINGS AND HOW TO VOTE
Venue
Meetings of the Securityholders of Charter Hall Group will be held at:
Westin Hotel Ballroom 4 No. 1 Martin Place
Sydney NSW 2000
Commencing
2.30 pm, Wednesday, 11 November 2009
How to Vote
You may vote by attending the Meetings in person or by proxy or a body corporate can appoint a corporate representative.
Voting In Person
To vote in person, you must attend the Meetings on Wednesday, 11 November 2009 at Westin Hotel, No.1 Martin Place, Sydney. The Meetings will commence at 2.30pm. Please allow at least 15 minutes for registration.
Voting By Proxy
To vote by proxy, please complete and sign the relevant proxy form enclosed with this Notice of Meetings as soon as possible and either:
-
return the proxy form by post in the reply paid envelope to Charter Hall Group Registry, Link Market Services Limited, Level 12, 680 George Street, Sydney, NSW 2000; or
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send the proxy form by facsimile to Link Market Services Limited on facsimile number 02 9287 0309; or
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vote online at www.linkmarketservices.com.au. Lodge your proxy online by visiting the Charter Hall Group security registry’s website at www.linkmarketservices.com.au, going to the proxy voting page and following the prompts and instructions on the website. To use the online lodgements facility, securityholders will need their Securityholder Reference Number (SRN) or Holder Identification Number (HIN),
so that it is received no later than 2.30pm (Sydney time) on Monday, 9 November 2009.
If the appointment is signed by an attorney, the power of attorney or a certified copy of it must be sent with the proxy form.
Your Proxy Form is enclosed
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CHARTER HALL GROUP Charter Hall Limited
(ACN 113 531 150)
Charter Hall Property Trust
(ARSN 113 339 147)
NOTICE OF MEETINGS
NOTICE is hereby given that the Annual General Meeting of Shareholders of Charter Hall Limited and an Annual General Meeting of the Unitholders of Charter Hall Property Trust (together, Charter Hall Group ) will be held at the Westin Hotel, Ballroom 4, No. 1 Martin Place, Sydney NSW 2000 at 2.30 pm on Wednesday, 11 November 2009 (Meetings).
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Important 1 The resolutions should be read in conjunction with the Explanatory Memorandum which follows.
-
2 Certain terms and abbreviations used below are defined in the Glossary at page 17 of this Notice.
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3 As explained in the 'Voting exclusion' paragraphs below, certain Securityholders are excluded from voting in relation to particular resolutions and Charter Hall Group must disregard votes cast by those Securityholders. If your vote must be disregarded or if you must not vote as outlined in the paragraphs below, please do not vote.
The business of the Meetings is as follows:
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(a) To consider the 2009 Annual Report of Charter Hall Group; and
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(b) To consider, and if thought fit, pass, with or without modification, the resolutions described below:
Resolutions 1 - 4: Re-election of Directors
To consider, and if thought fit, pass the following ordinary resolutions:
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"That Mr Glenn Fraser, a director of CHL retiring in accordance with the Constitution, is re-elected as a director of CHL."
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"That Ms Patrice Derrington, a director of CHL retiring in accordance with the Constitution, is re-elected as a director of CHL."
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"That Mr David Harrison, a director of CHL retiring in accordance with the Constitution, is re-elected as a director of CHL."
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"That Mr Peter Kahan, appointed as an additional director to the Board by the directors of CHL, is elected as a director of CHL."
Resolutions 5 - 7: Issue of options and performance rights to Mr David Southon, Mr David Harrison and Mr Cedric Fuchs.
To consider, and if thought fit, pass the following ordinary resolutions:
- “That approval is given for all purposes under the Corporations Act and the Listing Rules (in particular, Listing Rule 10.4) for the issue
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of 2,681,250 options with an exercise price of $0.485[∗] per unit and the issue of 750,000 performance rights to Mr David Southon.”
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“That approval is given for all purposes under the Corporations Act and the Listing Rules (in particular, Listing Rule 10.4) for the issue of 2,681,250 options with an exercise price of $0.485[∗] per unit and the issue of 750,000 performance rights to Mr David Harrison.”
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“That approval is given for all purposes under the Corporations Act and the Listing Rules (in particular, Listing Rule 10.4) for the issue of 625,625 options with an exercise price of $0.485[∗] per unit and 175,000 performance rights to Mr Cedric Fuchs.”
Voting Exclusion Statement
Charter Hall Group will disregard any votes cast on each of these resolutions by:
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any director of CHL who is eligible to participate in any employee incentive scheme in relation to Charter Hall Group, i.e. any Executive Director of Charter Hall Group; and
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an associate of such a director,
unless the vote is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form.
Resolution 8:
Ratification of the Placement of Stapled Securities to Gandel Group
To consider, and if thought fit, pass the following special resolution:
- "To ratify for all purposes under the Corporations Act and the Listing Rules (in particular, Listing Rule 7.4) the issue of 81,735,340 Stapled Securities to Gandel Group under the Placement conducted by Charter Hall Group in conjunction with the Entitlement Offer.”
