Remuneration Report – audited
The directors of Orica Limited present the Remuneration Report (which forms part of the Directors’ Report) prepared in accordance
with section 300A of the Corporations Act for the Company and its controlled entities for the year ended 30 September 2009.
A. Remuneration Report Summary
A.1 Remuneration strategy
Orica is a company that enjoys a strong performance based culture and aims to deliver above average returns to its shareholders.
The remuneration strategy adopted by the Company has been a key factor in achieving this success. The Company’s
remuneration framework is aligned with the Company’s business strategy. It aims to attract, motivate, reward and retain executives
through a remuneration system that is globally relevant, adaptable, sustainable, performance driven, competitive, shareholder
aligned, differentiated, retentive and transparent and has a high perceived value. The key elements of the strategy are fixed salary
at the market median with the ability to earn top quartile total remuneration based on achievement of clear short and long term
performance targets.
Orica has a policy on the use of financial products (e.g. derivatives, margin loans or similar products) by directors and employees
to limit the risk attached to equity instruments (commonly referred to as ‘hedging’) where those instruments are granted to them as
part of their remuneration. Under this policy, Orica securities must not be hedged prior to vesting (i.e. prior to the relevant
performance hurdles being met) or while they are subject to restriction under a long-term incentive plan. Any Orica securities that
have vested and are no longer subject to restriction under a long-term incentive plan may be subject to hedging arrangements
provided the Company is notified in advance of the employee/director entering into the relevant arrangement and the arrangements
are put in place in a trading window.
Consistent with this policy, the Company’s equity plans prohibit hedging of unvested securities. Orica treats compliance with this
policy as a serious issue and takes appropriate measures to ensure the policy is adhered to. Breaches of the policy will be subject
to appropriate sanctions, which could include disciplinary action or termination of employment.
A.2 Overview of elements of remuneration
As deemed under AASB 124 Related Party Disclosures, Key Management Personnel (KMP) include non-executive directors and
members of the Group Executive Team (executive directors and the most highly remunerated executives) who have authority and
responsibility for planning, directing and controlling the activities of Orica. In this report, “Executive KMP” refers to Executive Key
Management Personnel. Non–executive directors have no involvement in the day to day management of the business.
Non-Executive Directors
Non-executive directors fees are set at levels which reflect the responsibilities and time commitments required of non-executive
directors to discharge their duties. In order to maintain independence and impartiality, these fees are not linked to the performance
of Orica.
Executive Directors and Senior Executives
Executive directors and senior executives remuneration comprises both a fixed component and an at-risk component. Fixed
remuneration provides a guaranteed level of reward based on the executive’s role, skills, knowledge, experience, individual
performance and the employment market. At-risk remuneration rewards Executive KMP for achieving financial and business
targets and increasing shareholder value. The mix between fixed remuneration and at-risk remuneration depends on the level of
seniority of the Executive KMP.
Elements of Remuneration Directors
Non-Executive Executive
Executive
KMP
Discussion in
Remuneration
Report
Fees    B2
Salary    E1
Compulsory Statutory
Superannuation  (1)   B2/E1
Fixed
remuneration
Other benefits    B2/E1
At-risk Short Term Incentive (STI)    D3
remuneration Long Term Equity Incentive
Plan    D4/G/H
Other Retention arrangements   (2)  D5
Post- Service Agreements    F1
employment Termination payments –
former Executive    E1
Table 1
(1) Retirement allowances for non-executive directors have been discontinued and directors appointed prior to 1 July 2002 preserved their
retirement allowances as at 1 July 2004, with no indexation. The allowances will be paid to eligible directors on retirement.
(2) The Managing Director did not participate in the retention arrangements.A.3 Key Management Personnel
Particulars of Key Management Personnel qualifications, experience and special responsibilities are detailed on pages 12 to 13 of
the annual report.
All current Executive KMP other than Patricia McEwan were promoted internally from other roles within the Group. This reflects
Orica’s commitment to succession planning and development of key talent.
The Key Management Personnel to whom this Report applies are:
Name Role
Commencement
Date in current role
Non-Executive
Donald Mercer Non-Executive Director 1 October 1997
Michael Beckett Non-Executive Director 15 July 2002
Russell Caplan Non-Executive Director 1 October 2007
Peter Duncan Non-Executive Director 1 June 2001
Garry Hounsell Non-Executive Director 21 September 2004
Peter Kirby Non-Executive Director 22 July 2003
Nora Scheinkestel Non-Executive Director 1 August 2006
Michael Tilley Non-Executive Director 10 November 2003
Former Retirement Date
Catherine Walter Non-Executive Director 21 December 2008
Executives
Current
Graeme Liebelt Managing Director 1 September 2005
Noel Meehan Executive Director Finance 1 May 2005
Michael Reich Chief Executive Officer, Minova 1 February 2008
Andrew Larke Group General Manager, Mergers and Acquisitions, Strategy and
Technology
1 June 2006
Greg Witcombe Group General Manager, Chemicals 22 September 2008
John Beevers (1) Chief Executive Officer, Orica Mining Services 13 November 2008
Craig Elkington President, Orica Mining Services, North America 1 April 2008
Patrick Houlihan Chief Executive Officer, DuluxGroup 1 February 2007
Patricia McEwan General Manager, Human Resources and Communications 1 June 2009
Former Leaving Date
Philippe Etienne (2) General Manager, Business Development 31 July 2009
Table 2
The Company Secretary is not considered Key Management Personnel. Accordingly, the Company Secretary has not been
included in any Key Management Personnel totals.
(1) On 13 November 2008, John Beevers commenced as Chief Executive Officer, Orica Mining Services. Prior to this, John Beevers was General
Manager, Orica Mining Services Australia/Asia.
(2) From 13 November 2008, Philippe Etienne was General Manager Business Development. Prior to this, Philippe Etienne was Chief Executive
Officer, Orica Mining Services.
This Remuneration Report is signed in accordance with a resolution of the directors of Orica Limited.
------------------------------------------
D P Mercer
Chairman
9th November 2009.B. Non-Executive Directors’ Remuneration
B.1 Policy – independence and impartiality
Non-Executive directors’ fees, excluding committee fees, are set by the Board within the maximum aggregate amount of
$1,800,000 approved by shareholders at the 2005 Annual General Meeting. These fees exclude superannuation benefits and
other payments in accordance with rule 48.1 of Orica’s constitution. These fees are set at levels which reflect the time
commitments and responsibilities of non-executive directors. In order to maintain independence and impartiality, non-executive
directors are not entitled to any form of incentive payments and the level of their fees is not set with reference to measures of
Company performance. In setting fees, the Board takes into consideration the Company’s existing remuneration policies, external
professional advice, survey data on fees paid by comparable companies and the level of remuneration required to attract and
retain directors of the appropriate calibre. From 1 April 2009, non-executive directors receive a fee of $154,000 in relation to their
service as a director of the Board, and the Chairman, taking into account the greater commitment required, receives a fee of
$462,000. The Chairman’s fees include payment for service on the Corporate Governance and Nominations Committee. From 1
April 2009, directors who sit on the Board’s Audit and Risk Committee and Safety, Health and Environment Committee (SH&E) and
Human Resources and Compensation Committee (HR&C) receive an additional fee of $20,000 per annum, other than Chairs of
these Board committees who receive an additional fee of $40,000 per annum. Superannuation contributions are also made. In
addition, the Board may pay additional remuneration for significant extra workload of non-executive directors. Non-Executive
directors are also entitled to be reimbursed for reasonable travel, accommodation and other expenses incurred by the director
while engaged on the business of the Company, in accordance with rule 50.2 of Orica’s constitution.
