UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of February, 2024

 

	001-41208
	(Commission File Number)

 

NOVONIX LIMITED

(Translation of registrant’s name into English)

 

Level 38

71 Eagle Street

Brisbane, QLD 4000 Australia

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20‑F or Form 40‑F.

Form 20-F ☒ Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

 

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EXHIBIT INDEX

 

Exhibit No. Description

 

Exhibit 99.1 Annual Report for the 12 Months Ended 31 December 2023 of NOVONIX Limited

Exhibit 99.2 Corporate Governance Statement and Appendix 4G of NOVONIX Limited

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

NOVONIX LIMITED By:  /s/ Chris Burns        Chris Burns        Chief Executive Officer

 

Date: February 29, 2023

 

 

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EXHIBIT 99.1

 

 

 

 

 

 

 

 

 

 

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NOVONIX Limited

ABN 54 157 690 830

Annual Report - 31 December 2023

 

Table of Contents

 

Corporate Directory	3
Review of Operations and Activities	4
Material Business Risks	15
Directors’ Report	18
Auditor’s Independence Declaration	56
Corporate Governance Statement	57
Financial Reports – 31 December 2023	58
Consolidated statement of profit or loss and other comprehensive income	59
Consolidated balance sheet	60
Consolidated statement of changes in equity	62
Consolidated statement of cash flows	63
Notes to the consolidated financial statements for the year ended 31 December 2023	64
Directors’ Declaration	128
Independent Auditor’s Report to the Members	129
Shareholder Information	136

 

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Corporate Directory

 

Directors	Admiral R J Natter, US Navy (Ret.) A Bellas B. Econ, DipEd, MBA, FAICD, FCPA, FGS R Edmonds CPA, BBA (Acct) Andrew N. Liveris AO, BE (Hons) Doctor of Science (honoris causa) J Oelwang BS (Hons) S Vaidyanathan MTech (chemical engineering), MBA
Secretary	S M Yeates CA, B.Bus
Registered office in Australia	McCullough Robertson Level 11, Central Plaza Two 66 Eagle Street Brisbane QLD 4000
Principal place of business	Level 38, 71 Eagle Street Brisbane QLD 4000
Share register	Link Market Services Limited Level 21, 10 Eagle Street Brisbane QLD 4000 www.linkmarketservices.com.au
Auditor	PricewaterhouseCoopers 480 Queen Street Brisbane QLD 4000 www.pwc.com.au
Solicitors	Allens Linklaters Level 26 480 Queen Street Brisbane QLD 4000
Bankers	J.P. Morgan Chase
Stock exchange listing	NOVONIX Limited ordinary shares are listed on the Australian Securities Exchange (“ASX”) and American Depositary Receipts (“ADR’s”) are listed on the Nasdaq Stock Market.
Website address	www.novonixgroup.com

 

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Review of Operations and Activities

NOVONIX Limited (“NOVONIX” or the “Company”) and, together with its consolidated subsidiaries, (the “Group”), changed the Company’s fiscal year end to 31 December (previously 30 June) as announced on 21 December 2022. As a consequence, the financial results released in this report are for a new 12-month period ended 31 December 2023 and have also shown the six-month period ended 31 December 2022.

NOVONIX is a leading battery materials and technology company aiming to revolutionise the global lithium-ion battery industry with innovative, sustainable technologies, high-performance materials, and more efficient production methods. The Company manufactures industry-leading battery cell testing equipment, is growing its high-performance synthetic graphite anode material manufacturing operations, and has developed an all-dry, zero-waste cathode synthesis process. Through advanced R&D capabilities, proprietary technology, strategic partnerships, and as a leading North American supplier of battery-grade synthetic graphite, NOVONIX has gained a prominent position in the electric vehicle (“EV”) and energy storage systems (“ESS”) battery industry and is working to power a cleaner energy future.

Our mission is underpinned by an increasing emphasis on environmentally conscious battery technologies and is key to a sustainable future with prolific adoption of electric vehicles and grid energy storage systems. We are focused on the development of materials, processes, and technologies that support key sustainability criteria in the field of battery materials and technologies, including longer life batteries, higher-energy efficiency, manufacturing processes, reduced chemical usage, reduced waste generation, and the use of cleaner power inputs. Our vision is to accelerate adoption of battery technologies for a cleaner energy future. This is demonstrated by our values, which include integrity, respect, and collaboration that support social impact and embody NOVONIX’s approach to corporate responsibility.