Required Majority
The voting on Resolution 8 is to be conducted via a poll.
Resolution 8 will be passed if at least 75% of the value of Stapled Securities voted at the Meetings is in favour and at least 25% by value of all Stapled Securities, which are entitled to be voted, are voted on the resolution.
Voting Exclusion Statement
Charter Hall Group will disregard any votes cast on each of these resolutions by:
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Gandel Group; and
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an associate of Gandel Group,
∗ Representing the CHC VWAP for the month of July 2009.
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unless the vote is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions of the proxy form or unless the vote is cast by the person chairing the Meetings as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.
Resolution 9:
Ratification of the issue of performance rights and options during the preceding 12 months
To consider, and if thought fit, pass the following special resolution:
- "To ratify for all purposes under the Corporations Act and the Listing Rules (in particular, Listing Rule 7.4) the issue of 770,616 performance rights issued in December 2008 and 16,352,050 options at an exercise price of $0.485 rights issued in October 2009 to eligible employees of Charter Hall Group.”
Voting Exclusion Statement
Charter Hall Group will disregard any votes cast on each of these resolutions by
- any employee who acquired or was issued options or performance rights, or both, under the PROP,
unless the vote is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions of the proxy form or unless the vote is cast by the person chairing the Meetings as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.
Resolution 10: Adoption of Remuneration Report
To consider, and if thought fit, pass the following ordinary resolution:
- "That the Remuneration Report included in the Annual Report for the year ended 30 June 2009 be adopted."
Note: The vote on this resolution is advisory only and does not bind the directors of Charter Hall Group.
A detailed explanation of the background and reasons for the proposed resolutions are set out in the attached Explanatory Memorandum.
By order of the Board
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Nathan Francis
Company Secretary
Date: 9 October 2009
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NOTES
In accordance with the Corporations Act, a reasonable opportunity will be given to Securityholders, to ask questions about or make comments on the management of Charter Hall Group at the Meetings.
Similarly, a reasonable opportunity will be given to Securityholders, as a whole, to ask the Charter Hall Group external auditor, PricewaterhouseCoopers, questions relevant to:
-
(a) the conduct of the audit;
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(b) the preparation and content of the auditor's report;
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(c) the accounting policies adopted by Charter Hall Group in relation to the preparation of its financial statements; and
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(d) the independence of the auditor in relation to the conduct of the audit.
Securityholders may also submit written questions (see Page 19 of this Notice of Meetings) to PricewaterhouseCoopers, if the question is relevant to the content of PricewaterhouseCoopers' audit report or the conduct of its audit of Charter Hall Group's financial report for the year ended 30 June 2009.
Relevant written questions for PricewaterhouseCoopers must be received by no later than 5pm (Sydney time) on Tuesday, 3 November 2009. A list of those relevant written questions will be made available to Securityholders attending the Meetings. PricewaterhouseCoopers will either answer the questions at the Meetings or table written answers to them at the Meetings. If written answers are tabled at the Meetings, they will be made available to Securityholders as soon as practicable after the Meetings.
Please send any written questions for PricewaterhouseCoopers:
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to Link Market Services Limited at the address on the enclosed reply paid envelope;
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by facsimile to 02 9287 0309; or
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to Charter Hall Group registered office: Level 11, 333 George Street, Sydney NSW 2000
by no later than 5pm (Sydney time) on 3 November 2009.
Voting Entitlements
Pursuant to regulation 7.11.37 of the Corporations Regulations 2001 , the directors of CHL and CHFML have determined that the holding of each Securityholder for the purposes of ascertaining the voting entitlements for the Meetings will be as it appears in the Register at 7pm on 9 November 2009.
Voting and Proxies
A Securityholder is entitled to appoint a proxy to attend and vote on behalf of the Securityholder at the Meetings. A proxy need not be a Securityholder of Charter Hall Group.
Securityholders wishing to appoint the Chairman of the Meetings as their proxy should read carefully the instructions on the Proxy Form and mark the relevant box to ensure their votes are not disregarded.
A Securityholder entitled to cast two or more votes at the Meetings may appoint two proxies and specify the proportion or number of votes each proxy is appointed to exercise. If the Securityholder appoints two proxies and does not specify the proportion or number of votes each proxy may exercise, then each proxy may exercise half of the votes.
A Proxy Form is attached to this Notice of Meetings. To be valid:
- Proxy Forms must be received at the office of Link Market Services Limited or at the registered office of Charter Hall Group being the place designated by Charter Hall Group
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for that purpose or at the facsimile number of Link Market Services Limited or Charter Hall Group by no later than 2.30pm (Sydney time) on Monday, 9 November 2009.
- The authority under which any form appointing a proxy is signed or a certified copy of that authority, must be received at the office or facsimile number of Link Market Services Limited or Charter Hall Group by no later than 2.30pm (Sydney time) on Monday, 9 November 2009.
The office of Link Market Services Limited is on Level 12, 680 George Street, Sydney, NSW, 2000 and the facsimile number is +61 2 9287 0309. The registered office of Charter Hall Group is on Level 11, 333 George Street, Sydney, NSW, 2000 and the facsimile number is +61 2 8908 4040.
