BHP BILLITON ANNUAL REPORT CORPORATE GOVERNANCE REPORT – CONTENT CHECKLIST 2012 (as at 18 September 2012) Australia 1.

The checklist below details the BHP Billiton Group’s compliance with the corporate governance reporting requirements introduced by the second edition of the Corporate Governance Principles and Recommendations (the “Principles”) established by the ASX Corporate Governance Council (the “Council”) in August 2007, and the location of the relevant information in the 2012 Annual Report. Those requirements are summarised below. ASX Listing Rule 4.10.3 requires BHP Billiton to include in its annual report a statement disclosing the extent to which BHP Billiton has complied with the Recommendations in the Principles. Where a Recommendation has not been followed, BHP Billiton is required to identify the Recommendation, specify the extent of non-compliance and provide reasons for non-compliance. Where a Recommendation has only been followed for part of the period, BHP Billiton must state the period during which the Recommendation has been followed. On 30 June 2010, the ASX Corporate Governance Council released amendments to the Principles (the “amended Principles”) which include a requirement for each entity listed on the ASX to adopt and disclose a diversity policy and set measurable objectives relating to gender diversity for disclosure in their Annual Report (on an “if not, why not?” basis). In addition, there were amendments to the Principles in respect of trading policies, corporate briefings and remuneration committees. For BHP Billiton, the amended Principles apply from 1 July 2011, with the new reporting obligations applying for the first time in relation to the 2012 Annual Report. On 10 February 2012, ASX released a revised version of ASX Listing Rules Guidance Note 9 ‘Disclosure of Corporate Governance Practices’. This replaces the previous Guidance Notes 9 and 9A. The revised Guidance Note has greater guidance on ASX’s expectations regarding the corporate governance disclosures to be made by listed entities under Listing Rule 4.10.3 and its monitoring and enforcement processes under that rule. In particular, the Guidance Note recommends that all corporate governance related disclosures required by ASX Listing Rule 4.10.3 be included in a clearly labelled corporate governance statement (“CGS”), rather than using cross-references to where the information is located elsewhere in the annual report. The only exceptions to this are: • disclosures under Recommendation 2.6 regarding the skills, experience and expertise of directors, the period they have held office as director and whether they are considered to be independent. This information most logically belongs in the section of the annual report giving information about the board of directors; • disclosures under Recommendations 7.2 and 7.3 regarding risk management and reporting. These disclosures could either be included in the directors’ report or in the CGS; and

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disclosures under Recommendations 3.3 and 3.4 regarding gender diversity. If the annual report has a section dealing with its diversity or affirmative action policies, these disclosures could either be included in that section of the annual report or in the CGS. Where the information is included outside the CGS, the CGS should note that the information has been included elsewhere in the annual report with a cross-reference to the relevant page(s).

The Guidance Note also recommends that where an entity discloses additional corporate governance information on its website, the CGS should include a list of all governance-related documents that can be viewed on the company’s website. Requirement/Recommendation Corporations Act 2001 (Cth) Company Secretaries (s300(10) (d)) The directors’ report shall describe the qualifications and experience of each person who is a company secretary of the company as at the end of the financial year. Non-audit Services (s300 (11B) and (11C)) In the directors’ report under a heading “non-audit services” include:  Annual Report – Sections 4.1 (a cross reference to which is included in sections 5.21), 7.6 Compliance How we comply

details of the amounts paid or payable for non-audit services to the auditor or another person or firm acting on the auditor’s behalf during the year including the name of the author and the dollar amount paid or payable by the parent or subsidiary for each of the non-audit services; a statement as to whether the directors are satisfied that the provision of non-audit services are compatible with the general standard of independence of the auditor imposed by the Act; and

Annual Report – Sections 5.13.1 and 7.13 and Note 34 (a cross reference to which is included in section 7.13 and 5.13.1)

• a statement of reasons for being satisfied. The directors’ two statements must be made in accordance with advice provided by the company’s audit committee pursuant to s300(11D) and (11E) - see further the directors’ report checklist.
Directorships of other entities (s300(11)(e)) Disclose details of directorships (including the period for which each directorship has been held) of other listed companies held by each director in the three years prior to the end of the current financial year.  Annual Report – Section 4.1 (a cross reference to which is included in section 5.4, 5.5 and 5.13.1)

Requirement/Recommendation Corporate Governance Principles and Recommendations Number 1.1 Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.

Compliance 

How we comply Annual Report – Section 5.3 and 5.15 The Board Governance Document which can be found at http://www.bhpbilliton.com/home/aboutus/ourcompany/Page s/governance.aspx Annual Report – Section 5.15

1.2 1.3

Companies should disclose the process for evaluating the performance of senior executives. Provide the following information in the corporate governance statement in the annual report:

• • •

an explanation of any departure from recommendations 1.1, 1.2 or 1.3 the process for evaluating the performance of senior executives1 whether a performance evaluation for senior executives has taken place in the reporting period and whether it was in accordance with the process disclosed.

N/A  

Annual Report – Section 5.15 Annual Report – Section 5.15

The following material should be made publicly available, ideally on the company’s website in a clearly marked corporate governance section:

a statement of matters reserved for the board, or the board charter or the statement of areas of delegated authority to senior executives.

Annual Report – Section 5.3 and 5.15 The Board Governance Document which can be found at http://www.bhpbilliton.com/home/aboutus/ourcompany/Page s/governance.aspx Annual Report – Sections 5.4 and 5.9 Annual Report – Sections 5.4 and 5.5 Annual Report – Sections 5.4 and 5.5 Annual Report – Section 5.13.3 The Terms of Reference and members of the Nomination Committee can be found at http://www.bhpbilliton.com/home/aboutus/ourcompany/Page

2.1 2.2 2.3 2.4

A majority of the board should be independent directors. The chair should be an independent director. The roles of chair and chief executive officer should not be exercised by the same individual. The board should establish a nomination committee.

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The guide to reporting in Recommendation 1.3 implies, but does not specifically state, that an entity ought to disclose its process for evaluating the performance of senior executives under Recommendation 1.2. However, ASX Guidance Note 9 indicates that it is preferable that this information is disclosed.

Requirement/Recommendation 2.5 2.6 Companies should disclose the process for evaluating the performance of the board. its committees and individual directors.aspx Annual Report – Section 5. Provide the following information in corporate governance statement in the annual report: Compliance  How we comply s/governance.10 .

However.6 implies.1 Annual Report – Sections 5.3 Annual Report – Section 5.9       N/A Annual Report – Section 5.1.6.4 and 5.1 and 5. but does not specifically state. 2. . that an entity ought to disclose its process for evaluating the performance of the process for evaluating the performance of the board. its committees and individual directors2 whether a performance evaluation for the board and its members has taken place in the reporting period and whether it was in accordance with the process disclosed an explanation of any departures from recommendations 2. 2. or 2.1) and an explanation of why the board considers a director to be independent.1 of the ASX Guidelines – see below) a statement as to the existence of any relationships affecting independent status (Box 2.5. 2. (Note: The board should state its reasons if it considers a director to be independent notwithstanding the existence of relationships listed in Box 2.5.7 Annual Report – Sections 5.2. 2.3 Annual Report – Section 5.11 and 5. notwithstanding the existence of those relationships a statement as to whether there is a procedure agreed by the board for directors to take independent professional advice at the expense of the company a statement as to the mix of skills and diversity for which the board of directors is looking to achieve in membership of the board the period of office held by each director in office at the date of the annual report the names of members of the nomination committee and their attendance at meetings of the committee the process for evaluating the performance of the board.10 Annual Report – Section 5.Requirement/Recommendation Compliance   How we comply Annual Report – Sections 4.10 2 The guide to reporting in Recommendation 2. • • • • • • • •  Annual Report – Section 5. its committees and individual directors under Recommendation 2.7 Annual Report – Section 4.4.3. ASX Guidance Note 9 indicates that it is preferable that this information is disclosed.13.9 • • the skills. experience and expertise relevant to the position of director held by each director in office at the date of the annual report the names of the directors considered by the board to constitute independent directors and the company’s materiality thresholds.