NOVONIX is well-positioned to be an industry leader at the forefront of product innovation and intellectual property development in the battery materials and technology industry with a focus on supporting the onshoring of the battery supply chain. The Company has built a team of top talent with the experience to drive innovation company wide and believes it has the next-generation technology needed to support the rapidly growing EV and ESS markets in North America. NOVONIX is focused on scaling its production capacity of synthetic graphite to meet the growing demands of its customers, through increasing production capabilities at its facility in Chattanooga, Tennessee, and future expansions. Additionally, NOVONIX continues to focus on developing improved and sustainable technologies, pursuing strategic partnerships with leading international battery companies and growing an intellectual property pipeline that will position the Company at the forefront of next-generation battery technology.

Throughout fiscal year 2023, NOVONIX continued to focus on the execution of its business strategy and growth initiatives. NOVONIX had net assets of $183.9 million including $78.7 million in cash and cash equivalents at December 31, 2023. The Company reported a statutory after-tax loss for the year ended December 31, 2023, of $46.2 million. These financial results are in line with management expectations.

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Highlights of Twelve-Month Period Ended 31 December 2023

The twelve months ended 31 December 2023, saw continued progress for NOVONIX with several notable highlights along four main pillars of efforts. The Company continued to execute against its long-term strategic and operational roadmap, to maintain industry leading research and development efforts for battery materials, scale our operations to deliver commercial production, secure tier-one customers, and secure financing to scale operations to create value for shareholders. Key highlights and developments include:

Maintain Industry Leading R&D Efforts for Battery Materials

Scale Operations to Deliver Commercial Production

Secure Tier 1 Customers

Secure Financing to Scale Operations

The Company incurred net losses of $46.2 million, $27.9 million, $51.9 million and $13.4 million for the twelve months ended 31 December 2023, six months ended 31 December 2022, and years ended 30 June 2022 and 2021, respectively, and net operating cash outflows of $36.2 million, $18.9 million, $29.2 million and $6.1 million the twelve months ended 31 December 2023, six months ended 31 December 2022, and years ended 30 June 2022 and 2021, respectively. At 31 December 2023 and 2022, we had a cash balance of $78.7 million and $99.0 million, respectively, and net current assets of $86.9 million and $116.1 million, respectively.

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Our Growth Strategies

NOVONIX’s leadership is focused on the successful execution of its operational strategic roadmap with the objective of maximising long-term shareholder value through the generation of strong cash flow and the pursuit of profitable, high-growth opportunities. The Company’s key strategies include:

Operational Structure at a Glance

NOVONIX’s synergistic operating structure, as depicted below, is integral to the company’s current business development and future strategy.

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NOVONIX continues to invest in intellectual property for key materials technologies, including anode and cathode materials, that we believe will enhance the performance of long-life EV and ESS applications. Our NOVONIX Battery Technology Solutions (“BTS”) division, based in Nova Scotia, Canada, has a full cell pilot line and extensive cell testing capabilities, and works with tier-one customers across the battery value chain.

Supported by our Chief Scientific Advisor Dr. Jeff Dahn, and as part of our investment in intellectual property, we continue our collaboration with the group led by Dr. Mark Obrovac, a leading battery materials innovator, at Dalhousie University. NOVONIX exclusively owns all intellectual property developed within Dr. Obrovac’s group under the collaborative research agreement without any ongoing obligations to Dalhousie University.

NOVONIX provides battery materials and development technology for leading battery manufacturers, materials companies, automotive original OEMs and consumer electronics manufacturers at the forefront of the global electrification economy. Our core mission is to accelerate the continued advancement and scaling of EV batteries and ESS through our advanced, proprietary technologies that deliver longer cycle life batteries at lower costs. Through our in-house technology and capabilities, as well as our front-line access to industry trends, we intend to be an industry leader, delivering what we believe to be the most advanced, high-performance, and cost-effective battery and energy storage technologies for our customers.

We currently operate two core businesses: BTS and NOVONIX Anode Materials. We also have a third reporting segment - Graphite Exploration - the business of which is currently under strategic review and is not presently considered by management as a core operating business.

BTS provides industry leading battery testing technology and research and development (“R&D”) services to create next-generation battery technologies. BTS also serves as the pillar of innovation across the NOVONIX ecosystem by creating a positive feedback loop with our anode and cathode materials business through the development of applications and strategic partnerships. This collaboration drives our continuous technological innovation and enables us to deliver best-in-class products and services for customers.

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NOVONIX Anode Materials (“NAM”) was established with the objective of commercialising what we believe is the most advanced anode material in the market for EV and energy storage applications. These end-markets continue to demand high-performance batteries with longer life cycles and higher performance, while at the same time pursuing cost efficiencies to continue to drive mass adoption. Anode materials are one of the most significant components that define the overall performance, reliability, and cycle life of the battery cell. To our knowledge, we are the only qualified U.S.-based producer of EV battery-grade synthetic graphite anode material and believe NAM is well positioned to support the rapid growth in demand for these advanced anode materials in North America and globally.