If you return your Proxy Form but do not nominate a representative, the Chair of the Meetings will be your proxy and will vote on your behalf as you direct on the Proxy Form. If your nominated representative does not attend the Meetings then your proxy will revert to the Chair of the Meetings and he may vote as he thinks fit in relation to any motion or resolution other than those (if any) in respect of which an indication of the manner of voting is given on your Proxy Form.
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EXPLANATORY MEMORANDUM
This Explanatory Memorandum and the attachments to it are important documents. They should be read carefully.
If you are not able to attend the Annual General Meeting of Charter Hall Group, please complete the attached form of proxy and return it to Link Market Services Limited by 2.30pm on 9 November 2009.
Resolutions 1, 2, 3 and 4: Re-election of Directors
In order to comply with the ASX Listing Rules and the Constitution, the Board has resolved that each of Mr Glenn Fraser, Ms Patrice Derrington and Mr David Harrison will retire from office of director of CHL.
Listing Rule 14.4 provides that a director must not hold office (without re-election) past the third annual general meeting following the director's appointment or three years, whichever is longer. It also provides that an entity must hold an election of directors each year. These provisions are replicated in Rule 42 of the Constitution.
Listing Rule 14.4 also provides that managing directors are not subject to this requirement (i.e. to stand for re-election every three years) except in the case where there is more than one managing director, in which case only one is entitled not to be subject to re-election. CHL appointed both Mr David Harrison and Mr David Southon as Joint Managing Directors in 2006 and the Board resolved that they would each be exempt from this requirement on a rotational basis. Mr Southon stood for re-election in 2006 and, hence, it is now Mr Harrison’s opportunity to stand for re-election.
In addition, following the Placement the Board appointed Mr Peter Kahan, CEO of The Gandel Group Pty Ltd, as an addition to the Charter Hall Group Board.
Both the Constitution and Listing Rule 14.4 provide that the Directors may at any time appoint any person as an addition to the board of directors. Any Director appointed under this rule may hold office only until the next annual general meeting and is then eligible for election at that meeting. It is under this rule that Mr Kahan offers himself for election.
Each of Mr Glenn Fraser, Ms Patrice Derrington, Mr David Harrison and Mr Peter Kahan is eligible to be re-elected or elected as a director of CHL and each offers themselves for re-election or election.
Mr Glenn Fraser – Independent non-executive director
Glenn joined the Charter Hall Group as non-executive director on 6 April 2005. He has substantial experience in the project finance industry, specialising in infrastructure and property projects. He joined Transfield Holdings in 1996, where he was the CFO and previously General Manager – Finance, Project Development, and is currently a member of its Advisory Board. Previously Glenn was the principal of a finance advisory business ‘Perry Development Finance Pty Limited’. Glenn holds a Bachelor of Commerce from the University of New South Wales and is member of the Institute of Chartered Accountants in Australia and the Institute of Company Directors. He is also a member of Charter Hall Group’s Audit, Risk and Compliance Committee.
Ms Patrice Derrington – Independent non-executive director
Patrice has been an independent non-executive director of Charter Hall Group since 6 April 2005. She has formerly held the position of CEO for Penrith Lakes Development Corporation Limited in Australia. Patrice was also previously the executive responsible for the economics and funding of the revitalisation effort led by the Lower Manhattan Development Corporation (a Governorappointed state agency) following the September 11, 2001 terrorist attacks on New York City. She was also the Managing Director of the US asset management firm Spears, Benzak, Salomon and Farrell, and Vice President in the Real Estate Finance Group at Chemical Bank (now J.P. Morgan Chase). In 1997, she founded the Victory Real Estate Investment Fund. She holds an MBA from Harvard University and a Ph. D in architecture/civil engineering from U.C. Berkeley, where she was the recipient of the prestigious Harkness Fellowship. Patrice is also the Chair of Charter Hall Group’s Audit, Risk and Compliance Committee.
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Mr David Harrison – Joint Managing Director
David has more than 19 years of experience in the Australian commercial property markets and is Charter Hall Group’s Joint Managing Director and head of the Funds Management Division & Property Management Division. Prior to joining Charter Hall Group in 2004, he was the Managing Director of Savills in Australia. He holds a Land Economics degree from the University of Western Sydney, a graduate Diploma in Applied Finance and is a Fellow of the Australian Property Institute. David is also a member of various Charter Hall Investment Committees and the Valuation Committee of Charter Hall Group.