responsibilities and membership requirements for that committee  • the board’s policy for the nomination and appointment of directors  3.12 and 5.aspx Annual Report – Sections 5.bhpbilliton. rights.com/home/aboutus/ourcompany/ Pages/governance. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving them. 5.2 the practices necessary to maintain confidence in the company’s integrity the practices necessary to take into account their legal obligations and the expectations of their stakeholders the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.bhpbilliton.3 The Board Governance Document and the Terms of Reference of the Nomination Committee can be found at http://www. ideally on the company’s website in a clearly marked corporate governance section: Compliance How we comply • a description of the procedure for the selection and appointment of new directors to the board and re-election of incumbent directors  Annual Report – Sections 5.7.3 The Terms of Reference of the Nomination Committee can be found at http://www.com/home/aboutus/ourcompany/ Pages/governance.bhpbilliton. 5. Annual Report – Section 5.3 The Terms of Reference of the Nomination Committee can be found at http://www.7.16 The BHP Billiton Code of Business Conduct and other core policies can be found at http://www.com/home/aboutus/ourcompany/ Pages/governance.17 .aspx Annual Report – Section 5.1 Companies should establish a code of conduct and disclose the code or a summary of the code as to:  • • • 3.13.Requirement/Recommendation The following material should be made publicly available.13.aspx Annual Report – Sections 5.bhpbilliton.13.12 and 5.1 and 5.  Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy.aspx • the charter of the nomination committee or a summary of the role.com/home/aboutus/ourcompany/Pag es/governance.

3.com/home/aboutus/ourcompany/Page s/governance.4.17) 3.7. women in senior executive positions and women on the board.17) 3 The guide to reporting in Recommendation 3.5 does not mention that an entity ought to disclose in its annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them under Recommendation 3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving them. However. .Section 5.9 (a cross reference to which is included in section 5.2 or 3. Provide the following information in corporate governance statement in the annual report: Compliance  How we comply Annual Report – Sections 5. nor the proportion of women employees in the whole organisation.4  Annual Report – Section 5. and 2.9 (a cross reference to which is included in section 5.3. Companies should disclose in each annual report the proportion of women employees in the whole organisation. The following material should be made publicly available.17 3.17   Section 5.bhpbilliton.Requirement/Recommendation 3.1. women in senior executive positions and women on the board under Recommendation 3. 3.7 and 2. ideally on the company’s website in a clearly marked corporate governance section:  any applicable code of conduct or a summary N/A  The BHP Billiton Code of Business Conduct and other core policies can be found at http://www.aspx Annual Report – Section 5. women in senior positions and women on the board3  Annual Report . ASX Guidance Note 9 indicates that it is preferable that this information is disclosed.17  the diversity policy or a summary of its main provisions   the measurable objectives for achieving gender diversity set by the board3 the proportion of women employees in the whole organisation.5 • • an explanation of any departure from recommendations 3.

  N/A Annual Report – Sections 4.bhpbilliton. Guidance Note 9 clarifies that it is therefore not possible to ‘if not.2.1 The Terms of Reference of the Risk and Audit Committee can be found at http://www.1.bhpbilliton.7 provides that entities in the S&P/ASX 300 Index must comply with the Recommendations & Principles regarding the composition.aspx 4.3 consists of only non-executive directors consists of a majority of independent directors is chaired by an independent chair.1 Annual Report – Section 5. 5.13. 4.com/home/aboutus/ourcompany/Page s/governance.aspx 4.1.13.13.11 and 5.3.9 and 5. ideally on the company’s website in a clearly marked corporate governance section: 4 Listing Rule 12.2 Structure the audit committee so that it:  • • • • 4.11 The following material should be made publicly available. operation and responsibility of the audit committee. as that would amount to a breach of the Listing Rules.aspx Annual Report – Sections 5.4 Provide the following information in the corporate governance statement in the annual report: • • • the names and qualifications of those appointed to the audit committee and their attendance at meetings of the committee the number of meetings of the audit committee an explanation of any departures from recommendations 4.13. not follow the recommendations and give reasons for not following).com/home/aboutus/ourcompany/Page s/governance. who is not chair of the board has at least three members.  The audit committee should have a formal charter. why not’ report against Recommendations 4.1 The board should establish an audit committee.1 The Terms of Reference and members of the Risk and Audit Committee can be found at http://www.1 to 4. or 4.Requirement/Recommendation 4.4.bhpbilliton. 4.com/home/aboutus/ourcompany/Page s/governance.1 The Terms of Reference of the Risk and Audit Committee can be found at http://www.4 (that is.4 Compliance  How we comply Annual Report – Section 5. . Annual Report – Section 5.

Requirement/Recommendation Compliance  How we comply Annual Report – Section 5.aspx Annual Report – Sections 5.2. and for the rotation of external audit engagement partners. The following material should be made publicly available.1 Companies should establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.1 or 5.com/home/aboutus/ourcompany/Page s/governance.bhpbilliton.13.bhpbilliton.com/home/aboutus/ourcompany/Page s/governance.2 and 5.1 Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy  6.12 The Policy on Provision of Audit and Other Services by the External Auditor can be found at http://www.aspx Annual Report – Section 5.2 • N/A • the policies or a summary of the policies designed to guide compliance with Listing Rule disclosure requirements.  5.aspx 6.18 The Market Disclosure and Communications Policy can be found at http://www.aspx Annual Report – Section 5.com/home/aboutus/ourcompany/Page s/governance.com/home/aboutus/ourcompany/Page s/governance.com/home/aboutus/ourcompany/Page s/governance.1 and 7.bhpbilliton. Provide the following information in the corporate governance statement in the annual report: an explanation of any departures from recommendations 5.13.1 The Terms of Reference of the Risk and Audit Committee and the Policy on Provision of Audit and Other Services by the External Auditor can be found at http://www. ideally on the company’s website in a clearly marked corporate governance section:  5.bhpbilliton.bhpbilliton.aspx • the audit committee charter • information on procedures for the selection and appointment of the external auditor.  The Market Disclosure and Communications Policy can be found at http://www.2 Provide the following information in the corporate governance statement in the annual .18 The Market Disclosure and Communications Policy can be found at http://www.

 7.  Annual Report – Sections 5. The following material should be made publicly available.2 The board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. Provide the following information in the corporate governance statement in the annual report:  7.com/home/aboutus/ourcompany/Page s/governance. 5.aspx Annual Report – Sections 1.3 or 7.13.bhpbilliton.2.com/home/aboutus/ourcompany/Page s/governance.bhpbilliton. The board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks.13.14 7.1.1 and 5.2.18 The Market Disclosure and Communications Policy can be found at http://www.13.4 • • an explanation of any departures from recommendations 7.1 .13.3  Annual Report – Sections 5. 7.1 or 6.2 and 5.14 The Risk Management Policy can be found at http://www.4 whether the board has received the report from management under recommendation 7. 7.Requirement/Recommendation report: an explanation of any departures from recommendations 6. ideally on the company’s website in a clearly marked corporate governance section: Compliance N/A How we comply • • a description of how the company will communicate with its shareholders. The board should disclose whether it has received assurance from the CEO (or equivalent) and the CFO (or equivalent) that the declaration provided in accordance with s 295A of the Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.5.2 N/A  Annual Report – Sections 5.aspx Annual Report – Sections 5.1 and 5.1 7.1 Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.