Orica has discontinued retirement allowances for all Non-Executive directors. Directors appointed prior to 1 July 2002 have had
their retirement allowance preserved (as at 1 July 2004) with no indexation and the allowance will be paid to the eligible directors
upon retirement. In accordance with rule 48.1 of Orica’s constitution, those retirement benefits do not fall within the maximum
aggregate fee cap for Non-Executive directors.
B.2 Remuneration
Details of Non-Executive Directors’ remuneration is set out in the following table:
Committee Fees (1)
For the year to 30 September
2009
Directors
Fees (1)
Audit
and Risk
SH&E HR&C Due
Diligence (2)
Superannuation
(3)
Other
Benefits (1) (4)
Total
$000 $000 $000 $000 $000 $000 $000 $000
D P Mercer, Chairman (5) 441.0 - - - - 39.7 - 480.7
M E Beckett 147.0 - 17.5 - - 14.8 - 179.3
R R Caplan 147.0 - 7.5 20.0 - 15.7 - 190.2
P J Duncan (5) 147.0 17.1 - 10.0 - 15.7 - 189.8
G A Hounsell (4) 147.0 17.5 - 10.0 - 17.5 20.0 212.0
P M Kirby (4) 147.0 - 35.0 - - 18.6 25.0 225.6
N L Scheinkestel 147.0 28.8 - - - 15.8 - 191.6
M Tilley 147.0 11.2 12.5 - - 15.4 - 186.1
Former
C M Walter (5) 30.9 - 3.3 - - 3.1 - 37.3
Total Non-Executive Directors 1,500.9 74.6 75.8 40.0 - 156.3 45.0 1,892.6
For the year to 30 September
2008
D P Mercer, Chairman (5) 420.0 - - - - 37.8 - 457.8
M E Beckett 140.0 - 15.0 - - 14.0 - 169.0
R R Caplan 140.0 - 11.3 - - 13.6 - 164.9
P J Duncan (5) 140.0 30.0 - - - 15.3 - 185.3
G A Hounsell (2) 140.0 15.0 - - 25.0 16.2 - 196.2
P M Kirby (2) 140.0 - 30.0 - 20.0 17.1 - 207.1
N L Scheinkestel (2) 140.0 15.0 - - 20.0 15.8 - 190.8
M Tilley 140.0 - - - - 12.6 - 152.6
C M Walter (2) (5) 140.0 - 15.0 - 25.0 16.2 - 196.2
Total Non-Executive Directors 1,540.0 60.0 71.3 - 90.0 158.6 - 1,919.9
Table 3
(1) Represents actual directors’ remuneration paid during the financial year.
(2) C Walter chaired and P Kirby was a member of the Rights Issue Committee. G Hounsell chaired and N Scheinkestel was a member of the
Demerger Committee.
(3) Company superannuation benefits contributions made on behalf of Non-Executive directors.
(4) Remuneration for additional workload involved in the proposed demerger of the DuluxGroup.
(5) If each eligible Non-Executive director had ceased to be a director on 30 September in each year, the following benefits would have been
payable under the grandfathered Directors’ Retirement Scheme: D P Mercer $664,000 (2008 $664,000), P J Duncan $154,800 (2008 $154,800),
C M Walter $nil (paid in full in 2009) (2008 $228,700) (refer Non-Executive directors’ remuneration policy above). These benefits have been fully
provided for in the financial statements.C. Company performance – the link to reward
C.1 Five year performance
Over the past five financial years, the Board has set challenging financial performance targets for management and has directly
aligned Executive KMP incentives to the achievement of those targets. The link is clear: when target performance is achieved,
target Executive KMP rewards are earned, and when above target performance is achieved, Executive KMP earn above target
rewards.
Orica has enjoyed strong performance over the past five years:
 net profit after tax (before individually material items) has grown at a compound rate of 14.7% per annum over the five years;
 the share price has increased 36% over that period;
 an average of 85.0 cents per ordinary share per annum has been paid to shareholders under the Company’s dividend policy;
 additional returns to shareholders have been made through share buy-backs; and
 total shareholder return (TSR) over the past five years has been 71%.
As a result, for the past five years, Executive KMP have generally earned rewards at or above target levels.
The Board believes that directly linking Executive KMP rewards to performance targets has been a key driver in the achievement of
the strong results (before individually material items) shown in the charts below.
Further information about this year’s performance is set out in the Managing Director’s report on page 3 and throughout the annual
report.
Over the past five years, Orica has conducted a series of on-market share buy-backs as part of its capital management strategy.
These buy-backs have resulted in a total buy-back of 10,304,800 ordinary shares, with $250 million returned to shareholders.
C.2 Link to performance
All of the at-risk component of Executive KMP remuneration is tied to performance.
Executive KMP short term incentives are paid annually in cash and are linked to overall performance measures for Orica, as well
as specific measures for businesses in the areas of financial performance (net profit after tax (before individually material items)
(NPAT), earnings before interest and tax before individually material items (EBIT) and cash flow) and safety. The specific
measures and their weightings vary depending on the seniority and role of the Executive KMP. Each year, a performance contract
specifying target, stretch and threshold performance measures is set and agreed with each Executive KMP, by that Executive
KMP’s manager. The performance contract of the Managing Director is set and agreed with the Chairman. The Chairman and the
Human Resources and Compensation Committee review Executive KMP performance targets to ensure they are appropriately
challenging.Executive KMP long term incentives (delivered through the Long Term Equity Incentive Plan) are linked to growth in Orica’s
share price and growth in Total Shareholder Return (TSR).
The table below shows how specific measures of Company performance and shareholder value link to Executive KMP at-risk
rewards. Note that financial data prior to 2005 is stated under accounting standards used prior to the adoption of International
Financial Reporting Standards.