Mr Peter Kahan – Non Executive Director
Peter is the CEO of The Gandel Group and has over 15 years of property and funds management experience. He joined The Gandel Group of companies in 1994 and became its Finance Director in 2001, prior to his appointment as the Chief Executive Officer of the Gandel Group of companies in 2007. Prior to joining The Gandel Group, Peter worked as a Chartered Accountant and has held senior financial roles in various industry sectors. From 2002 to 2006, Peter was a director of Gandel Retail Management Pty Ltd and Colonial First State Property Retail Pty Ltd, a leading property and fund manager managing a portfolio of approximately $8 billion of retail assets in Australia. Peter is a member of the Institute of Chartered Accountants in Australia and the Australian Institute of Company Directors and holds a Bachelor of Commerce and Bachelor of Accountancy from the University of The Witwatersrand Johannesburg, South Africa. The Gandel Group is a substantial Securityholder in Charter Hall Group at the date of this notice and therefore Mr Peter Kahan is classified as a non-independent director as per the ASX Corporate Governance Principles and Recommendations.
Resolutions 5, 6 and 7: Issue of options and performance rights to Mr David Southon, Mr David Harrison and Mr Cedric Fuchs.
Background
Since the initial public offering in June 2005, Charter Hall Group has operated an incentive scheme for executives and other employees called the Executive Loan Security Plan (ELSP) under which selected staff (it is Charter Hall Group's policy not to make offers of participation in long term incentive schemes to non-executive directors) were provided loans to acquire units in a special purpose employee incentive plan trust. Last year, Charter Hall Group introduced a Performance Rights and Options Plan (PROP) in conjunction with the ELSP as a result of a benchmarking exercise conducted by PricewaterhouseCoopers ("PwC").
Whilst last year only performance rights were issued under the PROP, the PROP also provides for the issue of options. On the exercise of an option or a performance right, subject to the vesting conditions set out overleaf, the Board (at its sole discretion) will authorise a participant to acquire a Stapled Security on market or to subscribe for a Stapled Security. A Stapled Security issued under the PROP, as from the date of its issue, will rank equally with all other fully paid Stapled Securities.
This year, the Board engaged both Ernst & Young and PwC to conduct separate independent reviews on the Long Term Incentive (LTI) options available to the Charter Hall Group. PwC and Ernst & Young concluded that the market is more receptive to the issue of a combination of options and performance rights as part of the PROP, as opposed to units under the ELSP. This year, the ELSP has therefore been suspended and instead both options and performance rights will be issued under the PROP.
The points set out below provide the key reasons why the PROP is considered preferable over the ELSP:
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No loan component in the issue of performance rights or options. The issue of securities under the ELSP involved the granting of a loan to each participant in the plan;
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ELSP units are treated as options under accounting standards. Under AASB2 Share Based Payments, ELSP units are treated as options until they are exercised. Therefore, whilst Stapled Securities are legally issued under the ELSP they are not recognised for
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accounting purposes (EPS, DPS, NTA). This results in a difference between the number of securities on issue for legal and accounting purposes.
- Market prevalence of various LTI instruments . It was found that among Australian listed entities and direct peers, the use of options is more prevalent than the use of an ELSP.
Further, the issue of options was not available for entities operating under a stapled security structure at the time Charter Hall Group listed in 2005 so the ELSP scheme was formulated as an alternative. These restrictions were removed in 2008 for stapled entities and, hence, in line with current market trends Charter Hall Group will move exclusively to the PROP.
Details of the proposed allocation under the PROP
Charter Hall Group proposes to allocate options and performance rights to Mr Southon, Mr Harrison and to Mr Fuchs, at no cost to them. Performance rights have a nil exercise price. Options have an exercise price of $0.485, which is based on the volume weighted average price (VWAP) of Stapled Securities from 1 July 2009 to 31 July 2009 (inclusive).
Options and performance rights will vest subject to the specific service and performance conditions outlined below being met. It is proposed that Mr Southon and Mr Harrison are each granted up to 2,681,250 options and 750,000 performance rights and Mr Fuchs up to 625,625 options and 175,000 performance rights.
The vesting of options and performance rights will be subject to the following service and performance conditions:
| Instrument | Vesting period (service condition – years) |
Vesting hurdle (performance condition) |
Proportion of options / performance rights |
|---|---|---|---|
| Options Tranche 1 2 Absolute 25% Tranche 2 2 Relative 25% Tranche 3 3 Absolute 25% Tranche 4 3 Relative 25% Performance Rights Tranche 1 2 Absolute 25% Tranche 2 2 Relative 25% Tranche 3 3 Absolute 25% Tranche4 3 Relative 25% |
Subject to the service and performance conditions, options and performance rights will vest in equal proportions on 1 July 2011 and 1 July 2012.
The performance conditions relate to an Absolute and a Relative Total Shareholder Return (TSR) hurdle (refer overleaf).
The options and performance rights are proposed to be allocated to each of Mr Harrison, Mr Southon and Mr Fuchs as soon as practicable after the AGM if Resolutions 5, 6 and 7 are approved by Securityholders, but in any case, no later than 3 months after the AGM.
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Absolute TSR performance condition:
50% of the LTI instrument (option or performance right) that is subject to the absolute performance hurdle will vest if Charter Hall Group achieves a total compounded return of 8.0% per annum over the vesting period. 100% will vest if Charter Hall Group achieves a total compounded return of 12.0% per annum over the vesting period. The percentage that will vest if the total return is in between 8.0% per annum and 12.0% per annum will be determined on a linear basis. Please note that the base price for the calculation of the total return is the VWAP for the month of July 2009 (48.5cps).