13.Requirement/Recommendation Compliance How we comply Annual Report – Sections 5.com/home/aboutus/ourcompany/Page s/governance. Listing Rule 12. which applies to entities in the S&P/ASX 300 Index.2 The Terms of Reference for the Remuneration Committee can be found at http://www.9 The Terms of Reference and members of the Remuneration Committee can be found at http://www.aspx Annual Report – Section 5.13.10. .3 Listing Rule 12.14 The Risk Management Policy can be found at http://www.13.aspx Annual Report – Section 6 (to which there is a cross reference in section 5.3.8 provides that an entity in the S&P/ASX 300 Index must have a remuneration committee.bhpbilliton.1 The board should establish a remuneration committee.9 and 6.1 • whether the board has received the assurance from the CEO (or equivalent) and the CFO (or equivalent) under recommendation 7.  Annual Report – Sections 1.5  8.com/home/aboutus/ourcompany/Page s/governance.11 Annual Report – Sections 5.  The following material should be made publicly available.com/home/aboutus/ourcompany/Page s/governance.4 • • 5 6 the names of the members of the remuneration committee and their attendance at meetings of the committee the existence and terms of any schemes for retirement benefits. ideally on the company’s website in a clearly marked corporate governance section: • a summary of the company’s policies on risk oversight and management of material business risks.bhpbilliton.2 The remuneration committee should be structured so that it: • • • 8.2 and 5.5 and 5.2 and 5. It requires that the remuneration committee must be comprised solely of non-executive directors. Provide the following information in the corporate governance statement in the annual report or by clear cross reference.19) 8.  8.aspx Annual Report – Sections 5.2. is more prescriptive than Recommendation 8.13.bhpbilliton. other than  Annual Report – Sections 5.8.3 consists of a majority of independent directors is chaired by an independent chair has at least three members 6  Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives.

responsibilities and membership requirements for that committee. for non-executive directors Compliance How we comply  N/A • an explanation of any departures from recommendations 8.  . rights.bhpbilliton.2 The Terms of Reference for the Remuneration Committee can be found at http://www.13.20) The Securities Dealing document can be found at http://www. The following material should be made publicly available.aspx • a summary of the company’s policy on prohibiting entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity based remuneration schemes.com/home/aboutus/ourcompany/Page s/governance.  Annual Report – Section 5.3.Section 6. ideally on the company’s website in a clearly marked corporate governance section: • the charter of the remuneration committee or a summary of the role.2 or 8.3.bhpbilliton.aspx Annual Report .Requirement/Recommendation statutory superannuation.com/home/aboutus/ourcompany/Page s/governance.4 (to which there is a cross reference in Section 5.1. 8.

3.3. In the event of a separate report. DTR 7. Chapter 711 of the DTRs also sets out certain requirements with respect to audit committees and their functions. as well as the provisions of the Code (the “Code Provisions”).9. 7 8 . the corporate governance statement must be cross referenced in the directors’ report which must specify where the statement is available on BHP Billiton’s website9. The FSA has taken the view that compliance with the relevant provisions of the Code (Code Provisions A.2. However. 3. the UK Disclosure and Transparency Rules (the “DTRs”.9.6(5) and (6) requires BHP Billiton to include in its annual report: • • a statement of how BHP Billiton has applied the Main Principles set out in the Code (the statement should be set out in a manner that would enable shareholders to evaluate how the principles have been applied).2. the UK Companies Act 2006 (“CA 06”). in circumstances where there is a departure from the Code.1. Where BHP Billiton has not complied with a Code Provision. including: • • • • • the UKLA Listing Rules (the “Listing Rules”. Part 1 of the checklist sets out a brief description of the Main and Supporting Principles and the Code Provisions (which have been summarised in parts). The Code sets out the Main and Supporting Principles.3) will result in compliance with the audit committee requirements set out in Chapter 7 of the DTRs. Any separate corporate governance statement must also be approved by the board of directors and signed on behalf of the board by a director or the secretary of the company and filed with the UK Registrar of Companies 10.8. This replaces the UK Combined Code on Corporate Governance (the “Combined Code”) in respect of financial years beginning on or after 29 June 2010.2 DTRs. the statement must specify the Code Provisions with which BHP Billiton has not complied. It also contains references to other UK legislation and guidance where applicable. A corporate governance statement is required by Chapter 77 of the DTRs. 9 DTR 7. This statement can either be published in the directors’ report section of the annual report or in a separate report published together with the annual report8. Part 1 of the checklist below details compliance by the BHP Billiton Group with the UK Corporate Governance Code (the “Code”) published on 28 May 2010.1. and “Listing Rule” is a reference to a corresponding rule set out therein). 10 Sections 419A and 447 CA 06 (as amended by regulation 4 of 2009 Regulations). the UK Companies Act 2006 (Accounts. for how long the non-compliance continued and the reasons for the non-compliance. C. and the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 (the “2008 Regulations”). and a statement as to whether or not it has complied with the Code Provisions during the financial year. the following requirements must be complied with: 4. Reports and Audit) Regulations 2009 (the “2009 Regulations”). 2.United Kingdom 1. Part 2 of the checklist below details compliance by the BHP Billiton Group with the UK’s requirements in relation to the corporate governance statement. Listing Rule 9. C.2 and C. 11 Chapter 7. Chapter 7.3. and “DTR” is a reference to a corresponding rule set out therein).2.1 DTRs.

A statutory auditor as defined in section 1210 CA 06.4 16 DTR 7. the relevant body must: i. and in particular the provision of additional services to BHP Billiton 14. internal audit and risk management systems. monitor the effectiveness of BHP Billiton’s internal control. the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) Regulations 2008 (the “Regulations”) have been amended by the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) (Amendment) Regulations 2011. A new Schedule 2A has been inserted in the Regulations listing the types of services to be disclosed and the list has been updated to correlate with revised Ethical Standards published by the Auditing Practices Board. review and monitor the independence of the statutory auditor13. 14 DTR 7.16 DTR 7. At least one member of that body must be independent and at least one member must have competence in accounting and/or auditing. iii. With effect from 1 October 2011.12 BHP Billiton must ensure that.3. 12 13 .1.1. ii.2 provides that the requirements for independence and competence in accounting and/or auditing may be satisfied by the same member or by different members of the relevant body. and BHP Billiton must make a statement available to the public disclosing which body carries out the functions required by (b) above and how it is composed.1.(a) (b) (c) (d) BHP Billiton must have a body which is responsible for performing the functions set out in (b) below. monitor the financial reporting process. monitor the statutory audit of the annual and consolidated accounts. BHP Billiton must base any proposal to appoint a statutory auditor on a recommendation made by the relevant body15. and iv. as a minimum.6 provides that such a statement can be made in the corporate governance statement discussed above. 15 DTR 7.1.

thoroughly and on a continuing basis. 4.Section 5. Compliance with Code Provisions Reference  N/A  N/A  Annual Report -Section 5. Constraints on time and knowledge combine with the need to maintain mutual respect and openness between a cast of strong. boards must think deeply. and the frankness and openness of mind with which issues are discussed and tackled by all directors. Above all.The Code Requirement PREFACE 1.1  Annual Report . all directors of FTSE 350 companies should be subject to annual re-election. As with all other provisions of the Code. To follow the spirit of the Code to good effect. or that a transitional period is needed before they introduce annual re-election. by providing fuller context. able and busy directors dealing with each other across the different demands of executive and non-executive roles. companies are free to explain rather than comply if they believe that their existing arrangements ensure proper accountability and underpin board effectiveness. in the interests of greater accountability. The challenge should not be underrated. it may make investors more willing to accept explanations when a company chooses to explain rather than to comply with one or more provisions.PART 1 . To achieve good governance requires continuing and high quality effort. 2. about their overall tasks and the implications of these for the roles of their individual members. To run a corporate board successfully is extremely demanding.12 . The Code recommends that. the personal reporting on governance by chairmen as the leaders of boards might be a turning point in attacking the fungus of ‘‘boiler-plate’’ which is so often the preferred and easy option in sensitive areas but which is dead communication. Absolutely key in this endeavour are the leadership of the chairman of a board. Not only will this give investors a clearer picture of the steps taken by boards to operate effectively but also. the support given to and by the CEO. Chairmen are encouraged to report personally in their annual statements how the principles relating to the role and effectiveness of the board (in Sections A and B of the Code) have been applied. 3.