2004 2005 2006 2007 2008 2009
External Sales ($m) 4,610.5 5,126.7 5,359.2 5,527.2 6,544.1 7,411.0
Cash flow from operating
activities ($m) 587.9 375.8 413.9 524.3 736.9 854.9
EBIT ($m) 553.3 600.9 657.7 812.7 970.1 1,082.5
NPAT ($m) 325.6 339.9 380.3 497.8 572.3 646.1
All Workers Recordable
Case Rate 0.74 0.85 0.57 0.60 0.72 0.69
Dividends per ordinary
share (cents) 68.0 71.0 74.0 89.0 94.0 97.0
Return of capital ($m) 127.5 53.7 81.5 114.8 - -
Year end share price ($) 17.30 21.00 22.47 30.10 20.95 23.50
Cumulative TSR - Orica
(%) 25.24 54.94 101.79 78.24 70.96
Cumulative TSR - ASX
100 (%) 29.83 54.10 96.75 64.32 52.28
Table 4
D. Executive remuneration – driving a performance culture
D.1 Board policy on remuneration
The Human Resources and Compensation Committee has recommended, and the Board has adopted, a policy that remuneration
for Executive KMP will:
 reinforce the short, medium and long term objectives of Orica;
 link the rewards for management to the creation of shareholder value and returns; and
 be competitive in the markets in which Orica operates in order to attract, motivate and retain high calibre employees.
Details of the composition and responsibilities of the Human Resources and Compensation Committee are set out on page 16. The
Committee and senior management receive external advice on matters relating to remuneration.
The Board considers it desirable for remuneration packages of Executive KMP to include both a fixed component and an at-risk or
performance-related component (comprising both short term and long term incentives). The Board views the at-risk component as
an essential driver of Orica’s high performance culture. The mix between fixed remuneration and at-risk remuneration is designed
to reflect market conditions at each job and seniority level. For the Managing Director, the split is broadly 45% fixed and 55% atrisk,
whilst the split for other Executive KMP is broadly 55% fixed and 45% at-risk, as shown in the table below. These splits have
been updated from the 2008 report, and represent the annual grant value of Executive Long Term Incentives.
% of Total Annual Remuneration
Fixed (1) At-risk
Short term
incentive (2) (3)
Long term
incentive (4)
Managing Director 45% 25% 30%
Other Executive KMP 55% 25% 20%
Table 5
(1) Fixed Annual Remuneration as per table 13 in section F1.
(2) Target STI is set at 50% of the maximum STI. Executive KMP may achieve greater than 100% of maximum STI where there is an uncapped STI
for selected significant critical performance items such as EBIT performance.
(3) Maximum STI (%) as per table 10 in section E2.
(4) LTEIP granted ($) as per table 11 in section E3.
The percentages in table 5 represent the remuneration mix for the Executive KMP where target performance is achieved. The
actual remuneration mix for the Executive KMP will vary depending on the level of performance achieved at a Group, business and
individual level. Where stretch targets for short term and long term incentives are met, then the proportion of total remuneration
derived from these at-risk components will be significantly higher than the percentages shown in table 5. This relatively high
weighting of at-risk remuneration reflects the Board’s commitment to performance-based reward.
For full details of the remuneration paid to executive directors (including the Managing Director) and Executive KMP for the 2009
financial year, refer to section E below.D.2 Fixed remuneration
All Executive KMP receive a fixed remuneration component. In general, this is expressed as a total amount of salary and other
benefits (including statutory superannuation contributions) that may be taken in an agreed form, including cash and superannuation.
Fixed remuneration is reviewed annually and is determined by the scope of the individual’s role, their level of knowledge, skills and
experience, individual performance and market benchmarking.
Against the background of the global financial crisis and the resultant impact on the Australian economy, Executive KMP will
receive no increase to their fixed remuneration as part of the fiscal 2010 remuneration review process except where they have been
promoted into a new position or have had a significant increase in the scope of their responsibilities.
D.3 At-risk remuneration – Short Term Incentive Plan (STI)
Summary of STI for 2009
What is the STI? An annual cash incentive plan linked to specific annual targets (which are predominantly financial).
Who participates in
the STI?
All Executive KMP.
Why does the Board
consider the STI an
appropriate
incentive?
The STI is designed to put a large proportion of executive remuneration at-risk against meeting
targets linked to Orica’s annual business objectives.
Are STIs awarded
where performance
falls below a
minimum threshold
performance level?
No STI is awarded if minimum performance across Orica does not meet the required threshold. In
recent years, this has been linked to a minimum level of net profit after tax before individually
material items that must be achieved before any STI is awarded.
Who assesses the
performance of
Executive KMP?
The Managing Director, in consultation with the Orica Board, assesses the performance of Executive
KMP at the end of each financial year.
Who assesses the
performance of the
Managing Director?
Orica’s non-executive directors approve the targets for the Managing Director and Executive Director
Finance at the beginning of each year and assess performance against those targets at the end of
the financial year.
What are the
performance
conditions?
The performance conditions comprise financial targets relating to:
- Net profit after tax (before individually material items);
- Business EBIT; and
- Cash flow,
as well as other targets, including safety, health and environmental performance and talent
management.
These performance conditions are set at both an Orica level and an individual business level.
Achievement of performance conditions may therefore vary between businesses.
Why were these
conditions chosen?
The targets are set to reinforce and align with the Group’s annual budget and four year plan and are
intended to improve financial performance which results in greater shareholder wealth.
Are both target and
stretch performance
conditions imposed?
Yes. The STI and the performance conditions set under the STI have been designed to motivate
and reward high performance. If performance exceeds the already challenging targets, the STI will
deliver higher rewards to Executive KMP.
Can STI be greater
than 100%?
Yes. Executive KMP may achieve greater than 100% of maximum STI where there is an uncapped
STI for selected significant critical performance items such as EBIT performance.
How well were the
performance
conditions met in the
2009 financial year?
The performance conditions were generally satisfied, although some Board discretion was applied in
individual circumstances.
How would a change
of control impact on
STI entitlements?
Where there is an actual change of control, the Board would generally be expected to exercise its
discretion to pay a proportion of the STI available for that financial year.
Table 6D.4 At-risk remuneration – Long Term Incentives
D.4.1 Long Term Equity Incentive Plan - (LTEIP)
The terms of the LTEIP apply equally to Executive KMP and other eligible executives of the Company.
Summary of LTEIP for 2009
What is the LTEIP? The Orica Long Term Equity Incentive Plan is the long term incentive component of remuneration for
executives who are able to influence the generation of shareholder wealth by having a direct impact on
the Group’s performance.
The LTEIP is designed to encourage executives to focus on the key performance drivers which underpin
sustainable growth in shareholder value.
Why does the Board
consider the
structure of the
LTEIP appropriate?
The LTEIP facilitates immediate share ownership by the executives and links a significant proportion of
their potential remuneration to Orica’s ongoing share price and returns to shareholders over a three year
period.
The Board believes the LTEIP promotes behaviour that will achieve superior performance over the long
term.
What are the key
features of the
LTEIP?
Under the LTEIP, eligible executives are provided with an interest free, non-recourse loan from Orica for
the sole purpose of acquiring shares in the Company. Executives may not deal with the shares while
the loan remains outstanding and any dividends paid on the shares are applied (on an after-tax basis)
towards repaying the loan. In order to reward good performance, part of the loan may be forgiven at the
end of the performance period upon the achievement of specified performance conditions. The loan
must be repaid following testing of the performance condition and after the three year vesting period.