Relative TSR performance condition:
50% of the LTI instrument (option or performance right) that is subject to the relative performance hurdle will vest if the Charter Hall Group total compounded return is equal to the total compounded return of the S&P/ASX AREIT 200 Accumulation Index ("Index") over the vesting period. 100% will vest if Charter Hall Group achieves a total compounded return of 1.10 times the total compounded return of the Index over the vesting period. If Charter Hall Group's total return is in between the total compounded return of the Index and 1.10 times the total compounded return of the Index, the percentage that will vest will be determined on a linear basis.
Vesting period:
The absolute and relative return will be calculated over the periods 3 August 2009 to 30 June 2011 and 3 August 2009 to 30 June 2012. Please note that the base price for the calculation of the total return is the VWAP for the month of July 2009 (48.5cps).
As outlined in the table on page 12, half of the instruments issued have a vesting period of 2 years with the remaining half subject to a vesting period of 3 years. Any of the instruments with a vesting period of 2 years that do not vest because the performance condition is only partly or not met will be added to the tranches with a 3 year vesting period. There is therefore potential for these instruments to vest if part or all of the performance condition after 3 years has been met.
Securities held:
The number of Charter Hall Group Stapled Securities currently held by the Executive Directors, excluding the options and performance rights subject to approval above, is as follows:
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David Harrison – 20,070,203 securities in Charter Hall Group via direct and indirect interests including 12,276,884 securities in the ELSP. In addition, Mr Harrison holds 403,846 performance rights in the PROP (issued since last Securityholder approval for no consideration).
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David Southon – 20,427,012 securities in Charter Hall Group via direct and indirect interests including 12,233,577 securities in the ELSP. In addition, Mr Southon holds 403,846 performance rights in the PROP (issued since last Securityholder approval for no consideration).
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Cedric Fuchs – 8,105,997 securities in Charter Hall Group via direct and indirect interests including 2,671,404 securities in the ELSP. In addition, Mr Fuchs holds 50,481 performance rights in the PROP (issued since last Securityholder approval for no consideration).
Approvals
In order for the options and performance rights to be allocated to Mr Southon, Mr Harrison and Mr Fuchs, Listing Rule 10.14 requires Charter Hall Group Securityholder approval.
Further, in order for this issue not to count towards the 15% limit imposed by Listing Rule 7.1, Securityholders must approve the issue of securities under Listing Rule 7.1. Listing Rule 7.1 provides that a company must not, without the approval of Securityholders, issue during any 12 month period any equity securities or other securities with rights of conversion to equity if the
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number of such securities exceeds 15% of the number of securities in the same class on issue at the commencement of that 12 month period.
Securityholder approval is subject to the requirement that certain information, required under Listing Rule 7.3, is provided to Securityholders in this Notice of Meeting, which information is set out in these Resolutions 5, 6 and 7.
The effect of the approval would be that the issue of options and performance rights would not be counted in determining whether any further issues of Securities would breach the 15% limit under Listing Rule 7.1. The approval of Resolutions 5, 6 and 7 would give Charter Hall Group the flexibility to maximise the amount of capital that can be raised during FY10 without further Securityholder approval.
Accordingly, Charter Hall Group seeks approval for the allocation of these options and performance rights to Mr Southon, Mr Harrison and Mr Fuchs, Executive Directors of Charter Hall Group, for all purposes under the Corporations Act and Listing Rules.
Recommendation
The directors of Charter Hall Group (other than Mr Southon, Mr Harrison and Mr Fuchs (as relevant)) believe that the issue of options and performance rights on the above terms is an appropriately designed equity-based incentive for these directors having regard to their roles and responsibilities, and that if the performance hurdles described above are met this will result in benefits for the Charter Hall Group as a whole.
The options and performance rights are an important incentive-based remuneration tool which aligns the interests of Securityholders and those of Charter Hall Group executives and is an important mechanism for the retention of key executives and for driving the improved performance of Charter Hall Group.
Further, excluding this issue from the 15% limit set out in Listing Rule 7.1, allowing Charter Hall Group to retain flexibility to maximise the amount of capital that can be raised during the following 12 months, is in the best interest of the Charter Hall Group.
Accordingly, the directors of Charter Hall Group (other than Mr Southon, Mr Harrison and Mr Fuchs (as relevant)) recommend that Securityholders vote in favour of Resolutions 5, 6 and 7.
Resolutions 8 and 9: Ratification of the issue of Stapled Securities, performance rights and options during the preceding 12 months
Background
Charter Hall Group is seeking to refresh its issuance capacity in order to maintain the flexibility to raise funds in the following 12 months by maximising the numbers of Stapled Securities, options and performance rights that may be issued without obtaining Securityholder approval by requesting Securityholders to ratify the Stapled Securities, options and performance rights issued during the preceding 12 months.
