9 February 2011
Company Announcements Office
Australian Securities Exchange - ASX Limited
Exchange Centre
Level 4, 20 Bridge Street
Sydney NSW 2000
Via e-lodgements: Sequence #551
Dear Sir / Madam
Board Renewal and Succession Program – Notice of Change of Managing Director
In accordance with Listing Rule 3.16, the Company submits the attached announcement for
immediate release to the market.
Yours faithfully
Jennifer Waldegrave
Company Secretary
ASX ANNOUNCEMENT
9 February 2011
John Douglas to succeed Roger Olds as MD and CEO
- Succession effective 1st March 2011 –
Coffey International Limited ((ASX:COF) (“Coffey”, “the Company”)) today announced
that it has appointed Mr John Douglas as Managing Director and CEO effective 1st
March this year. Mr Douglas succeeds Mr Roger Olds, who will be stepping down on
February 28th 2011 after leading Coffey for the last 15 years.
Mr Douglas is a civil engineer with First Class Honours from the University of Adelaide and
an MBA from London Business School. Before joining Coffey, he worked with Boral Limited
for 15 years. During his last 6 years at Boral, Mr Douglas was the Executive General
Manager of the Australian Construction Materials division. Prior to joining Boral, Mr Douglas
held various positions with the Boston Consulting Group, Pioneer Concrete UK Ltd, Soil
Mechanics (part of Mowlem International) and Douglas Partners Pty Ltd.
The Chairman of Coffey, Dr John Mulcahy, said: “John Douglas is an ideal successor to
Roger. Mr Douglas has demonstrated strong leadership capabilities in highly competitive
markets in Australia and internationally. He has a proven ability to deliver against both
performance and growth imperatives.
“In his former role, John was highly successful at leveraging results through the devolved
management of multiple business units, enhanced by a strong commitment to system
standardisation and back office streamlining.
“His experience and management philosophy are highly relevant given Coffey’s diversity of
businesses today,” Dr Mulcahy said.
Mr Douglas said: “I am delighted to be joining a business with the potential of Coffey. I look
forward to leveraging that potential to build value for our Shareholders while continuing to
provide the specialist professional service to our customers for which Coffey is so well
known.
“Roger Olds and his team have done a great job in growing the business, and establishing a
global footprint and I very much look forward to working with the Coffey team in the next
phase of the Company’s development,” Mr Douglas said.
Mr Olds joined Coffey in 1979 and, after a long and distinguished career at Coffey, will
continue his association with the Company by assisting Coffey on specific projects as
agreed from time to time under a consultancy arrangement.
Mr Olds said; "I am looking forward to the next phase of my career as a consultant, at a less
frantic pace, after 15 years as Managing Director
.
I plan to spend more time with my wife,
Dr Mulcahy, said: “Roger is stepping down as part of the Board’s ongoing renewal and
succession program which has been underway since my appointment as a non-executive
director in 2009.”
“While the Board and Roger agree that now is the right time for a change of leadership, we
are pleased that with his deep experience, he will continue to have a relationship with the
Company as a consultant.
“Roger is regarded as one of Australia’s leading engineers and he has overseen a long and
remarkable period of expansion for Coffey. The Board thanks Roger for his leadership and
extraordinary commitment to Coffey and wishes him well in his future endeavours.
“Under his leadership Coffey has grown from a relatively small, Australia focused
geotechnics company, to become a global engineering and specialist services business with
over 3,000 employees providing consulting, project management and international
development services in approximately 80 countries.
“His successor John Douglas is well placed to understand the challenges which face a
global business like Coffey and the immediate priority of rebuilding the Company’s revenue
and earnings as local and global conditions stabilise and improve. He also has a
professional background which is ideally suited to leading this business,” Dr Mulcahy said.
The Company is in the process of finalising its H1 results for release on 16 February and, as
part of that process, is reviewing the outlook for the remainder of the financial year including
any impact from the recent natural disasters in Queensland. An update will be provided with
the release of the H1 results.
Additional information is provided in the following attachments:
1. John Douglas Biography
2. John Douglas: Employment Contract – Summary of Key Terms and Conditions
3. Roger Olds: Summary of Payments on Cessation of Employment and Key Terms of
Consultancy Agreement
-ends-
Investor contact: Media contact:
John Mulcahy / Urs Meyerhans John Frey
Chairman / Chief Financial Officer Principal, Cosway Australia
T: +61 2 8404 4409 T: +61 2 9929 8344
M: +61 411 361 361
Attachment 1
Biography of Mr John Douglas
Profile
John Douglas was born in New Zealand and grew up in Australia, Papua New Guinea and the United States. He is a civil engineer who graduated from the University of Adelaide in 1983.