Under the November 2006 and subsequent offers, if the executive resigns from the Group or is
terminated for cause during the loan period, the shares are returned to the Group (in full repayment of
the loan) and the executive has no further interest in the shares.
When is the
performance
measurement
tested?
Performance is tested over the five days immediately following the announcement of annual results in
the third year after a grant is made.
How are shares
provided to executive
directors under the
LTEIP?
Whilst the Company has the flexibility under the LTEIP Rules to either acquire shares on-market, issue
new shares, or reissue unvested shares to participants in the Plan, shares allocated to the executive
directors under the LTEIP are acquired on-market. As the grants to the executive directors do not dilute
the holdings of other shareholders, they do not require shareholder approval.
Why continue with a
loan based plan?
The Board approved the design of the LTEIP (as a loan based plan) after consideration of its relative
merits against other performance share based equity plans in the market. The Board considers the
LTEIP to be a cost effective plan aligned to the creation of shareholder value.
Is the loan interest
free?
Whilst the loan is interest free, any loan forgiveness will incur an interest charge as part of the
calculation of the forgiveness amount. Orica’s effective interest rate in 2009 is 6.5% (as per note 34).
Why is a nonrecourse
loan
provided?
If the loan exceeds the value of the shares, the Board believes the loss of any remuneration value from
the LTEIP is a sufficient penalty to the executives. The performance condition necessary for partial
forgiveness of their loan would not be satisfied and executives would derive no value from the shares.
As the loans are nonrecourse
do
executives have to
repay their loans?
Yes, the executives must repay their loans either at the earlier of the end of the performance period or
following the cessation of their employment with the Group. Where an executive does not discharge
their loan within the prescribed period, the Company will sell or otherwise realise the value of their
shares and apply the proceeds in satisfaction of the loan.
What happens if the
value of the shares is
less than the
outstanding loan
balance?
If the value of the shares is less than the outstanding loan balance at the end of the performance period,
the executive returns the shares to Orica in full settlement of the loan balance and no benefit accrues to
the executive.
Is the benefit to
executives of
participation in the
LTEIP affected by
changes in the share
price?
Yes, executives who participate in the LTEIP will be affected in the same way as all other shareholders
by changes in Orica’s share price. The remuneration value executives receive through participation in
the LTEIP will be reduced if the share price falls during the loan period, and will increase if the share
price rises over this period.
Is the performance
hurdle re-tested?
No, the performance condition is only tested once at the end of the performance period.
Do participants get
access to
entitlements in the
case of redundancy?
The Board has absolute discretion over entitlements to participants.
What is TSR? Broadly, TSR is the percentage increase in the Company’s share price over the performance period,
plus the value of dividends paid being treated as if they were reinvested.
Why did the Board
select an absolute
TSR performance
hurdle rather than a
relative TSR hurdle?
Orica’s diversified business mix means there is no logical comparator group for the Company. The
Board sets a TSR growth target for executives against which they can regularly monitor performance by
comparing changes in the Company’s share price over the performance period. This was felt to be
superior to using a relative hurdle that would only be calculated and made available periodically.What is the
forgiveness amount?
Part of the loan (the forgiveness amount) may be forgiven upon the achievement of specified conditions
at the end of the performance period. The amount of the loan which may be forgiven is calculated by
reference to a percentage of the executives’ fixed annual remuneration. No forgiveness amount is
earned if the executive resigns or is terminated for cause before the end of the loan period.
What are the
performance
hurdles?
The performance hurdle is based on Orica’s Total Shareholder Return (TSR). For the performance
condition to be satisfied at target, compound growth in Orica’s TSR must be 20% per annum over the
three year period. In order to ensure that the performance condition is not “all or nothing”, there is a
range for loan forgiveness linked to Company TSR performance.
What is the TSR
performance
condition vesting
schedule?
This vesting condition has been widened for the 2009 financial year offer as a result of
recommendations stemming from the 2008 Remuneration Strategy review. TSR rates must hit a
minimum target for loan forgiveness to apply.
Previous LTEIP Offers 2009 Financial Year Offers
TSR growth Loan forgiveness (1)
%
TSR growth Loan forgiveness (1)
%
Less than 15% 0% Less than 10% 0 %
15% 90% 10% 50%
20% 100% 20% 100%
25% + 110% 30% + 150%
The percentage of loan forgiveness increases on a straight line basis between the minimum and
maximum TSR growth targets.
(1) Part of the loan (the forgiveness amount) may be forgiven upon the achievement of specified conditions at the end
of the performance period. The amount of the potential loan forgiveness is a percentage of the executives’ fixed
annual remuneration and will vary depending on the country of residence of the executive.
Does the Board
consider the
satisfaction in full of
the TSR hurdle a
sufficient “stretch” for
management?
Yes. After reviewing the Company’s rate of cumulative growth in TSR over the past few years, the
Board believes that 20% per annum is a clear, certain and absolute target for management. The Board
believes it is an aggressive target to maintain TSR growth at 20% per annum over the performance
period. When selecting this target, the Board also had reference to the general performance of the
market and noted that a TSR of 20% per annum generally reflects top quartile performance within the
ASX 100.
How would a change
of control impact on
LTEIP entitlements?
The LTEIP Rules provide that the loan becomes immediately repayable upon a change of control, with
the outstanding loan balance reduced by the forgiveness amount, except where the Board determines
otherwise. The Board’s current intention is that it would not exercise its discretion to vary this default
position in the event of an actual change of control.
Table 7
D.4.2 Illustrative example of how LTEIP works
The following example is based on an executive located in Australia with a fixed annual remuneration of $700,000 and assumes
that:
 Initial share price is $20 and 50,000 shares are allocated
 Retained dividends assume gross dividends of $140,000, less 48.5%* to cover participant’s individual tax obligations.
 Case A -Target TSR performance of 20% (inclusive of dividends) is reached at the end of 3 year vesting period i.e. share
price increases to $31.
 Case B -Target TSR performance of 20% (inclusive of dividends) is not reached at the end of 3 year vesting period i.e. share
price falls to $15.
Case A
$
Case B
$
Initial Loan 1,000,000 1,000,000
Less loan repayments via retained dividends (72,000) (72,000)
Loan balance at end of Year 3 (date of vesting) 928,000 928,000
Less Loan Forgiveness (net of interest charge) (1) (2) (3) (220,000) -
Outstanding Loan Balance 708,000 928,000
Value of Shares at Vesting 1,550,000 750,000
Less Outstanding Loan Balance (708,000) (928,000)
Value of LTEIP to Executive 842,000 0**
* This global rate is set to take into account tax rates applying across all jurisdictions covered by the Plan.
** Non recourse loan condition applies and the shares are returned to Orica in full satisfaction of the loan balance.
(1) Calculated by reference to a percentage of the executives’ fixed annual remuneration and will vary depending on the country of residence of the
executive.
(2) Interest charge based on Orica’s effective interest rate.