Listing Rule 7.1 provides that an entity must not, without the approval of Securityholders, issue during any 12 month period any equity securities or other securities with rights of conversion to equity (i.e. options and performance rights) if the number of such securities exceeds 15% of the aggregate of the number of securities in the same class on issue at the commencement of that 12 month period plus the number of securities issued in that 12 month period with Securityholder approval or that rely on an exception, provided under Listing Rule 7.2, to the 15% limit.
In addition, in respect of the Placement to Gandel Group, ASIC Class Order 05/26 provides relief from the requirement under section 601GA(1)(a) of the Corporations Act so that Stapled Securities can be issued under a placement without Securityholder approval at a price determined by the responsible entity, provided the issue, together with any related issues of Stapled Securities in the year previously, would not comprise more than 15% of the Stapled Securities of the same class on issue immediately before the issue.
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Details relating to the Stapled Securities, options and performance rights issued during the preceding 12 months which do not fall with an exception provided in Listing Rule 7.2 are set out in the table below and in the paragraphs following.
| Resolution 8: Placement to Gandel Group |
Resolution 9: Issue under the PROP to staff |
|
|---|---|---|
| Number of Stapled Securities, options and performance rights issued: |
81,735,340 | 770,616 performance rights (issued December 2008) and 16,352,050 options (issued October 2009) |
| Price at which Stapled Securities, options and performance rights were issued: |
$0.33 per Stapled Security | Options and performance rights issued at no cost to staff |
| Terms of the Stapled Securities, options and performance rights: |
The Stapled Securities rank, as from the date of their issue, equally with all other fully paid Stapled Securities |
Refer to the explanatory notes for Resolutions 5, 6 and 7 for terms of the options. The terms of the performance rights issued December 2008 were disclosed at the 2008 Notice of Meetings (Resolutions 8 to 10) |
| Names of allottees: | Gandel Group | Eligible Charter Hall Group staff (excluding directors) |
| Use or intended use of the funds raised: |
The net proceeds of the Placement, together with the net proceeds of the Entitlement Offer, were used to repay existing Charter Hall Group balance sheet debt and reduce look-through gearing |
Long Term Incentive Scheme for staff |
| Voting exclusion statement: |
Refer to pages 6 and 7 of the Notice of Meetings |
Approvals
Under Listing Rule 7.4, the issue of Stapled Securities, options and performance rights made without approval under Listing Rule 7.1 will be treated as having been made with approval for the purpose of Listing Rule 7.1 if the Stapled Securities, performance rights and options issued did not exceed the 15% limit under Listing Rule 7.1, and Securityholders subsequently approve the issue.
Charter Hall Group now seeks subsequent approval by Securityholders under Listing Rule 7.4 for the issue of the Stapled Securities and the performance rights and options set out in the table above.
Approval of Resolutions 8 and 9 would give Charter Hall Group the flexibility to maximise the amount of capital that can be raised during the forthcoming 12 months without further Securityholder approval.
Resolution 8 - Issue of 81,735,340 Stapled Securities to Gandel Group under the Placement conducted by Charter Hall Group in conjunction with the Entitlement Offer.
As the 81,735,340 Stapled Securities issued under the Placement was less than the 15% limit under Listing Rule 7.1 at the time of the issue, the effect of the approval under Listing Rule 7.4 would be that the issue of Stapled Securities under the Placement would not be counted in determining whether any further issues of Securities would breach the 15% limit under Listing Rule 7.1 or under ASIC Class Order 05/26.
Page 15
Listing Rule 7.4 requires the approval to be given by an ordinary resolution of Securityholders. However, where Securityholder approval is sought to issue securities or to ratify the issue of the Stapled Securities under the Placement (as is the case here), ASIC Class Order 05/26 requires that approval is to be given by special resolution so that Securityholders who hold at least 25% in value of the issued Stapled Securities who vote on the question (whether in person or by proxy) and Securityholders with at least 75% in value of the Stapled Securities represented by Securityholders who vote on the question (in person or by proxy) vote in favour of the resolution.
Resolution 9 - 770,616 performance rights issued December 2008 and 16,352,050 options at an exercise price of $0.485 issued October 2009 [1] to eligible employees of Charter Hall Group.
A description of the terms of the PROP are set out in the explanatory notes for Resolutions 5, 6 and 7, concerning the issue of options and performance rights to directors of Charter Hall Group. Those terms apply equally to its staff. The details of the issue are set out in the table on page 15.
As the 770,616 performance rights and 16,352,050 options issued to staff under the PROP was less than the 15% limit under Listing Rule 7.1 at the time of the issue, the effect of the approval under Listing Rule 7.4 would be that the issue of performance rights and options issued to staff would not be counted in determining whether any further issues of Securities would breach the 15% limit under Listing Rule 7.1. Approval of this Resolution requires only a simple majority.
Recommendation
The directors of Charter Hall Group believe that excluding these issues from the 15% limit set out in Listing Rule 7.1, allowing Charter Hall Group to retain flexibility to maximise the amount of capital that can be raised during the following 12 months, is in the best interest of the Charter Hall Group.
Accordingly, the directors of Charter Hall Group recommend that Securityholders vote in favour of Resolutions 8 and 9.