Supporting Principles • The board’s role is to provide entrepreneurial leadership of the company within a framework of prudent and effective controls which enables risk to be assessed and managed. 17 .Section 5. executive directors.3 Annual Report .3 and 5.Section 5. All directors must act in what they consider to be the best interests of the company.Requirement A.1 DIRECTORS THE BOARD17 Compliance with Code Provisions Reference Main Principle Every company should be headed by an effective board. A.aspx Annual Report .  •  The guidance entitled ‘Guidance of Board Effectiveness’ published by the Financial Reporting Council in March 2011 replaced the “Suggestions to Good Practice from the Higgs Report (June 2006)” and provides guidance in relation to the roles of: non-executive directors.3  Annual Report .3 The Board Governance Document which can be found at http://www. •  Annual Report .com/home/aboutus/ourcompany/Page s/governance. however it has no formal status and companies are not required to follow it when applying the Code.Section 5. ensure that the necessary financial and human resources are in place for the company to meet its objectives and review management performance. 18 These duties are set out in sections 170 to 177 of the CA 06. the senior independent director and the company secretary. which is collectively responsible for the long-term success of the company. consistent with their statutory duties18.bhpbilliton.Sections 5.7 The board should set the company’s strategic aims. the chairman. The board should set the company’s values and standards and ensure that its obligations to its shareholders and others are understood and met.

1 and A.bhpbilliton.3 and 5. set out in writing and agreed by the board.11 and 5.11 A.3 The Board Governance Document which can be found at http://www.1 The roles of the chairman and the chief executive should not to be exercised by the same individual.Section 5. The division of responsibilities between the chairman and chief executive should be clearly established.5 The Board Governance Document which can be found at http://www. Code Provision A.3 The company should arrange appropriate insurance cover in respect of legal action against its directors.Sections 5.5.1. 5.Requirement Code Provisions A.Sections 5. The annual report should include a statement of how the board operates. and the number of meetings of the board and its committees and individual attendance by directors.com/home/aboutus/ourcompany/Page s/governance.2 The annual report to identify: • • the chairman. A.6.7. . the senior independent director. A.2 DIVISION OF RESPONSIBILITIES Main Principle There should be a clear division of responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business. No one individual should have unfettered powers of decision.4.7  Annual Report .1.1.  Annual Report – Section 7. chairmen and members of the board committees19.1.2. Compliance with Code Provisions Reference  Annual Report .1. 5. Provision A.aspx 19 Provisions A.1.5 (see Schedule B of the Code). 5.bhpbilliton. There should be a formal schedule of matters specifically reserved for its decision.13 Annual Report . including a high level statement of which types of decisions are to be taken by the board and which are to be delegated to management.1.5  Annual Report . the chief executive.com/home/aboutus/ourcompany/Page s/governance.1 The board should meet sufficiently regularly to discharge its duties effectively.2 also overlaps with DTR 7. deputy chairman (where there is one).Section 5.2 overlap with DTR 7.Section 5.2.aspx   Annual Report .

5 N/A 20 Compliance or otherwise with this provision need only be reported for the year in which the appointment is made.bhpbilliton. .3 THE CHAIRMAN Compliance with Code Provisions Reference Main Principle The chairman is responsible for leadership of the board and ensuring its effectiveness on all aspects of its role. The chairman should also promote a culture of openness and debate by facilitating the effective contribution of non-executive directors in particular and ensuring constructive relations between executive and non-executive directors. the board should consult major shareholders in advance and should set out its reasons to shareholders at the time of the appointment and in the next annual report.Section 5.com/home/aboutus/ourcompany/Page s/governance.  Code Provision A.5  Annual Report . If exceptionally.Section 5.5 The chairman is responsible for ensuring that the directors receive accurate. •  Annual Report . timely and clear information.1 The chairman should on appointment meet the independence criteria set out in B. The chairman should ensure effective communication with shareholders.Section 5. Supporting Principles • The chairman is responsible for setting the board’s agenda and ensuring that adequate time is available for discussion of all agenda items.3. in particular strategic issues. a board decides that a chief executive should become chairman.Section 5.Requirement A.5 The Board Governance Document which can be found at http://www.1.20  Annual Report .1 below. A chief executive should not go on to become chairman of the same company.aspx Annual Report .

Sections 5. non-executive directors should constructively challenge and help develop proposals on strategy.7 Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance.13. The chairman should hold meetings with the non-executive directors without the executives present.2  N/A Annual Report . removing executive directors.7 and 5.3 Code Provisions A.Section 5.    Annual Report .10 N/A A.15 Annual Report .4 and 5.6 A. chief executive or other executive directors has failed to resolve or for which such contact is inappropriate.4. Where directors have concerns which cannot be resolved about the running of the company or a proposed action. The board should appoint one of the independent non-executive directors to be the senior independent director to provide a sounding board for the chairman and to serve as an intermediary for the other directors when necessary. for circulation to the board. they should ensure that their concerns are recorded in the board minutes.4.Sections 5.1 Annual Report .Sections 5. a non-executive director should provide a written statement to the chairman.2 and 5. Supporting Principles • • •  Annual Report – Section 5.13.4.13.1  Annual Report . Led by the senior independent director.Requirement A. The senior independent director should be available to shareholders if they have concerns which contact through the normal channels of chairman.3 .Sections 5. where necessary.4 NON-EXECUTIVE DIRECTORS Compliance with Code Provisions Reference Main Principle As part of their role as members of a unitary board. the non-executive directors should meet without the chairman present at least annually to appraise the chairman’s performance and on such other occasions as are deemed appropriate.2 and 5. They should satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible. if they have any such concerns. and in succession planning.13. They are responsible for determining appropriate levels of remuneration of executive directors and have a prime role in appointing and. On resignation.

1 THE COMPOSITION OF THE BOARD Main Principle The board and its committees should have the appropriate balance of skills.com/home/aboutus/ourcompany/Page s/governance. No one other than the committee chairman and members is entitled to be present at a meeting of the nomination.8 and 5.  • The board should include an appropriate combination of executive and non-executive directors (and.Section 5.4 The Board Governance Document and the Terms of Reference of the Nomination Committee which can be found at http://www.com/home/aboutus/ourcompany/Page s/governance.bhpbilliton.bhpbilliton.Section 5.Section 5. audit or remuneration committee.aspx Annual Report .3 and 5.  • The value of ensuring that committee membership is refreshed and that undue reliance is not placed on particular individuals should be taken into account in deciding chairmanship and membership of committees. Compliance with Code Provisions Reference  Annual Report .bhpbilliton.aspx Annual Report .4 The Board Governance Document and the Terms of Reference of the Nomination Committee which can be found at http://www.Requirement SECTION B: EFFECTIVENESS B.Section 5. independent non-executive directors) such that no individual or small group of individuals can dominate the board’s decision taking. independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively. in particular. but others may attend at the invitation of the committee.7 The Board Governance Document and the Terms of Reference of the Nomination Committee which can be found at http://www.aspx Annual Report .11 .Section 5. experience.10 Supporting Principles • The board should be of sufficient size that the requirements of the business can be met and that changes to the board’s composition and that of its committees can be managed without undue disruption.com/home/aboutus/ourcompany/Page s/governance.  •  Annual Report . and should not be so large as to be unwieldy.

represents a significant shareholder.aspx 21 A. directors or senior employees. meet the independence criteria set out in this provision.bhpbilliton. • has.com/home/aboutus/ourcompany/Page s/governance.1 The board should identify in the annual report each non-executive director it considers to be independent21. or could appear to affect. should comprise non-executive directors determined by the board to be independent.2 At least half the board.1.3. The board should determine whether the director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect. participates in the company’s share option or a performance-related pay scheme. on appointment. but thereafter the test of independence is not appropriate in relation to the chairman.9 B. • • • • has close family ties with any of the company’s advisers. or has had within the last three years. or is a member of the company’s pension scheme. or has served on the board for more than nine years from the date of their first election.Section 5. including if the director: • has been an employee of the company or group within the last five years. holds cross-directorships or has significant links with other directors through involvement in other companies or bodies. a material business relationship with the company either directly. director or senior employee of a body that has such a relationship with the company.  Annual Report . excluding the chairman.4 and 5. the director’s judgement. • has received or receives additional remuneration from the company apart from a director’s fee.Requirement Code Provisions B. Compliance with Code Provisions Reference  Annual Report Sections 5.4 The Board Governance Document which can be found at http://www.1 states that the chairman should. or as a partner. The board should state its reasons if it determines that a director is independent notwithstanding the existence of relationships or circumstances which may appear relevant to its determination. . shareholder.1.