(3) In addition, the Company incurs fringe benefits tax on loan forgiveness.D.4.3 Legacy plans
In the period 2001 to 2004, Orica used a number of long term incentive plans for executives. Further details regarding the legacy
share plans that are still active at 30 September 2009 are contained in note 36 to the financial statements.
D.5 Retention arrangements for the Executive KMP – expired 31 March 2009
The Board entered into agreements with the Executive KMP during 2007 to participate in the Key Executive Retention Programme
(KERP). The KERP expired on 31 March 2009 and payments were made to eligible Executive KMP in April 2009. The Managing
Director did not participate in the KERP.
In return for participating in the KERP, participants agreed to changes to the terms of their service agreements. The relevant
changes comprised an extension of the notice the Executive KMP must give to Orica upon termination to six months, as well as an
undertaking not to compete with Orica for a period of six months following termination.
The KERP had the following key elements:
 participants were eligible to receive a lump sum retention payment equal to 50% of their Fixed Annual Remuneration plus
their maximum STI (determined by reference to their remuneration as at 1 January 2007). The amount of the payment was
not linked to, or dependent upon, Group performance; and
 participants needed to be employed with Orica on 31 March 2009 to receive the retention payment, although in exceptional
circumstances (e.g. if the employee had been made redundant prior to 31 March 2009) the Board could have elected to
make retention payments prior to that date.
Amounts paid to Executive KMP KERP participants in 2009 were N A Meehan $1,170,000, A J P Larke $1,155,000, P G Etienne
$1,235,000, J R Beevers $780,000, G J Witcombe $936,000, C B Elkington $600,000 and P W Houlihan $585,000.E. Details of remuneration
E.1 Executive KMP Remuneration
Particulars of Executive KMP qualifications, experience and special responsibilities are detailed on page 13 of the annual report.
Details of the nature and amount of each element of remuneration of Executive KMP for the current reporting period and also for the
previous reporting period are included in the tables below:
For the year ended
30 September 2009
Short term employee benefits
Post
Employment
Benefits
Fixed
Salary
$000
STI
Payment (1)
$000
Other
Benefits (2)
$000
Superannuation
Benefits
$000
Termination
Benefits (3)
$000
Other Long
Term
Benefits (4)
$000
Total
excluding
SBP *
Expense
$000
Share
Based
Payments
Expense (5)
$000
Total
$000
Current Executive Directors
G R Liebelt 2,248.6 1,537.3 19.6 13.9 - 87.1 3,906.5 1,425.2 5,331.7
N A Meehan 991.1 541.8 44.8 13.9 - 286.4 1,878.0 309.1 2,187.1
Total Current
Executive Directors 3,239.7 2,079.1 64.4 27.8 - 373.5 5,784.5 1,734.3 7,518.8
Current Executive KMP
J R Beevers 899.9 590.5 275.0 13.9 - 307.1 2,086.4 240.9 2,327.3
G J Witcombe 779.8 624.7 51.5 13.9 - 244.8 1,714.7 259.0 1,973.7
A J P Larke 779.8 486.4 48.1 13.9 - 274.9 1,603.1 297.4 1,900.5
C B Elkington 543.1 345.8 255.1 13.9 - 154.9 1,312.8 216.0 1,528.8
P W Houlihan 615.3 463.2 1.8 13.9 - 160.0 1,254.2 157.6 1,411.8
M Reich 675.0 250.0 133.3 - - 12.8 1,071.1 166.9 1,238.0
P McEwan (6) 188.6 85.1 27.5 4.8 - 3.2 309.2 33.0 342.2
Total Current
Executive KMP 4,481.5 2,845.7 792.3 74.3 - 1,157.7 9,351.5 1,370.8 10,722.3
Former Executive KMP
P G Etienne 876.8 150.0 23.8 11.5 1,421.8 320.9 2,804.8 327.7 3,132.5
Total Executive KMP 5,358.3 2,995.7 816.1 85.8 1,421.8 1,478.6 12,156.3 1,698.5 13,854.8
Total Executive Key
Management
Personnel 8,598.0 5,074.8 880.5 113.6 1,421.8 1,852.1 17,940.8 3,432.8 21,373.6
Table 8
* Share Based Payments (SBP).
(1) STI Payment includes payments relating to 2009 performance accrued but not paid.
(2) These benefits include relocation costs, car parking, medical costs, movement in annual leave accrual, spousal travel and costs associated with
services related to employment (inclusive of any applicable fringe benefits tax).
(3) Represents contractual payments upon termination and payment of statutory leave to the Executive KMP on cessation of his employment.
(4) This benefit includes the movement in long service leave accrual and the 2009 accrual for the KERP (refer section D.5).
(5) Includes the value calculated under AASB 2 Share Based Payments to Executive KMP under the November 2006, May 2007, December 2007,
December 2008 and June 2009 LTEIP which vest over three years. Value only accrues to the KMP when performance conditions have been met.
(6) Commenced 1 June 2009.
The amounts that appear under the heading Share Based Payments Expense are the amounts required under Accounting Standards to be
expensed by Orica in respect of the allocation of long term incentives to Executive KMP. Each year, the Board may decide to allocate long term
incentives to Executive KMP. Currently, these long term incentives are expensed over the three year vesting period. The Share Based Payments
expense in Table 8 represents the expense incurred during the year in respect of current and past incentive allocations to Executive KMP. These
amounts are therefore not amounts actually received by Executive KMP during the year. Whether Executive KMP receive any value from the
allocation of long term incentives in the future will depend on the performance of Orica shares. The mechanism which determines whether or not
long term incentives vest in the future is described in Section D.4.1.Executive KMP remuneration (continued)
For the year ended
30 September 2008
Short term employee benefits
Post
Employment
Benefits
Fixed
Salary
$000
STI
Payment (1)
$000
Other
Benefits (2)
$000
Superannuation
Benefits
$000
Termination
Benefits (3)
$000
Other Long
Term
Benefits (4)
$000
Total
excluding
SBP *
Expense
$000
Share
Based
Payments
Expense (5)
$000
Total
$000
Current Executive Directors
G R Liebelt (7) 2,099.2 2,095.0 (16.7) 13.3 - 372.1 4,562.9 858.5 5,421.4
N A Meehan 931.7 646.7 25.5 13.3 - 571.5 2,188.7 190.7 2,379.4
Total Current
Executive Directors 3,030.9 2,741.7 8.8 26.6 - 943.6 6,751.6 1,049.2 7,800.8
Current Executive KMP
A J P Larke 694.2 1,312.3 115.1 13.3 - 613.0 2,747.9 201.8 2,949.7
P G Etienne (7) 981.7 800.7 (6.8) 13.3 - 644.7 2,433.6 203.0 2,636.6
J R Beevers 624.2 655.2 109.2 13.3 - 426.4 1,828.3 135.3 1,963.6
G J Witcombe 736.7 370.3 25.2 13.3 - 635.5 1,781.0 165.0 1,946.0
C B Elkington (8) 511.5 375.7 223.5 13.3 - 334.1 1,458.1 149.0 1,607.1
P W Houlihan 563.0 453.4 9.4 13.3 - 300.9 1,340.0 85.4 1,425.4
M Reich (8) 489.2 306.7 201.4 - - 6.6 1,003.9 88.7 1,092.6
Total Current
Executive KMP 4,600.5 4,274.3 677.0 79.8 - 2,961.2 12,592.8 1,028.2 13,621.0
Former Executive KMP
B K Karcz (6) 467.8 262.1 6.2 11.0 729.5 538.1 2,014.7 123.5 2,138.2
A R Coleman 510.0 441.9 16.9 13.3 464.7 22.8 1,469.6 83.6 1,553.2
Total Former
Executive KMP 977.8 704.0 23.1 24.3 1,194.2 560.9 3,484.3 207.1 3,691.4
Total Executive KMP 5,578.3 4,978.3 700.1 104.1 1,194.2 3,522.1 16,077.1 1,235.3 17,312.4
Total Executive Key
Management
Personnel 8,609.2 7,720.0 708.9 130.7 1,194.2 4,465.7 22,828.7 2,284.5 25,113.2
Table 9
* Share Based Payments (SBP).