Graphite Exploration, or the MDG Project, holds interests in a natural, high-grade graphite deposit in Queensland, Australia. NOVONIX had previously put any exploration and development of the MDG Project generally on hold while it conducts a strategic review of the graphite deposit asset in response to continued sector momentum to evaluate options for furthering exploration and development of the MDG Project. In October 2023, the Company decided to pursue potential opportunities to realise the value of these assets through a strategic transaction.

NOVONIX Battery Technology Solutions Overview

BTS was founded by Dr. Chris Burns and researchers from the research group at Dalhousie University, formerly headed by Dr. Jeff Dahn, in 2013, and the Company acquired BTS in June 2017. BTS provides innovative R&D services along the supply chain to battery component, battery cell, and original equipment manufacturers.

BTS, based in Nova Scotia, Canada, provides battery R&D services and manufactures what we believe to be the most accurate lithium-ion battery cell test equipment in the world. This equipment is now used by leading battery makers, researchers, and equipment manufacturers including Panasonic Energy Co., Ltd. (“Panasonic Energy”), LGES, Samsung SDI, and SK Innovation, and numerous consumer electronics and automotive OEMs. The BTS division significantly expanded R&D capabilities through direct investment in and through a long-term partnership agreement with Dalhousie University.

Since we acquired the business, we have significantly expanded BTS’ R&D capabilities through direct investments and our long-term collaborative research agreement with Dalhousie University. BTS now has an established team of leading scientists with an internal battery cell pilot line to prototype and evaluate new materials and cell designs, and extensive battery testing capability, including our proprietary Ultra-High Precision Coulometry (“UHPC”) system.

In the twelve months ended 31 December 2023, BTS continued strong revenue growth through increased sales of its hardware and battery testing and R&D service offerings, including through the addition and expansion of key strategic accounts. In the twelve months ended 31 December 2023, BTS’ revenues from contracts with customers increased by 42%, compared to the twelve months ended 31 December 2022, due to an increase in sales with the addition of a new distributor which expanded our footprint in the battery hardware market. In the twelve months ended 30 June 2022, BTS’ revenues from contracts with customers grew by 57%, compared to the twelve months ended 30 June 2021, due to an increase in sales in the battery hardware division of the business.

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The Company is collaborating with Sandbox AQ, an enterprise SaaS company that combines artificial intelligence (“AI”) with quantum analysis (“AQ”) to address some of the world’s most challenging problems, to predict the lifespan of lithium-ion batteries. The Company intends to leverage SandboxAQ’s AI-driven chemical simulation software and the Company’s UHPC technology and extensive battery cell prototyping and testing capabilities to enhance its data and analytics services. This enhanced data and analytics offering complements the Company’s UHPC testing equipment and R&D prototyping and testing services to provide actionable information faster for the battery industry. The resulting models will be used for data products and services in the first half of 2024, building on the Company’s purpose-built, proprietary, battery data platform.

In November 2022, BTS announced the opening of its new cathode pilot production facility aimed to position NOVONIX as an industry leader in high-nickel cathode technology. The program will be housed in a newly opened, 35,000-square-foot facility and leverage NOVONIX’s all-dry, zero-waste cathode synthesis technology to pilot its patent-pending technology for material production with the target of servicing the rapidly expanding electric vehicle and energy storage sectors.

The Company has continued its investment in the intellectual property developed around all-dry, zero-waste cathode synthesis technology in 2023, which the Company believes could enable a substantial reduction in the cost of producing high-energy density (high nickel-based) cathode materials including cobalt-free materials, an industry game-changer. The Company announced it successfully completed the commissioning of its 10 tpa cathode pilot line in July 2023. The cathode pilot line’s first product, a mid-nickel grade of single-crystal cathode material (NMC622), produced using its patent-pending, all-dry, zero-waste cathode synthesis technology, is performing in line with leading cathode materials from existing suppliers in full-cell testing. NOVONIX will use the pilot line to further demonstrate the manufacturability of the Company’s cathode materials and technology, including high-nickel (e.g., NMC811) and cobalt-free materials, along with their performance in industrial format lithium-ion cells leveraging its capabilities at BTS.