3 Section 5. which should: • • •  Annual Report .Section 5.1 lead the process for board appointments and make recommendations to the board. so as to maintain an appropriate balance of skills and experience within the company and on the board and to ensure progressive refreshing of the board.13. explaining the committee’s role and the authority delegated to it by the board. comprise a majority of independent non-executive directors. including gender.   N/A Sections 5.bhpbilliton.Requirement B.2.17 The board should satisfy itself that plans are in place for orderly succession for appointments to the board and to senior management. There should be a nomination committee. and appointments made on merit and against objective criteria and with due regard for the benefits of diversity on the board.3 Code Provisions B.Sections 5.13.13. be chaired by the chairman or an independent non-executive director.7 and 5. •  Annual Report .3 and 5.13.aspx •  22 Including the information on the BHP Billiton website is sufficient. but the chairman should not chair the nomination committee when it is dealing with the appointment of a successor to the chairmanship. .7  Annual Report .2 APPOINTMENTS TO THE BOARD Compliance with Code Provisions Reference Main Principle There should be a formal.com/home/aboutus/ourcompany/Page s/governance. and make available its terms of reference 22 .3 The Terms of Reference of the Nomination Committee which can be found at http://www.3 Section 5.7 and 5. Supporting Principles • The search for board candidates should be conducted.Section 5. rigorous and transparent procedure for the appointment of new directors to the board.

5 and 5.2. A separate section of the annual report should describe the work of the nomination committee 23 . including the process it has used in relation to board appointments.13.13.Section 5. 25 See the FRC’s Feedback Statement “Gender Diversity on Boards” published in October 2011.2.bhpbilliton.4  Section 5.Sections 5. this Code Provision will be amended to state that this section of the annual report should include a description of the board’s policy on diversity. experience.4 of the Code.  Annual Report . the Lord Davies’ Report suggests that companies should report on the matters in (i) Recommendation 1 (percentage of women to be on the board in 2013 and 2015).7 and 5. the chairman should disclose meaningful information about the company’s appointment process and how it addresses diversity in the annual report.com/home/aboutus/ourcompany/Page s/governance. An explanation should be given if neither an external search consultancy nor open advertising has been used in the appointment of a chairman or a non-executive director.3 The Terms of Reference of the Nomination Committee which can be found at http://www. including gender.3 COMMITMENT Main Principle All directors should be able to allocate sufficient time to the company to discharge their responsibilities effectively.Requirement B.2.3)  B. including a description of the search and nomination process (Recommendation 5).3  B. and (iii) Recommendation 3 (policy on boardroom diversity and progress made in meeting measurable objectives). The Report into “Women on Boards” led by Lord Davies (February 2011) (the “Lord Davies’ Report”) recommends that in line with provision B.com/home/aboutus/ourcompany/Page s/governance.Section 5. In addition.2.7 and 5. (ii) Recommendation 2 (the proportion of women on the board.25  B. any measurable objectives that it has set for implementing policy.7 (see Schedule B of the Code).aspx Annual Report .7 This provision overlaps with DTR 7. prepare a description of the role and capabilities required for a particular appointment. Any term beyond six years for a non-executive director should be subject to particularly rigorous review. Earlier compliance has been encouraged by the FRC.aspx Annual Report . and progress on achieving objectives.9 The Terms of Reference of the Nomination Committee which can be found at http://www. independence and knowledge on the board and. 23 24 .17 (a cross reference to which is included in Section 5.3 Non-executive directors should be appointed for specified terms subject to re-election and to statutory provisions relating to the removal of a director.Section 5.24 From 1 October 2012.2.2 The nomination committee should evaluate the balance of skills.bhpbilliton. Compliance with Code Provisions Reference Annual Report .13. in the light of this evaluation. women in senior executive positions and females employees in the whole organisation). and should take into account the need for progressive refreshing of the board.

with a broad indication of the time involved and the board should be informed of subsequent changes. recognising the need for availability in the event of crises.aspx Supporting Principles • The chairman should ensure that directors continually update their skills and the knowledge 26 The terms and conditions of appointment of non-executive directors should be made available for inspection by any person wishing to inspect the terms and conditions of appointment of non-executive directors at BHP Billiton’s registered office during normal business hours and at the AGM (for 15 minutes prior to the meeting and during the meeting).1 For the appointment of a chairman. A chairman’s other significant commitments should be disclosed to the board before appointment and included in the annual report. Their other significant commitments should be disclosed to the board before appointment.Requirement Code Provisions B.3.8 The Non-executive Director Induction Program which can be found at http://www.3. Compliance with Code Provisions N/A Reference B.Section 5.7 The Terms of Appointment of Non-executive Directors which can be found at http://www.com/home/aboutus/ourcompany/Page s/governance. including an assessment of the time commitment expected. Changes to such commitments should be reported to the board as they arise.4 Main Principle All directors should receive induction on joining the board and should regularly update and refresh their skills and knowledge. Non-executive directors should undertake that they will have sufficient time to meet what is expected of them.aspx B. The letter of appointment should set out the expected time commitment. . the nomination committee should prepare a job specification. and included in the next annual report.3 The board should not agree to a full time executive director taking on more than one non-executive directorship in a FTSE 100 company nor the chairmanship of such a company.2   Annual Report . DEVELOPMENT N/A B.Section 5. The terms and conditions of appointment of non-executive directors should be made available for inspection26.bhpbilliton.3.bhpbilliton.  Annual Report .com/home/aboutus/ourcompany/Page s/governance.

21 •  Section 5.2 and 5. timely and clear information. Supporting Principles • The chairman is responsible for ensuring that the directors receive accurate. as well as facilitating induction and assisting with professional development as required.4. As part of this.com/home/aboutus/ourcompany/Page s/governance.bhpbilliton.aspx Annual Report – Section 5.Section 5.8 B. • Compliance with Code Provisions Reference Annual Report .Section 5.Section 5. Management has an obligation to provide such information but directors should seek clarification or amplification where necessary. The company secretary should be responsible for advising the board through the chairman on all governance matters.  Annual Report .Requirement and familiarity with the company required to fulfill their role on the board and on board committees.4.2 The chairman should regularly review and agree with each director their training and development needs. the company secretary’s responsibilities include ensuring good information flows within the board and its committees and between senior management and non-executive directors.8 The Non-executive Director Induction Program which can be found at http://www. The chairman should ensure new directors receive a full.21 . •  Annual Report – Section 5.  B.5 and 5.aspx Annual Report – Sections 5.21  Under the direction of the chairman.5 The Board Governance Document which can be found at http://www. formal and tailored induction on joining the board.1  Annual Report – Sections 5. The company should provide the necessary resources for developing and updating its directors’ knowledge and capabilities.com/home/aboutus/ourcompany/Page s/governance.5 INFORMATION AND SUPPORT Main Principle The board should be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties.8 Code Provisions B. directors should avail themselves of opportunities to meet major shareholders.8  To function effectively.bhpbilliton.  Annual Report . all directors need appropriate knowledge of the company and access to its operations and staff.