(1) STI Payment includes payments relating to 2008 performance accrued but not paid.
(2) These benefits include relocation costs, car parking, medical costs, movement in annual leave accrual, spousal travel and costs associated with
services related to employment (inclusive of any applicable fringe benefits tax).
(3) Represents contractual payments upon termination and payment of statutory leave to the Executive KMP on cessation of their employment.
(4) This benefit includes the movement in long service leave accrual, fringe benefits tax on LTEIP loan forgiveness and the 2008 accrual for the
KERP (refer section D.5).
(5) Includes the value calculated under AASB 2 Share Based Payments to Executive KMP under the November 2006, May 2007 and December
2007 LTEIP which vest over three years. Value only accrues to the Executive KMP when performance conditions have been met.
(6) B K Karcz remained eligible for payment under the KERP in return for an extended restraint provided at the time of cessation of employment.
(7) G R Liebelt’s and P G Etienne’s annual leave accruals reduced during the year.
(8) Includes remuneration for the period during the year before joining the Group Executive.
The amounts that appear under the heading Share Based Payments Expense are the amounts required under Accounting Standards to be
expensed by Orica in respect of the allocation of long term incentives to Executive KMP. Each year, the Board may decide to allocate long term
incentives to Executive KMP. Currently, these long term incentives are expensed over the three year vesting period. The Share Based Payments
expense in Table 8 represents the expense incurred during the year in respect of current and past incentive allocations to Executive KMP. These
amounts are therefore not amounts actually received by Executive KMP during the year. Whether Executive KMP receive any value from the
allocation of long term incentives in the future will depend on the performance of Orica shares. The mechanism which determines whether or not
long term incentives vest in the future is described in Section D.4.1.

E.2 Executive KMP STI’s
Specific information relating to the percentage of the STI which is payable and the percentage that was forfeited for the Executive
KMP of the Company and the Group is set out in the table below:
For the year ended
30 September 2009
Maximum
STI
$000 (3)
Actual STI
payment
$000 (1) (2)
Actual STI payment as
% of maximum STI (3)
% of maximum STI
payment forfeited
Current Executive KMP
G R Liebelt 2,760.0 1,537.3 55.7 44.3
N A Meehan 816.0 541.8 66.4 33.6
J R Beevers 760.0 590.5 77.7 22.3
G J Witcombe 644.0 624.7 97.0 3.0
A J P Larke 1,288.0 486.4 37.8 62.2
C B Elkington 464.8 345.8 74.4 25.6
P W Houlihan 515.2 463.2 89.9 10.1
M Reich 560.0 250.0 44.6 55.4
P McEwan 154.7 85.1 55.0 45.0
Former Executive KMP
P G Etienne 726.7 150.0 20.6 79.4
Table 10
(1) STI constitutes a cash incentive earned during 2009, which is expected to be paid in December 2009 to current Executive KMP and was paid
during the year to former Executive KMP.
(2) A minimum level of net profit after tax must be achieved before any STI is paid. Therefore the minimum potential value of the STI for the
financial year was nil.
(3) Executive KMP may achieve greater than 100% of maximum STI where there is an uncapped STI for selected significant critical performance
items such as EBIT performance.
E.3 Equity instruments granted to and exercised by Executive KMP
The Company has a plan (LTEIP) under which it allocates shares to executives; while these are shares for legal and taxation
purposes, Australian Accounting Standards require they be treated as options for accounting purposes.
The value of options granted during the year and the value of any options granted in a previous year that were exercised during the
year relating to Executive KMP is set out below. The value of the options granted, as valued by PricewaterhouseCoopers (PWC),
is the fair value calculated at grant date using an adjusted form of the Black Scholes option pricing model.
For the year ended
30 September 2009
Options
Granted
Number
Options
Granted (1) (2) (3)
($)
Options
Exercised (4)
Number
Options
Exercised (4)
($)
Current Executive Directors
G R Liebelt 409,872 1,586,205 - -
N A Meehan 85,406 330,521 - -
Total Current Executive Directors 495,278 1,916,726 - -
Current Executive KMP
J R Beevers 84,516 327,077 - -
G J Witcombe 67,613 261,662 - -
A J P Larke 67,613 261,662 - -
C B Elkington 47,418 183,508 - -
P W Houlihan 52,044 201,410 - -
M Reich 53,378 206,573 - -
P McEwan 40,580 330,321 - -
Total Current Executive KMP 413,162 1,772,213 - -
Former Executive KMP
P G Etienne 89,854 347,735 - -
Total Executive KMP 503,016 2,119,948 - -
Table 11
(1) Under the LTEIP, eligible Executive KMP are provided with a non-recourse loan from the Group for the sole purpose of acquiring shares in
Orica. Executive KMP must apply net cash dividends to the repayment of the loan balance and may not deal with the shares while the loan
remains outstanding. Australian Accounting Standards require that shares issued under employee incentive share plans in conjunction with nonrecourse
loans are to be accounted for as options. As a result, the amounts receivable from employees in relation to these loans have not been
recognised in the financial statements. Further details are set out in sections D.4.1, E.4, G and H of this report.
(2) The options have been valued by PWC at $8.14 per option for P McEwan and $3.87 per option for all other Executive KMP. The benefit of the
options granted under the November 2006 and subsequent LTEIP offers will lapse during future years if the Executive KMP cease employment
with the Group before the end of the three year performance period.
(3) The grants made to Executive KMP under the LTEIP during the year constituted 100% of the grants available for the year. The minimum
potential value of grants made during the year under LTEIP is nil.
(4) No options were exercised or forfeited during the year. Options related to the December 2005 and June 2006 LTEIP issues lapsed during the
year. The value of each option exercised is the market value of Orica shares on the date of exercise, less the exercise price paid.

