board and management changes

ASX Release
21 August 2008
BOARD AND MANAGEMENT CHANGES
International investment and specialised fund and asset management group
Babcock & Brown (ASX: BNB) advises that as part of a broader strategic review
process, the Board has adopted a number of changes to improve independence
and governance and to support the next phase of the Group’s evolution.
Following 24 years with Babcock & Brown and nearly four years as Managing
Director and Chief Executive Officer (CEO), Phil Green, has decided to step
down from his executive role but will remain on the Board, and after a short
transition period will become a Non-Executive Director.
Mr Green will be replaced by current CFO, Michael Larkin, who has been
appointed Managing Director and CEO effective immediately. The Company is
in the process of selecting a new Chief Financial Officer (CFO) from a field of
both internal and external candidates.
Jim Babcock, Founder and Executive Chairman, is stepping down as Chairman
but will remain on the Board and after a short transition period will become a
Non-Executive Director. Deputy Chairman, Elizabeth Nosworthy, has been
elected Chairman.
For health reasons, the current Chairman of the Board’s Audit & Risk
Management Committee, Michael Sharpe, has retired as a Non Executive
Director he will be replaced in that role by Pat Handley.
The remaining two Executive Directors, Jim Fantaci and Martin Rey have
stepped down from the Board to increase the proportion of independent and
non-executive directors on the board. The other independent directors, Joe
Roby and Dieter Rampl, will continue in their roles and the Board has
commenced a search to recruit further independent directors. The Babcock &
Brown Board will after the noted transitions, have only one Executive Director
being the Managing Director, Michael Larkin.
Mr Babcock said, “As I indicated at the Company’s AGM in early May, we heard
the market’s desire for us to make governance and strategic changes to better
reflect the nature, scale and breadth of Babcock & Brown today compared to
the much smaller, highly entrepreneurial company that listed on the Australian
Securities Exchange just four years ago, and the changes being announced
today have been designed and adopted with this end in mind.”
Ms Nosworthy said, “the changes have been unanimously agreed by directors
and senior executive team. The appointment of Michael Larkin as Managing
Director and CEO represents a change of focus for Babcock & Brown towards
consolidation of its position as a leading global alternative asset
manager/developer with a reducing level of principal investment activity.
“Jim Babcock is to be congratulated for his vision and insight that has created a
global company with a unique and mutually respectful culture and a strong
focus on performance. The Board and the company thank Jim for his 31 years
of service and will continue to value Jim’s input in his capacity as a Non-
Executive Director.
“Everyone at Babcock & Brown thanks Phil for his enormous contribution to the
development and success of Babcock & Brown over so many years. We
recognise in particular his leadership and vision in building the business since
the float in 2004. Phil is greatly admired by his Board colleagues, by employees
across the Babcock & Brown world and by many shareholders and coinvestors.
We are all delighted that the group will continue to benefit from his
intellect, insight and guidance in his role as a non-executive director.
“As senior executives, Jim Fantaci and Martin Rey remain deeply committed to
the ongoing success of Babcock & Brown. Like Jim and Phil they fully recognise
that the time has come for the appointment of a greater proportion of
independent directors to the Board to ensure the Group complies with
governance best practice and to make room for fresh talent and thinking at
board level. We thank them for their service on the Board and look forward to
their continuing contribution as senior executives of the company.
“On behalf of all Board members I extend our gratitude to Michael Sharpe for
his contribution over these last four years. He has been an outstanding
Chairman of our Audit and Risk Management Committee and we wish him well.
“We are delighted that someone with Pat Handley’s extensive financial
management expertise has agreed to join the board as an Independent Director
and Chairman of the Audit & Risk Management Committee,” Ms Nosworthy
said.
As part of the Company’s 2008 interim results presentation today, Mr Larkin will
provide an update on the strategic review now underway. The update includes
key decisions taken so far; a senior management restructure to implement
those changes and revised financial and capital management policies.
Mr Larkin said, “While Babcock & Brown currently faces a number of challenges
I am excited to have been appointed to lead a Group with significant
competitive advantages in our key markets globally with a highly experienced
and talented employee group.
Outgoing Managing Director and CEO, Phil Green, said, “I have had an
enormously rewarding 24 years since joining Babcock & Brown in 1984 to cofound
the Australian office.”
“Over the years identifying new growth opportunities has been a hallmark of
Babcock & Brown’s success which continues to this day.
“I have every confidence in Michael Larkin and the team in place to execute on
the changes that have been announced today to ensure that we leverage the
strong platforms and skill sets we have to continue Babcock & Brown’s
evolution towards a global alternative asset management business. I look
forward to making a continuing contribution for the benefit of all stakeholders
both in directly assisting Michael in the transition and in the long term as a nonexecutive
director.
Mr Green is currently on the Boards of Babcock & Brown Infrastructure,
Babcock & Brown Capital, Babcock & Brown Japan Property Management
Limited, a responsible entity for Babcock & Brown Japan Property Trust and
Everest Babcock & Brown. He will progressively retire from those boards as
suitable replacements are appointed.