Both the appointment and removal of the company secretary should be a matter for the board as a whole. All directors should have access to the advice and services of the company secretary.com/home/aboutus/ourcompany/Page s/governance. its diversity. Supporting Principles • The chairman should act on the results of the performance evaluation by recognising the strengths and addressing the weaknesses of the board and.aspx Annual Report – Section 5.1 The board should ensure that directors.21 The Board Governance Document which can be found at http://www.10 From 1 October 2012.17 27 See the FRC’s Feedback Statement “Gender Diversity on Boards” published in October 2011. . a new Supporting Principle will be included to state that “evaluation of the board should consider the balance of skills.1. experience.  Annual Report – Section 5. who is responsible to the board for ensuring that board procedures are complied with. where appropriate.5.bhpbilliton.Requirement Code Provisions B. how the board works together as a unit. proposing new members to be appointed to the board or seeking the resignations of directors.6 Main Principle The board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors.bhpbilliton.3 The Board Governance Document which can be found at http://www.aspx Annual Report – Section 5.27  Annual Report – Sections 5.2  B.10 and 5.com/home/aboutus/ourcompany/Page s/governance. including gender.com/home/aboutus/ourcompany/Page s/governance. Committees should be provided with sufficient resources to undertake their duties. Earlier compliance has been encouraged by the FRC.10 The Board Governance Document which can be found at http://www.bhpbilliton. especially non-executive directors have access to independent professional advice at the company’s expense where they judge it necessary to discharge their responsibilities as directors. and other factors relevant to its effectiveness”. EVALUATION Compliance with Code Provisions Reference  Annual Report – Section 5. 5. independence and knowledge of the company on the board. •   Individual evaluation should aim to show whether each director continues to contribute effectively and to demonstrate commitment to the role (including commitment of time for board and committee meetings and any other duties).10 B.aspx Annual Report – Section 5.5.

12 and The 2012 BHP Biliton Notice of Annual General Meeting and proxy forms 28 29 The requirement to make the information available would be met by including the information on the BHP Billiton website.6.7.29 The non-executive directors.3  Annual Report – Section 5. following formal performance evaluation. The names of directors submitted for election or re-election should be accompanied by sufficient biographical details and any other relevant information to enable shareholders to take an informed decision on their election.1 All directors should be subject to annual election by shareholders. the individual’s performance continues to be effective and he or she demonstrates commitment to the role.7 Main Principle All directors should be submitted for re-election at regular intervals.Section 5. RE-ELECTION Compliance with Code Provisions Reference  Annual Report – Section 5. The annual report should also identify external advisers used in relation to a board evaluation.  Annual Report – Section 5.7. Evaluation of the board should be externally facilitated at least every three years.10  Annual Report – Section 5. taking into account the views of executive directors.1 B. A statement should be made available of whether an external facilitator has any other connection with the company28.2 The board should state in the annual report how performance evaluation of the board.10 B. its committees and its individual directors has been conducted. led by the senior independent director. . The board should set out to shareholders in papers accompanying a resolution to elect a non-executive director why they believe an individual should be elected. The chairman should confirm to shareholders when proposing re-election that.6. should be responsible for performance evaluation of the chairman.10 B.12 Biographical details contained in 2012 BHP Billiton Notices of Annual General Meeting B. subject to continued satisfactory performance.2  Annual Report .12  Annual Report – Section 5. Code Provisions B.Requirement Code Provisions B.6. See comment of FRC on page 17 of its “Developments in corporate governance: The impact and implementation of the UK Corporate Governance and Stewardship Codes (December 2011).

2. Annual Report –Sections 1. that information only needs to be provided for those undertakings whose results or financial position principally affected the company’s figures (section 410(2)(a) CA 06). However. if advantage is taken of section 410(1).2 C. However. Code Provisions C.  Schedule 4 of the 2008 Regulations sets out the information on related undertakings required to be included in the annual accounts.1.html. and there should be a statement by the auditor about their reporting responsibilities31.Requirement C ACCOUNTABILITY Compliance with Code Provisions Reference C.2 The directors should include in the annual report an explanation of the basis on which the company generates or preserves value over the longer term (the business model) and the strategy for delivering the objectives of the company. the notes to the accounts must make it clear that information is only being provided about those undertakings whose results or financial position have principally affected the company’s figures and the full information about all undertakings must be annexed to the company’s next annual return (section 410(3)). section 410 CA 06 states that if the directors believe that to provide all the necessary information for all subsidiary undertakings would result in an excessive amount of information being provided in the notes to the accounts.5. in the auditor’s report pursuant to the requirements in paragraph 16 of ISA (UK and Ireland) 700.1.  Annual Report – sections 1. Independent auditors’reports of KPMG Audit Plc (‘KPMG UK’) to the members of BHP Billiton Plc and of KPMG (‘KPMG Australia’) to the members of BHP Billiton Limited.  Statement of Directors’ Responsibilities in respect of the Annual Report and the Financial Statements.1. Supporting Principle The board’s responsibility to present a balanced and understandable assessment extends to interim and other price-sensitive public reports and reports to regulators as well as to information required to be presented by statutory requirements.6.1 FINANCIAL AND BUSINESS REPORTING Main Principle The board should present a balanced and understandable assessment of the company’s position and prospects.1 The directors should explain in the annual report their responsibility for preparing the annual report and accounts30.uk/apb/publications/pub2102. or referred to. 30 . 31 The requirement may be met by the disclosures about the audit scope and the responsibilities of the auditor included.4. 1.org. 1.frc. ‘The Auditor’s Report on Financial Statements’ Copies are available at: http://www. 3 and 9.2 and 3. 1. 1.

uk/corporate/auditcommittees.  Annual Report – Section 5. conduct a review of the effectiveness of the company’s risk management and internal control systems and should report to shareholders that they have done so.bhpbilliton. The review should cover all material controls.13. Copies are available at http://www.org.frc.com 32 . C.frc. C.2 RISK MANAGEMENT AND INTERNAL CONTROL32 Main Principle The board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives.com/home/aboutus/ourcompany/Page s/governance. In its “Effective Company Stewardship: Next Steps” document published in September 2011.bhpbilliton. operational and compliance controls. including financial.13.3   Annual Report – Section 5.14 The Board Governance Document and the Terms of Reference of the Risk and Audit Committee which can be found at http://www.1 The board should.uk/corporate/internalcontrol. with supporting assumptions or qualifications as necessary.1 The Board Governance Document and the Terms of Reference of the Risk and Audit Committee which can be found at http://www.cfm.1. Copies are available at www.2.org.3 Compliance with Code Provisions Reference Annual Report – Section 7.3 AUDIT COMMITTEE AND AUDITORS33 Main Principle The Turnbull guidance suggests means of applying this part of the Code. The board should maintain sound risk management and internal control systems. 33 The FRC Guidance on Audit Committees suggests means of applying this part of the Code.Requirement The directors should report in annual and half-yearly financial statements that the business is a going concern.aspx Code Provision C.com/home/aboutus/ourcompany/Page s/governance.1 and 5.aspx C. at least annually. the FRC announced that it is to update the Turnbull Guidance to reflect improvements in practice and to clarify the board’s responsibility for determining the nature and extent of the significant risks it is willing to take.