E.4 Loans to Executive KMP under Group long term incentive plans
For the year ended
30 September 2009 Opening
balance
$
Advances
during the
year (1)
$
Other
repayments
during the
year (2)
$
Cash
repayments
during the
year (3)
$
Closing
balance
$
Interest
free value
$
Highest
indebtedness
$
Current Executive Directors
G R Liebelt 12,136,772 6,611,235 1,857,334 295,310 16,595,363 1,051,417 18,614,330
N A Meehan 3,246,460 1,377,599 955,191 72,912 3,595,956 237,540 4,586,070
Total Current Executive
Directors 15,383,232 7,988,834 2,812,525 368,222 20,191,319 1,288,957 23,200,400
Current Executive KMP
J R Beevers 2,220,509 1,363,243 596,982 55,767 2,931,003 188,047 3,557,819
G J Witcombe 2,888,407 1,090,598 905,621 63,440 3,009,944 208,289 3,944,688
A J P Larke 2,724,162 1,090,598 310,817 63,690 3,440,253 219,801 3,784,011
C B Elkington 2,058,248 764,852 276,687 47,424 2,498,989 160,803 2,799,574
P W Houlihan 1,129,033 839,470 106,593 29,522 1,832,388 113,265 1,956,953
M Reich 986,227 860,987 - 26,295 1,820,919 160,806 1,838,356
P McEwan - 832,296 - - 832,296 13,587 832,296
Total Current Executive
KMP 12,006,586 6,842,044 2,196,700 286,138 16,365,792 1,064,598 18,713,697
Former Executive KMP
P G Etienne 3,467,701 1,449,345 1,028,151 77,640 3,811,255 248,625 4,876,396
Total Executive KMP 30,857,519 16,280,223 6,037,376 732,000 40,368,366 2,602,180 46,790,493
Table 12
(1) Under the LTEIP, eligible executives are provided with an interest free, non-recourse loan from the Group for the sole purpose of acquiring shares
in Orica. Executives must apply net cash dividends to the repayment of the loan balance, and executives may not deal with the shares while the
loan remains outstanding. Australian Accounting Standards require that shares issued under employee incentive share plans in conjunction with
non-recourse loans are to be accounted for as options. As a result, the amounts receivable from employees in relation to these loans have not been
recognised in the financial statements.
(2) Shares handed back to Orica in settlement of the non-recourse loan in accordance with the terms of the LTEIP (refer section D.4.1).
(3) Constitutes repayments including after tax dividends paid on the shares applied against the loan. No loans were forgiven during the year.
F. Executive KMP service agreements
Remuneration and other terms of employment for the Executive KMP are formalised in service agreements. Specific information
relating to the terms of the service agreements of the current Executive KMP are set out in the table below:
F.1 Summary of specific terms
Name Term of
Agreement
Fixed
Annual
Remuneration (1)
Notice
Period by
Executive
Termination
Payment (2)
Current Executive Directors
G R Liebelt 30 Sep 2012 2,300,000 6 months 1.5 times fixed annual remuneration (3)
N A Meehan Open 1,020,000 6 months 1.0 times fixed annual remuneration
Current Executive KMP
J R Beevers Open 950,000 6 months 1.28 times fixed annual remuneration (4)
G J Witcombe Open 805,000 6 months 1.68 times fixed annual remuneration (4)
A J P Larke Open 805,000 6 months 1.0 times fixed annual remuneration
C B Elkington Open 581,000 6 months 1.0 times fixed annual remuneration
P W Houlihan Open 644,000 6 months 1.0 times fixed annual remuneration
M Reich Open 700,000 6 months 1.0 times fixed annual remuneration
P McEwan Open 580,000 6 months 1.0 times fixed annual remuneration
Table 13
(1) Fixed salary, inclusive of superannuation, is reviewed annually by Orica’s non-executive directors following the end of each financial year.
Accordingly, the amounts set out in the table above are the Executive KMPs’ fixed annual remuneration as at 30 September 2009. As part of the
normal annual review of remuneration, fixed annual remuneration for all Executive KMP will be reviewed and, where appropriate, adjusted during the
2010 financial year. Against the background of the global financial crisis and the resultant impact on the Australian economy, Executive KMP will
receive no increase to their fixed remuneration as part of the fiscal 2010 remuneration review process except where they have been promoted into a
new position or have had a significant increase in the scope of their responsibilities.
(2) Termination payment if Orica terminates the Executive KMP employment other than for cause.
(3) The termination benefits in respect of G R Liebelt were confirmed following external professional remuneration advice in 2007 at a level reflective
of the termination benefits of the Company’s peers and which were considered to be reasonable in the context of G R Liebelt and his previous
contractual entitlement and in the context of the Orica Group.
(4) The termination benefits in respect of these Executive KMP reflect grandfathering of entitlements, under previous service agreements and
employment terms, recognising their past service in the Group, as part of new remuneration arrangements.

Orica makes provision for employee entitlements in accordance with applicable Australian Accounting Standards. In addition,
Orica has policies in relation to relocation, consistent with its expectation that all Executive KMP are mobile, as required by the
needs of the business.
F.2 Non-compete
Each of the Executive KMP has agreed to restraints as part of their service agreements, which will apply upon cessation of their
employment to protect the legitimate business interests of Orica.
As a term of their participation in the KERP, the Executive Director Finance and other Executive KMP consented to their service
agreements being amended to incorporate a six month non-compete period. In addition, the service agreements for each of the
Executive KMP provide for a twelve month non-solicitation period following termination of their employment.
F.3 Sign-on payments
No payment was made to the executive directors or any of the named Executive KMP before they took office as part consideration
for them agreeing to hold office.