John worked as a geotechnical engineer for Douglas Partners Pty Ltd in Australia, Kiribati and Papua New Guinea. He then moved to the UK to work for Soil Mechanics Ltd (part of Mowlem International) before becoming involved in the concrete industry with Pioneer Concrete UK Ltd.
After five years in the UK, and having completed an MBA at London Business School, John returned to Australia to join the Boston Consulting Group. He consulted to a wide range of clients in different industries and countries.
In 1995, John joined Boral Ltd. He held a number of roles before becoming Executive General Manager of the Australian Construction Materials business in 2004. In this role, he managed a business with a turnover of more than $2.0 billion spread across four business streams. The business operated from over 430 sites and employed more than 7,000 employees and contractors. John was also responsible for Boral’s significant ($50 million EBIT) property development business.
Summary of Experience
1995 - 2010 BORAL LIMITED, Sydney
2004 - 2010 Executive General Manager, Australian Construction Materials (ACM) 1999 - 2004 Regional General Manager NSW, ACM
1997 - 1999 National Overlay Manager, Quarries, Construction Materials Group (CMG) 1997 - 1999 General Manager, NSW Quarries and Recycling, CMG
1995 - 1997 General Manager, Planning, CMG
1991 - 1995 BOSTON CONSULTING GROUP, Sydney
1995 Manager
1994 Case Leader
1991 - 1993 Consultant
1987 - 1989 PIONEER CONCRETE UK LTD, London Area Manager
1985 - 1987 SOIL MECHANICS LTD, North Wales Project Manager
1983 - 1985 DOUGLAS PARTNERS PTY LTD, Australia, Kiribati, Papua New Guinea Geotechnical Engineer
Attachment 2
Summary of Key Terms of Employment: John Douglas, CEO and Managing Director
Commencement Date: 1 March 2011
Term: Mr Douglas’ employment will continue until terminated by either party in accordance with the relevant termination provisions (see below).
Total Fixed Remuneration (TFR): (inclusive of superannuation and any fringe benefits)
Commencing Total Fixed Remuneration (TFR) of $800,000 per annum, reviewed annually and benchmarked against a relevant peer group.
Short Term Incentive (STI): Mr Douglas will be entitled to participate in Coffey Short Term Rewards Scheme as amended from time to time. In addition to his TFR, Mr Douglas may receive STI rewards ranging from 0% to 75% of his TFR, as
determined by the Board. Any STI reward will be subject to achieving agreed Key Performance Indicators (KPIs) determined in advance by the Board, and the actual value of the bonus pool.
KPIs are based on outperformance in financial, customer, safety, strategy, business development, people
development and leadership areas.
The target performance will be set at 50% with the initial KPIs including:
• Deliver improved EPS and TSR returns
• Complete restructure to achieve reduced cost targets ensuring appropriate cost base for current revenues
• Engage the senior leadership team in Coffey’s Strategic Direction
• Develop systems and processes to enable Coffey to follow its strategic pathway
For the 2011 financial year, Mr Douglas is entitled to participate in the Company’s short-term incentive plan on a pro rata basis.
Long Term Incentive (LTI):
• Ongoing: Mr Douglas will be entitled to participate in Coffey Long Term Rewards Scheme, as amended from time to time, subject as required to Shareholder approval.
In addition to his TFR, Mr Douglas may receive LTI rewards ranging from 0% to 50% of his TFR subject to achieving agreed performance hurdles (currently Operating Earnings Per Share (OEPS) and Total
Shareholder Return (TSR)) determined in advance by the Board and remaining an employee of the Company.
• Initial Grant on Commencement: Mr Douglas will be granted Coffey shares with a value of $400,000 (being 50% of his TFR) under the Coffey Rewards Share Plan (CRSP) shortly after
commencement.
Limited-recourse loan: As the CRSP is a loan-based share scheme, an interest free, limited-recourse loan will be provided to Mr Douglas calculated at the Market Value of Coffey shares at the date of issue multiplied by the number of shares issued (Market Value is defined in the Trust Deed as the five day volume weighted average share prices traded on the ASX on the five days prior to the date of issue).
The number of Coffey shares to be issued will be 694,323 and has been determined by converting the amount of $400,000 using a conventional valuation methodology and performed by an independent expert. This methodology is consistent with the methodology used for the 2010 grant to participating Coffey employees.