3.com/home/aboutus/ourcompany/Page s/governance. 5.1 The board should establish an audit committee 34 of at least three independent non-executive directors.1 (see Schedule B of the Code). 34 . The board should satisfy itself that at least one member of the audit committee has recent and relevant financial experience35. Compliance with Code Provisions Reference Annual Report – Sections 5.7.1 The Board Governance Document and the Terms of Reference of the Risk and Audit Committee which can be found at http://www.bhpbilliton.aspx FRC’s Update for Audit Committees: ‘Issues arising from the current economic conditions (November 2010)’.13.1. seeks to identify issues that will be relevant to work of audit committees during the 2010/2011 reporting season and sets out key questions for audit committees to consider when preparing audit reports. 35 This provision overlaps with DTR 7.bhpbilliton.com/home/aboutus/ourcompany/Page s/governance.14 The Board Governance Document and the Terms of Reference of the Risk and Audit Committee which can be found at http://www.9 and 5.13.aspx  Code Provisions C.Requirement The board should establish formal and transparent arrangements for considering how they should apply the corporate reporting and risk management and internal control principles and for maintaining an appropriate relationship with the company’s auditor.  Annual Report – Sections 5.1 and 5.

1.13. reviewing significant financial reporting judgements contained in them. Compliance with Code Provisions Reference Annual Report – Section 5. taking into consideration relevant UK professional and regulatory requirements.aspx  This provision overlaps with DTR 7. the audit committee should disclose this fact and reasons for it to shareholders as early as practicable (Audit Committee Guidance.com/home/aboutus/ourcompany/Page s/governance.1.4. • to review the company’s internal financial controls and. re-appointment and removal of the external auditor 37 and to approve the remuneration and terms of engagement of the external auditor 38. in relation to the appointment.3 (see Schedule B of the Code).3. or by the board itself. taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm. • to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process. to review the company’s internal control and risk management systems.36). and • to develop and implement policy on the engagement of the external auditor to supply non-audit services. 36 37 . paragraph 4. BHP Billiton must base any proposal to appoint a statutory auditor on a recommendation by the Audit Committee as required by DTR 7.1 The Board Governance Document and the Terms of Reference of the Risk and Audit Committee which can be found at http://www. 38 If. • to monitor and review the effectiveness of the company’s internal audit function. • to make recommendations to the board. the audit committee decides that the audit engagement partner may continue in this position for up to seven years. unless expressly addressed by a separate board risk committee composed of independent directors. and to report to the board.Requirement C. 39 Section 494 CA 06 requires the annual report to include a note disclosing the amount of the auditor’s remuneration for audit work and remuneration for non-audit work. to safeguard the quality of the audit. identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken39. for it to put to the shareholders for their approval in general meeting.2 The main role and responsibilities of the audit committee should be set out in written terms of reference36 and should include: • to monitor the integrity of the financial statements of the company and any formal announcements relating to the company’s financial performance.bhpbilliton.

The audit committee should have primary responsibility for making a recommendation on the appointment.Requirement C. .bhpbilliton.1. a statement from the audit committee explaining the recommendation and should set out reasons why the board has taken a different position. but a company should avoid paying 40 41  Annual Report – Sections 5.1 and 5.42. If the board does not accept the audit committee’s recommendation.13.5 C.5 and 7. retain and motivate the directors of the quality required to run the company successfully.13. REMUNERATION THE LEVEL AND COMPONENTS OF REMUNERATION  C. The annual report should explain to shareholders how. should be made available40. including its role and the authority delegated to it by the board. The audit committee should monitor and review the effectiveness of the internal audit activities. reappointment and removal of the external auditor.aspx Section 5. raise concerns about possible improprieties in matters of financial reporting or other matters. 42 The FRC’s Guidance on Audit Committees sets out the content the separate section of the annual report should include. and in any papers recommending appointment or re-appointment.16  C.1 The Board Governance Document and the Terms of Reference of the Risk and Audit Committee which can be found at http://www.13.2 and 6 The requirement to make the information available would be met by including the information on the BHP Billiton website. in confidence.3 The terms of reference of the audit committee.1 Main Principle Levels of remuneration should be sufficient to attract.13. auditor objectivity and independence is safeguarded. it should include in the annual report.1 C.7 (see Schedule B of the Code).4 The audit committee should review arrangements by which staff of the company may. A separate section of the annual report should describe the work of the committee in discharging those responsibilities 41.3.3.13.3.6  Annual Report – Section 5. Compliance with Code Provisions Reference Annual Report – Section 5. The audit committee’s objective should be to ensure that arrangements are in place for the proportionate and independent investigation of such matters and for appropriate follow-up action.7 D. D. if the auditor provides non-audit services.3.13.1  Annual Report – Section 5.2.com/home/aboutus/ourcompany/Page s/governance.1  Annual Report – Section 5. This provision overlaps with DTR 7.3.

But they should use such comparisons with caution in view of the risk of an upward ratchet of remuneration levels with no corresponding improvement in performance.4. They should take a robust line on reducing compensation to reflect departing directors’ obligations to mitigate loss. If.3  Annual Report – Section 6. Levels of remuneration for non-executive directors should reflect the time commitment and responsibilities of the role. if so. the remuneration committee should follow the provisions in Schedule A to the Code.4 and 6. 6.7.1.10. the remuneration report should include a statement as to whether or not the director will retain such earnings and.1. D. The remuneration committee should carefully consider what compensation commitments (including pension contributions and all other elements) their directors’ terms of appointment would entail in the event of early termination. exceptionally. Where a company releases an executive director to serve as a non-executive director elsewhere. The aim should be to avoid rewarding poor performance. • The remuneration committee should judge where to position their company relative to other companies.3 and 6.4  Annual Report – Sections 6. Remuneration for non-executive directors should not include share options or other performance related elements.1 D. Holding of share options could be relevant to determination of non-executive director independence (as set out in Code Provision B. 6.10  N/A Annual Report – Section 6 N/A D. Compliance with Code Provisions Reference    Annual Report – Sections 6. Supporting Principles • The performance-related elements of executive directors’ remuneration should be stretching and designed to promote the long-term success of the company. • They should also be sensitive to pay and employment conditions elsewhere in the group. what the remuneration is. especially when determining annual salary increases. Annual Report – Sections 6. options are granted.Requirement more than is necessary for this purpose.1.1. Code Provisions D. A significant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance.1).3.2 In designing schemes of performance-related remuneration for executive directors.1.3 and 6. shareholder approval should be sought in advance and any shares acquired by exercise of the options should be held until at least one year after the non-executive director leaves the board.10 .1.4 Annual Report – Sections 6.

1 The board should establish a remuneration committee of at least three independent non-executive directors.5 D.Requirement D.13.2 and section 6.  Annual Report – Sections 5. the company chairman may also be a member of.2 and 6 Annual Report – Section 5. but not chair.2.7. Where executive directors or senior management are involved in advising or supporting the remuneration committee. Supporting Principles • The remuneration committee should consult with chairman and/or chief executive about their proposals relating to the remuneration of other executive directors.2 The Board Governance Document and the Terms of Reference of the Remuneration Committee which can be found at http://www. • The chairman should ensure that the company maintains contact as required with its principal shareholders about remuneration. The remuneration committee should make available its terms of reference.2. No director should be involved in deciding his or her own remuneration.bhpbilliton. the committee if he or she was considered independent on appointment as chairman.3.bhpbilliton. such periods should reduce to one year or less after the initial period.com/home/aboutus/ourcompany/Page s/governance.13. PROCEDURE Compliance with Code Provisions  Reference Annual Report – Section 6.1.aspx  43 This provision overlaps with DTR 7. The remuneration committee should also be responsible for appointing any consultants in respect of executive director remuneration.2 Notice or contract periods should be set at one year or less. a statement should be made available of whether they have any other connection with the company. Where remuneration consultants are appointed.1 Main Principle There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. explaining its role and the authority delegated to it by the board43. 5.2 and 6 The Board Governance Document and the Terms of Reference of the Remuneration Committee which can be found at http://www. care should be taken to recognise and avoid conflicts of interest.3   Annual Report – sections 5.7 (see Schedule B of the Code).13. If it is necessary to offer longer notice or contract periods to new directors recruited from outside. .aspx Annual Report – Section 6. In addition. Code Provisions D.2.com/home/aboutus/ourcompany/Page s/governance.3.