Babcock & Brown notes that Ms Nosworthy has resigned from the Board of the
Group’s joint venture partner, GPT Group, in recognition of the potential for
conflicts of interest that could arise as a result of her role as Chairman of
Babcock & Brown.
ENDS
For further information please contact:
Kelly Hibbins
Babcock & Brown
+61 2 9229 1800
[email protected]
BOARD CHANGES
New Board Previous Board
Elizabeth Nosworthy – Chairman & Non
Executive Director
Jim Babcock - Executive Chairman
Michael Larkin - CEO & Managing Director Elizabeth Nosworthy – Non Executive Director
and Deputy Chairman
Pat Handley – Independent Non Executive
Director
Phil Green - Executive Director
Ian Martin - Independent Non Executive
Director
Ian Martin - Non Executive Director
Dieter Rampl - Independent Non Executive
Director
Dieter Rampl - Non Executive Director
Joe Roby – Independent Non Executive
Director
Joe Roby - Non Executive Director
Jim Babcock – Executive Director
transitioning to Non – Executive Director
Michael Sharpe - Non Executive Director
Phil Green - Executive Director transitioning
to Non – Executive Director
Martin Rey - Executive Director
New appointments - further Independent
Non Executive Directors to be recruited
Jim Fantaci – Executive Director
About Babcock & Brown
Babcock & Brown is an international investment and specialised fund and asset
management group with longstanding capabilities in structured finance and the
creation, syndication and management of asset and cash flow-based
investments. Babcock & Brown was founded in 1977 and is listed on the
Australian Securities Exchange.
Babcock & Brown operates from 33 offices across Australia, North America,
Europe, Asia, United Arab Emirates and Africa and has in excess of 1,400
employees worldwide. Babcock & Brown has four operating divisions including
real estate, infrastructure, operating leasing, corporate and structured finance.
The company has established a funds management platform across the
operating divisions that has resulted in the creation of a number of focused
investment vehicles in areas including real estate, renewable energy and
infrastructure.
For further information about Babcock & Brown please see our website:
www.babcockbrown.com
Appointment of Chief Executive Officer and Managing Director
Babcock & Brown today announced that Michael Larkin, currently Group Chief
Financial Officer, has been appointed Chief Executive Officer and Managing
Director of Babcock & Brown, effective immediately.
Biographical notes on Michael Larkin
• Michael joined Babcock & Brown in August 2004 as Group Chief Financial
Officer.
• Michael holds a Bachelor of Commerce degree from the University of NSW,
is a member of the Institute of Chartered Accountants and the Taxation
Institute of Australia.
• Prior to joining Babcock & Brown, Michael was Group Financial Controller
for Lend Lease Corporation, based in London. In this and other roles in his
7 years with Lend Lease he developed a strong set of skills and experiences
in dealing with financial and management reporting for a global company
listed on the Australian Stock Exchange.
• Michael held various positions with Coopers & Lybrand for 13 years,
culminating in his appointment as Director of Tax Services in the financial
services sector.
Summary of the key terms and conditions of appointment
Role
Chief Executive Officer and Managing Director
Commencement date and term
Mr Larkin’s current employment agreement is ongoing and is subject to 3
months’ notice from Babcock & Brown and 3 months’ notice from Mr Larkin.
Babcock & Brown may terminate without notice in the event of serious
misconduct.
Remuneration package
Total fixed remuneration: $365,000 per annum base salary, reviewed annually.
Participation in short and long term incentive plan: discretionary annual bonus
and participation in a long term incentive plan, in each case on the same terms
offered to other senior executives under the Babcock & Brown Equity Incentive
Plan. The annual bonus and grant of long term incentive is subject to the
achievement of KPIs to be agreed with the Board.
Long term incentive: 1,000,000 options to acquire ordinary shares in Babcock &
Brown Limited, subject to shareholder approval if required. These options vest
subject to Babcock & Brown Limited meeting or exceeding its performance
hurdles on the relevant test dates. The first test date is the date of release of
the Babcock & Brown’s financial results to the ASX for the period ending 30
June 2011. If less than 100% of options vest on the first test date there will be
a retest on the date of release of the Babcock & Brown’s financial results to the
ASX for the period ending 30 June 2012. The options will only vest if Babcock
& Brown Limited’s TSR (Total Shareholder Return) for the period from the grant
date to the relevant test date is between the 51st and 74th percentile of the ASX
100 (in which case there will be progressive vesting on a straight line basis from
50% to 99%). If the TSR is at or above the 75th percentile there will be 100%
vesting.
These performance hurdles are in line with the Company’s grant of options to
executives in April 2008. Subject to vesting, the options are first exercisable
immediately following the release of the Babcock & Brown’s financial results to
the ASX for the period ending 30 June 2011 at an exercise price of $3.45 (being
the closing price of Babcock & Brown Limited shares on 19 August 2008). The
options expire 6 years from the grant date and unvested options lapse after the
second test date.
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