The loan shares are subject to the following service and performance hurdles:
• Service period: from Commencement Date for a period of 3 years
• 50% subject to OEPS hurdle
o Measurement period: 1 March 2011 to 28 February 2014;
OEPS annualised compound growth rate over 3 years
(% per annum)
% of shares subject to this condition which will vest
<8.0 None
10.0 25%
12.0 50%
14.0 75%
16.0 100%
The base for this measure is the underlying financial performance of the company for the 12 months ending 28 February 2011.The underlying performance is calculated using actual unaudited performance from 1 March 2010 to 31 December 2010 plus management estimated
performance for January and February 2011. The underlying financials exclude the reported 'one off’ costs due to restructure activities within the period, but include the expected annualised benefits from these restructures.
• 50% subject to TSR hurdle
o Measurement period: 8 February 2011 to 28 February 2014;
If, at the testing date, the COF % of shares subject to this
Coffey’s TSR is compared to the S&P/ASX 300
Accumulation Index (XKOAI) performance over the same period.
Mr Douglas will not be entitled to participate in any additional offer of shares under the LTI in relation to the FY11 year.
The initial grant of shares is not subject to shareholder approval under the ASX Listing Rules.
Director Appointment: Mr Douglas will be appointed to the Board of Coffey as Managing Director.
Termination:
• Termination by the Company The Company may terminate Mr Douglas’ appointment in the following circumstances:
• at any time for cause; or
• by giving 12 month’s notice in writing, or a payment in lieu thereof. Any payment in lieu will be calculated on the total sum of the TFR only.
• Termination by Mr Douglas
Mr Douglas may terminate his appointment by giving 6 month’s notice in writing to the Company.
If Mr Douglas does not work out this notice period as determined by the Company, Mr Douglas will be entitled to receive a payment in lieu for the unworked notice period calculated on the total sum of the TFR at the time of termination.
• Fundamental Change If there is a material diminution in Mr Douglas’ position as Chief Executive Officer and Managing Director of Coffey, without his consent, Mr Douglas may terminate his employment within one month of this fundamental change occurring and he will be entitled to receive a termination payment equal to 12 months of his then TFR.
Consequences of Termination:
• Restraint Mr Douglas is subject to 12 month compete and non-solicitation restrictions after his employment ceases pursuant to which he cannot be engaged or involved in any business or activity within Australia and New Zealand which is the same as or similar to or in competition with a business conducted by the Coffey Group.
• Resignation as Director On termination, Mr Douglas must resign as a director or officer of Coffey and any Coffey Group entity.
General Provisions The agreement also contains customary provisions including in relation to confidentiality, intellectual property, moral rights and other facilitating clauses.
Attachment 3
Summary of Payments on Cessation of Employment and Key Terms of
Consultancy Agreement: Roger Olds
Cessation of Employment Payments
Employment Agreement Date: 3 March 2006
Termination Entitlement: In accordance with Mr Olds’ contractual entitlement, 18 months payment in lieu of notice plus statutory leave entitlements being:
$1,185,000.00 gross, plus statutory entitlements
Short Term Incentives: No entitlement to any payment under the Coffey Short Term Rewards Scheme.
Long Term Incentives: Mr Olds has been classified as a “Good Leaver” under the terms of the Coffey Long Term Rewards Scheme (CLTRS). Under the terms of the CLTRS, Mr Olds’ existing Long Term Incentives will be treated as follows:
• Unvested performance loan shares will continue to be held by the Trustee for the benefit of Mr Olds and vesting will remain subject to achievement of relevant performance hurdles.
•
A percentage of unvested Loyalty shares (596 shares) will vest on the day of Mr Olds’ termination with the remainder of unvested shares to be forfeited (1,113 shares). The percentage of shares that vest is calculated as a percentage of full time equivalent time worked since the date of issue relative to three years full time work• Repayment of the outstanding loan amounts under the CLTRS relating to vested shares will be in accordance with the Rules of the Scheme.
Key Terms of Consultancy Agreement
Coffey has entered into a consultancy arrangement under which Mr Olds will be available to the Company to consult on specific Coffey projects. As part of this arrangement Mr Olds will also enter into a restraint which will prevent Mr Olds from providing services to major competitors or competing businesses.
The consulting arrangement has been made under normal commercial rates.
Consulting Commencement Date: 1 March 2011
Term: 15 months unless terminated by either party in
accordance with the relevant termination provisions (see below).
Consulting Rate: $600 per hour or project based payments as agreed Termination:
• Termination by the Company The Company may terminate the agreement in the following circumstances:
• at any time for cause; or
• by giving 2 month’s notice in writing.
• Termination by Consultant The consultant may terminate the agreement in the following circumstances:
• by giving 2 month’s notice in writing to the Company; or
• immediately for serious or persistent breach.
Restraint: For the term of the consulting agreement plus an additional 12 months
The Board considers this ongoing arrangement to be strategically important for Coffey.