G. Equity instruments held by Executive KMP
The number of equity instruments held by Executive KMP is shown in the following table:
For the year
ended 30
September
2009
Grant date
Granted
during the
year
Exercised
during the
year (1) (5)
Other (2)
Outstanding
at year
end
Exercise
price
$
Value of
options at
grant date (3)
$
Value of options
included in
compensation
for the year (3)
$
Current Executive Directors
G R Liebelt 23 Dec 05 - - 97,194 - N/A 600,659 - (1)
20 Nov 06 - - - 181,110 N/A 1,043,194 347,731 (4)
18 Dec 07 - - - 193,639 N/A 2,042,891 680,964 (4)
19 Dec 08 409,872 - - 409,872 N/A 1,586,205 396,551 (4)
N A Meehan 23 Dec 05 - - 49,985 - N/A 308,907 - (1)
20 Nov 06 - - - 43,466 N/A 250,364 83,455 (4)
18 Dec 07 - - - 40,664 N/A 429,005 143,002 (4)
19 Dec 08 85,406 - - 85,406 N/A 330,521 82,630 (4)
Current Executive KMP
J R Beevers 23 Dec 05 - - 31,240 - N/A 193,063 - (1)
20 Nov 06 - - - 33,203 N/A 191,249 63,750 (4)
18 Dec 07 - - - 27,109 N/A 286,000 95,333 (4)
19 Dec 08 84,516 - - 84,516 N/A 327,077 81,769 (4)
G J Witcombe 23 Dec 05 - - 47,391 - N/A 292,876 - (1)
20 Nov 06 - - - 41,232 N/A 237,496 79,165 (4)
18 Dec 07 - - - 32,531 N/A 343,202 114,401 (4)
19 Dec 08 67,613 - - 67,613 N/A 261,662 65,416 (4)
A J P Larke 23 Dec 05 - - 16,265 - N/A 100,518 - (1)
20 Nov 06 - - - 57,955 N/A 333,821 111,274 (4)
18 Dec 07 - - - 34,338 N/A 362,266 120,755 (4)
19 Dec 08 67,613 - - 67,613 N/A 261,662 65,416 (4)
C B Elkington 23 Dec 05 - - 14,479 - N/A 89,480 - (1)
20 Nov 06 - - - 44,501 N/A 256,326 85,442 (4)
18 Dec 07 - - - 24,082 N/A 254,065 84,688 (4)
19 Dec 08 47,418 - - 47,418 N/A 183,508 45,877 (4)
P W Houlihan 23 Dec 05 - - 5,578 - N/A 36,201 - (1)
20 Nov 06 - - - 10,349 N/A 59,610 19,870 (4)
18 Dec 07 - - - 24,850 N/A 262,168 87,389 (4)
19 Dec 08 52,044 - - 52,044 N/A 201,410 50,353 (4)
M Reich 11 May 07 - - - 4,162 N/A 51,526 19,946 (4)
18 Dec 07 - - - 27,109 N/A 286,000 95,333 (4)
19 Dec 08 53,378 - - 53,378 N/A 206,573 51,643 (4)
P McEwan 26 Jun 09 40,580 - - 40,580 N/A 330,321 33,032 (4)
Former Executive KMP
P G Etienne 23 Dec 05 - - 53,803 - N/A 332,503 - (1)
20 Nov 06 - - - 46,786 N/A 269,487 89,829 (4)
18 Dec 07 - - - 42,923 N/A 452,838 150,946 (4)
19 Dec 08 89,854 - - 89,854 N/A 347,735 86,934 (4)
Table 14
(1) Related to the LTEIP grants in the 2006 financial year. The combination of shares, and the loan provided to fund those shares constitutes an
option under AASB 2. These options vest immediately. Under the terms of the LTEIP, the loan must be repaid before the Executive KMP can deal
with the shares. Accordingly, the exercise period of these options is the loan repayment period, which commences following the testing of the
performance condition typically in November after the annual results announcement and continues through to 31 January of the following year. The
options expire if the loan is not repaid within the repayment window.
(2) Options lapsed during the year.
(3) The option valuation prepared by PWC uses methodologies consistent with assumptions that apply under an adjusted form of the Black Scholes
option pricing model and reflects the value (as at grant date) of options held at 30 September 2009.
(4) Related to the LTEIP grants in the 2007, 2008 and 2009 financial years. The combination of shares, and the loan provided to fund those shares
constitutes an option under AASB 2. These options vest over three years. Under the terms of the LTEIP, the loan must be repaid before the
Executive KMP can deal with the shares. Accordingly, the exercise period of these options is the loan repayment period, which commences
following the testing of the performance condition typically in November after the annual results announcement and continues through to 31 January
of the following year. The options expire if the loan is not repaid within the repayment window.
(5) There were no amounts outstanding on shares issued as a result of the exercise of the options.

H. Equity instruments held by executives
The number of option (LTEIP) issues, values and related executive loan information in relation to Orica executives is shown in the
following table:
Grant date
Number
of options
issued
Number
of options
held at
30 Sep
Number of
participants
at 30 Sep
Total loan at
grant date
$
Total loan at
30 Sep
$
Maximum
loan waiver
opportunity
over full
loan period
$
Loan
repayments
through
dividends
during year
$
Value of
options
at grant
date (1)
$
As at 30 September 2009
26 Jun 09 40,580 40,580 1 832,296 832,296 186,040 - 330,321
19 Dec 08 2,937,558 2,843,331 315 47,382,811 45,278,225 12,943,288 592,852 11,368,349
18 Dec 07 1,464,237 1,206,357 266 46,504,167 37,482,872 11,816,286 632,802 15,447,700
11 May 07 64,405 33,464 17 2,064,824 1,034,415 821,822 37,323 797,334
20 Nov 06 1,633,960 1,274,699 210 38,839,229 28,522,495 10,511,599 670,371 9,411,610
6,140,740 5,398,431 135,623,327 113,150,303 36,279,035 1,933,348 37,355,314
Table 15
(1) The assumptions underlying the options valuations are:
Grant date
Price of Orica
Shares
at grant date
Expected
volatility in
share price
Dividends
expected
on shares
Risk free
interest
rate
Average value
per option
$
26 Jun 09 $21.05 37% Nil 4.66% 8.14
19 Dec 08 $13.85 37% Nil 3.17% 3.87
18 Dec 07 $31.76 28% Nil 6.79% 10.55
11 May 07 $33.50 28% Nil 6.29% 12.38
20 Nov 06 $22.39 24% Nil 5.93% 5.76
13 Jun 06 $22.08 22% 4.0% 5.24% 8.65
23 Dec 05 $20.67 22% 4.0% 5.24% 6.49
Table 16
The terms of the LTEIP Plan apply equally to Executive KMP and other eligible executives of the Company.
The option valuation prepared by PWC uses methodologies consistent with assumptions that apply under an adjusted form of the Black Scholes
option pricing model and reflects the value (as at grant date) of options held at 30 September 2009. The assumptions underlying the options
valuations are: (a) the exercise price of the option, (b) the life of the option, (c) the current price of the underlying securities, (d) the expected
volatility of the share price, (e) the dividends expected on the shares, and (f) the risk-free interest rate for the life of the option. The share based
payments expense recognised in the Income Statement for LTEIP in 2009 was $8.1 million (2008 $6.5 million).
Shares issued under employee incentive share plans in conjunction with non-recourse loans are accounted for as options. As a result, they are
measured at fair value at the date of grant using an option valuation model which generates possible future share prices based on similar
assumptions that underpin the Black Scholes option pricing model and reflects the value (as at grant date) of options granted. The amounts
receivable from employees in relation to these loans and share capital issued under these schemes are not recognised and any shares purchased
on-market are recognised as a share buy-back and deducted from shareholders equity. LTEIP is administered by Link Market Services Limited.
Rounding
The amounts shown in this report and in the financial statements have been rounded off, except where otherwise stated, to the
nearest tenth of a million dollars, the Company being in a class specified in the ASIC Class Order 98/100 dated 10 July 1998.
Signed on behalf of the Board in accordance with a resolution of the directors of Orica Limited.
D P Mercer
Chairman
Dated at Melbourne this 9th day of November 2009.