com/home/aboutus/ourcompany/Page s/governance.2.com/home/aboutus/ourcompany/Page s/governance. the board may however delegate this responsibility to a committee.2  The board should keep in touch with shareholder opinion in whatever ways are most practical and efficient.2. Shareholders should be invited specifically to approve all new long-term incentive schemes (as defined in the Listing Rules) and significant changes to existing schemes.10. Supporting Principles • Whilst recognising that most shareholder contact is with the chief executive and the finance director. where required by the Articles of Association.bhpbilliton.bhpbilliton. the shareholders should determine the remuneration of the non-executive directors within the limits set in the Articles.3  D.1  Main Principle There should be a dialogue with shareholders based on the mutual understanding of objectives.2 Code Provisions . The board itself or.4 E.2 The Board Governance Document and the Terms of Reference of the Remuneration Committee which can be found at http://www.Requirement D.2 The Board Governance Document which can be found at http://www. save in the circumstances permitted by the Listing Rules.2 The Board Governance Document e which can be found at http://www. E. including pension rights and any compensation payments. The committee should also recommend and monitor the level and of remuneration for senior management. RELATIONS WITH SHAREHOLDERS DIALOGUE WITH INSTITUTIONAL SHAREHOLDERS Compliance with Code Provisions  Reference Annual Report – Section 5. The definition of ‘senior management’ for this purpose should be determined by board but should normally include the first layer of management below board level.  Annual Report – Section 5.aspx N/A D. The board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place. the chairman should ensure that all directors are made aware of their major shareholders’ issues and concerns.aspx Annual Report – Section 5. which might include the chief executive.aspx Annual Report – Section 6. Where permitted by the Articles.13.2 The remuneration committee should have delegated responsibility for setting remuneration for all executive directors and the chairman.com/home/aboutus/ourcompany/Page s/governance.bhpbilliton.2. •  Annual Report – Section 5.

in particular.1.6 The Board Governance Document which can be found at http://www.1 The chairman should ensure that the views of shareholders are communicated to the board as a whole. Code Provisions E.3 E.2. The chairman should discuss governance and strategy with major shareholders.2 and 5.1 At any general meeting.5 and 5. Non-executive directors should be offered the opportunity to attend scheduled meetings with major shareholders and should expect to attend meetings if requested by major shareholders.2. The proxy form and any announcement of the results of a vote should make it clear that a ‘vote withheld’ is not a vote in law and will not be counted in the calculation of the proportion of votes for and against the resolution.  Annual Report – Section 5.2  Annual Report – Sections 5. and should. CONSTRUCTIVE USE OF THE AGM Compliance with Code Provisions  Reference Annual Report – Sections 5.bhpbilliton.com/home/aboutus/ourcompany/Page s/governance. the non-executive directors) develop an understanding of the views of major shareholders about the company.2 Main Principle The board should use the AGM to communicate with investors and to encourage their participation.2 and the 2012 BHP Billiton Notices of Annual General Meeting and proxy forms  The 2012 BHP Billiton Notices of Annual General Meeting and proxy forms . The board should state in the annual report the steps they have taken to ensure that the members of the board (and.1. For each resolution. the company should propose a separate resolution on each substantially separate issue. 5.aspx E. analysts’ or brokers’ briefings and surveys of shareholder opinion.Requirement E. in particular propose a resolution at the AGM relating to the report and accounts. The senior independent director should attend sufficient meetings with a range of major shareholders to listen to their views in order to help develop a balanced understanding of the issues and concerns of major shareholders. for example through direct face-to-face contact. proxy appointment forms should provide shareholders with the option to direct their proxy to vote either for or against the resolution or to withhold their vote.

• the number of votes for the resolution. For each resolution. remuneration and nomination committees to be available to answer questions at the AGM and for all directors to attend.2. and • the number of shares in respect of which the vote was directed to be withheld. • the number of votes against the resolution. the company should ensure that the following information is given at the meeting and made available as soon as reasonably practicable on its website: • the number of shares in respect of which proxy appointments have been validly made.2.Requirement E.2 The company should ensure that all valid proxy appointments received for general meetings are properly recorded and counted. The company should arrange for the Notice of the AGM and related papers to be sent to shareholders at least 20 working days before the meeting.2. where a vote has been taken on a show of hands.3 E.4   Group practice Group practice . Compliance with Code Provisions  Reference Group practice E. The chairman should arrange for the chairmen of the audit.

2 and 7.10 (as set out below). If the company has decided not to apply any provisions of a corporate governance code.2.2.2.10 and 7. 44 The corporate governance statement must contain reference to: (a) the corporate governance code to which the company is subject.6 is consistent with the accounts (section 497A CA 06). or by means of reference in the directors’ report to where such document is publicly available on the company’s website). The directors’ report must include details of where the company’s corporate governance practices can be found and such practices must be publicly available.8.1 7. That separate report must be published with and in the same manner as the annual report and the corporate governance statement must contain either the information required by DTR 7. and/or (b) the corporate governance code to which the company may have voluntarily decided to apply.2.5 and 7.   Annual Report – Sections 7.6(6) (comply or explain rule in relation to the Code) will be sufficient to ensure compliance with DTR 7.4).3(2) 7.2. .3 (DTR 7.2.2 Requirement The directors’ report must contain a corporate governance statement containing at least the information in DTR 7.2.3(1)  Annual Report – Section 5.2. The auditor must also state in his report on the annual accounts whether in his opinion the information given in the statement in compliance with DTR 7.22 7.7 and DTR 7. (ii) state the name of the person who signed it and (iii) be filed with the Registrar of Companies (as provided by sections 419A and 447 CA 06 (as amended by regulation 4 of the 2009 Regulations). an explanation of which parts of the corporate governance code it departs from and the reasons for doing so.1 and 5. and/or (c) all relevant information about the corporate governance practices applied beyond the requirements under national law.2.2.2. an explanation of its reasons for that decision must be included in its corporate governance statement45.6. 45 Compliance with Listing Rule 9.3(3)  N/A Annual Report – Section 5. or a reference to the directors’ report where that information is available. If the corporate governance statement is in a separate report it must (i) be approved by the board and signed on behalf of the board by a director or secretary.22 7.9 permits the corporate governance statement to be set out in a separate report rather than in the directors’ report.2 to DTR 7.2.2. to the extent that the company departs from that corporate governance code.22 44 DTR 7.PART 2 . The directors’ report must include details of where the relevant corporate governance code is publicly available should be included and.The DTRs Requirement Compliance with DTR Reference DTR 7.2.2.23 Annual Report – Sections 5.

13.2. D. (h) and (i) of Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (information about share capital required under Directive 2004/25/EC (the Takeover Directive)).13 and 5. In the event that the company presents its own annual report and its consolidated annual report as a single report.14 7.23 and 7.3.1 and 5.6  Annual Report – Sections 5. 5.2. (d). .2.7  Annual Report – Sections 5. management and supervisory bodies and their committees.1.8).1. 46 Compliance with DTR  Reference Annual Report – Sections 5.2.1 and C.2.5 The corporate governance statement must contain a description of the main features of the company’s Internal control and risk management systems in relation to the financial reporting process (including in relation to the process for preparing consolidated accounts).3 of the Code will satisfy this requirement (DTR 7. The corporate governance statement must contain the information required by paragraph 13(2)(c).1. A. (f).23 7.2.Requirement 7.3. B. 5. The corporate governance statement must contain a description of the composition and operation of the company’s administrative. this information must be included in the corporate governance statement.15 46 Compliance with the information specified in Code Provisions A.4.2.4.