Resolution 10: Adoption of Remuneration Report
The Remuneration Report is contained in the Annual Report.
Securityholders should note that given the underperformance of the property sector over the past 12 months and the continued challenging economic environment expected for FY10, the Board has not increased Executive Directors Base Salary. In addition, the Executive Directors have volunteered not to be a paid a bonus for FY09. Despite several achievements in FY09, the 2008 AGM disclosed bonus has not materialised nor has any potential value for the LTI.
The Remuneration Report further:
-
explains the Board's policies in relation to the nature and level of remuneration paid to directors and senior managers within Charter Hall Group;
-
discusses the link between the Board's policies and Charter Hall Group's performance;
-
provides a detailed summary of performance conditions, explaining why they were chosen and how performance is measured against them;
-
set outs remuneration details for each director and for key management personnel; and
-
makes clear that the basis for remunerating non-executive directors is distinct from the basis for remunerating executives, including executive directors.
A reasonable opportunity will be provided for discussion of the Remuneration Report at the Meetings.
1 As at the date of this Notice of Meetings these options had not been issued. The intention is to issue the options prior to the AGM.
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GLOSSARY
| GLOSSARY | |
|---|---|
| Annual Report | the annual report of Charter Hall Group that includes the |
| financial report, the directors' report and the independent audit | |
| report for the period ended 30 June 2009 | |
| ASIC | Australian Securities and Investments Commission |
| ASX | ASX Limited |
| Board | board of directors of CHL |
| Charter Hall Group | CHL and CHPT and their controlled entities |
| CHFML | Charter Hall Funds Management Limited (ACN 082 991 786) |
| as responsible entity of CHPT | |
| CHL | Charter Hall Limited (ACN 113 531 150) |
| CHPT | Charter Hall Property Trust (ASRN 113 339 147) |
| Constitution | the constitutions of CHL and/or CHPT as appropriate |
| Corporations Act | the_Corporations Act 2001_(Cth) |
| DPS | Distribution per Stapled Security |
| ELSP | Executive Loan Security Plan of Charter Hall Group |
| Entitlement Offer | the fully underwritten 2 for 7 accelerated non-renounceable |
| entitlement offer of Stapled Securities by Charter Hall Group as | |
| described in the announcement lodged with ASX on 27 May | |
| 2009. | |
| EPS | Earnings per Stapled Security |
| Explanatory Memorandum | the explanatory memorandum that accompanies this Notice of |
| Meetings | |
| FY | Financial Year, starting 1 July and ending 30 June |
| Gandel Group | Alphabridge Pty Ltd (ACN 124 654 306) as trustee for The |
| Alphabridge Trust, which is a member of the Gandel Group of | |
| companies | |
| Listing Rules | Listing Rules of ASX |
| Meetings | the 2009 annual general meeting of shareholders of CHL and |
| general meeting of CHPT to be held on 11 November 2009 | |
| Notice of Meetings | this notice of meetings and any notice of any adjournment of |
| the meetings | |
| Placement | the placement of Stapled Securities to Gandel Group by |
| Charter Hall Group on 12 June 2009 and 29 June 2009 as | |
| described in the announcement and the investor presentation | |
| lodged with ASX on 27 May 2009 and the announcement | |
| lodged with the ASX on 26 June 2009 | |
| PROP | Performance Rights and Options plan of Charter Hall Group |
| Securityholders | registered holders of Stapled Securities |
| Stapled Security | a share in CHL and a unit in CHPT |
Page 17
CORPORATE DIRECTORY
Corporate Head Office and Registered Office
Charter Hall Funds Management Limited ACN 082 991 786 AFSL No. 262 861
Charter Hall Limited ACN 113 531 150
Directors
Kerry Roxburgh (Chairman) Roy Woodhouse (Deputy Chairman) Patrice Derrington Glenn Fraser Cedric Fuchs (Executive Director) David Harrison (Joint Managing Director) Peter Kahan Colin McGowan David Southon (Joint Managing Director)
Level 11 333 George Street Sydney NSW 2000
Telephone: +61 2 8908 4000 Facsimile: +61 2 8908 4040
Company Secretary
Nathan Francis
Auditors
PricewaterhouseCoopers Darling Park Tower 2 201 Sussex Street Sydney NSW 2000
Lawyers
Allens Arthur Robinson Deutsche Bank Place Corner Hunter and Phillip Streets Sydney NSW 2000
Principal Register
Link Market Services Limited Level 12 680 George Street Sydney NSW 2000
Telephone: +61 2 9230 4000 Facsimile: +61 2 9230 5333
Telephone: 1300 664 498 Facsimile: +61 2 9287 0303 Proxy Facsimile: +61 2 9287 0309
Securities Exchange
Australian Securities Exchange Limited
Page 18
QUESTIONS FOR THE EXTERNAL AUDITOR – PRICEWATERHOUSECOOPERS
Please use this form to submit any questions concerning the Auditor’s report in the Charter Hall Group Annual Report that you would like the Auditor to answer at the AGM and return in the reply paid envelope provided or fax it to the Registry on 02 9287 0309. Please note that written questions for the Auditor must be received no later than 5.00 pm (Sydney time) on 3 November 2009.
Securityholder’s name ___________
Address ___________
Security Reference Number (SRN) or Holder Identification Number (HIN)
Question (s)
Page 19
All enquiries to: Telephone:
1300 664 498 (02) 8280 7787
==> picture [97 x 48] intentionally omitted <==
Charter Hall Limited ACN 113 531 150 Charter Hall Funds Management Limited ACN 082 991 786
as Responsible Entity for Charter Hall Property Trust ARSN 113 339 147
LODGE YOUR VOTE
By mail: Charter Hall Group C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia
Telephone:
By fax: (02) 9287 0309
ONLINE
www.linkmarketservices.com.au
SECURITYHOLDER VOTING FORM
I/We being a member(s) of Charter Hall Group and entitled to attend and vote hereby appoint:
STEP 1
APPOINT A PROXY
the Chairman OR if you are NOT appointing the Chairman of the of the Meetings Meetings as your proxy, please write the name of the (mark box) person or body corporate (excluding the registered securityholder) you are appointing as your proxy
or failing the person/body corporate named, or if no person/body corporate is named, the Chairman of the Meetings, as my/our proxy and to vote for me/us on my/our behalf at the Annual General Meetings of the Charter Hall Group to be held at 2:30pm on Wednesday, 11 November 2009, at the Westin Hotel, Ballroom 4, No. 1 Martin Place, Sydney NSW 2000 and at any adjournment or postponement of the meetings.
Proxies will only be valid and accepted by the Charter Hall Group if they are signed and received no later than 48 hours before the meetings. Please read the voting instructions overleaf before marking any boxes with an X
VOTING DIRECTIONS
STEP 2
For Against Abstain * For Against Abstain * Resolution 6 Resolution 1 Re-election of Mr Glenn Fraser Issue of options and performance rights to Mr David Harrison Resolution 7 Resolution 2 Issue of options and performance Re-election of Ms Patrice Derrington rights to Mr Cedric Fuchs Resolution 8 Resolution 3 Re-election of Mr David Harrison Ratification of the Placement of Stapled Securities to Gandel Group Resolution 9 Resolution 4 Election of Mr Peter Kahan Ratification of the issue of performance rights and options during Resolution 5 the preceding 12 months Issue of options and performance rights Resolution 10 to Mr David Southon
Resolution 10 Adoption of Remuneration Report
* If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.
STEP 3 SIGNATURE OF SECURITYHOLDERS – THIS MUST BE COMPLETED
Securityholder 1 (Individual) Sole Director and Sole Company Secretary
Joint Securityholder 2 (Individual) Joint Securityholder 3 (Individual) Director/Company Secretary (Delete one) Director
This form should be signed by the securityholder. If a joint holding, either securityholder may sign. If signed by the securityholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth).
CHC PRX901
HOW TO COMPLETE THIS PROXY FORM
Your Name and Address
This is your name and address as it appears on the Charter Hall Group’s security register. If this information is incorrect, please make the correction on the form. Securityholders sponsored by a broker should advise their broker of any changes. Please note: you cannot change ownership of your securities using this form.
Appointment of a Proxy
If you wish to appoint the Chairman of the Meetings as your proxy, mark the box in Step 1. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meetings please write the name of that person in Step 1. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a securityholder of the company. A proxy may be an individual or a body corporate.
Votes on Items of Business – Proxy Appointment
You may direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the items of business, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.
Appointment of a Second Proxy
You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the Charter Hall Group’s security registry or you may copy this form and return them both together.
To appoint a second proxy you must:
-
(a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.
-
(b) return both forms together.
Signing Instructions
You must sign this form as follows in the spaces provided:
Individual: where the holding is in one name, the holder must sign.
Joint Holding: where the holding is in more than one name, either securityholder may sign.
Power of Attorney: to sign under Power of Attorney, you must lodge the Power of Attorney with the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.
Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001 ) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.
Corporate Representatives
If a representative of the corporation is to attend the meeting the appropriate “Certificate of Appointment of Corporate Representative” should be produced prior to admission in accordance with the Notice of Meetings. A form of the certificate may be obtained from the Charter Hall Group’s security registry.
Lodgement of a Proxy Form
This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below by 2:30pm on Monday, 9 November 2009, being not later than 48 hours before the commencement of the meetings. Any Proxy Form received after that time will not be valid for the scheduled meetings.
Proxy Forms may be lodged using the reply paid envelope or:
by mail: Charter Hall Group C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia
by fax:
(02) 9287 0309
online: ONLINE
www.linkmarketservices.com.au
lodging it online at Link’s website (www.linkmarketservices.com.au) in accordance with the instructions given there (you will be taken to have signed your Proxy Form if you lodge it in accordance with the instructions given on the website);
by hand:
delivering it to Link Market Services Limited, Level 12, 680 George Street, Sydney NSW 2000.
If you would like to attend and vote at the Annual General Meetings, please bring this form with you. This will assist in registering your attendance.