We believe this patent-pending process – and the innovations resulting from it – are transformational for the battery industry, decreasing processing complexity which should result in a substantial reduction in costs and waste (e.g., elimination of sodium sulphate) in the cathode manufacturing process. Hatch Ltd. (“Hatch”), a global engineering consultancy firm, was commissioned to conduct a commercial-scale capital and operating cost comparison study, as well as a high-level evaluation of plant emissions and impacts to natural resources, between the Company’s patent-pending process and the current state-of-the-art wet-chemical process (“conventional process”). The Company’s all-dry, zero-waste cathode synthesis process was built upon dry particle microgranulation, which requires fewer steps than the conventional process, while producing no sodium sulphate, reducing facility cooling water by an estimated 65% and eliminating the water needed for core materials processing.

The Hatch study found that the NOVONIX process may potentially reduce power consumption by an estimated 25% and practically eliminate waste byproduct generation over the conventional process. These factors contributed to a potential processing cost reduction of an estimated 50% (excluding material feedstock costs) and potentially lower capital costs by an estimated 30% when considering a 30,000 tpa high-nickel cathode manufacturing facility. Based on the scoping study comparing the two processes, the NOVONIX process is estimated to consume fewer natural resources, likely requiring

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essentially no reagents and generating fewer waste streams, and, as a result, is likely a far more environmentally friendly and sustainable process than the conventional process.

The Company’s 10 tpa cathode synthesis pilot line allows continued progress to develop and demonstrate new materials and larger test samples to accelerate commercial discussions with potential partners and customers. The Company has begun commercial discussions with precursor and cathode suppliers regarding the Company’s cathode materials and technology including sampling of products. We believe NOVONIX is positioned to become a market leader in cathode synthesis technology as it pursues these development opportunities.

BTS is receiving up to CAD$3M (US$2.23M) in research and development funding and advisory services from the National Research Council of Canada Industrial Research Assistance Program (“NRC IRAP”). The Company will use the funds to advance both its collaboration with SandboxAQ towards data analytics and the Company’s all-dry, zero-waste cathode materials development and pilot line.

With carbon-neutral policies taking hold across major countries, NOVONIX continues to work in the ESS market, which has experienced an increase in demand driven primarily by a significant increase in renewable energy adoption. BTS developed a first-of-its-kind microgrid battery prototype to support Block Energy Labs' (formerly Emera Technologies) residential microgrid system, which is operating in a residential pilot project in Florida. This relationship highlights the strategic value BTS provides through working with various companies and industries to identify growth opportunities across the battery value chain.

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NOVONIX Anode Materials Overview

NAM was established in March 2017 as a joint venture to develop and commercialise ultra-high purity, high-performance graphite anode material for the lithium-ion battery market focused on electric vehicles, energy storage, and specialty applications. In fiscal year 2019, we exercised our call option, pursuant to which we acquired all our joint venture partner’s interest in NAM and increased our ownership to 100%.

NAM exclusively owns all graphite-related intellectual property of its former joint venture partner and has the ongoing exclusivity for the development of graphite products and battery anode materials using that technology.

This intellectual property includes innovative, high-performance graphite anode materials (demonstrated in internal testing to outperform leading materials currently in the market) and production methods that we expect to deliver production costs significantly lower than existing producers.

Through operational growth and by executing strategic partnerships, NOVONIX has developed proprietary technology that delivers increased energy efficiency, negligible facility emissions, and anode materials that outperform industry standards. In June 2022, NOVONIX released the results of a Life Cycle Assessment (“LCA”), which showed an approximate 60% decrease in global warming potential compared to commercially manufactured anode grade synthetic graphite produced in China, and an approximate 30% decrease in global warming potential compared to anode grade natural graphite also produced in China. NAM strives for the highest performance while powering the battery materials industry with lower carbon emissions.

Since the United States passed the Inflation Reduction Act of 2022, battery development capacity has accelerated with increased domestic production and robust electric vehicle demand. These current trends underpin the significance of NOVONIX’s agreement with Phillips 66 in January 2022 for the joint development of new feedstocks and synthetic graphite with reduced carbon-intensive processing. We believe this partnership positions NOVONIX at the forefront of revolutionary solutions that advance the adoption of clean energy.

The Company has recently doubled its production target at its first manufacturing plant, Riverside, to 20,000 tpa. The Company plans to begin production in late 2024 at an initial 3,000 tpa to support its supply agreements with KORE Power and Panasonic Energy and intends to eventually reach at least 150,000 tpa of total production capacity in North America through the acquisition or construction of new production facilities. In the first quarter of 2023, the Company's Generation 3 Furnaces produced its GX-23 product that fully met its physical and electrochemical specification targets. The continuous output from a single Generation 3 Furnace, producing multiple tonnes of material which, was confirmed to meet the target for the degree of graphitisation for the product. In 2023, the Company met the engineering specifications for performance and efficiency of Generation 3 Furnace systems and remains on track for commercial deliveries of anode material by late 2024. The Company continues to leverage this progress in its engagements with prospective customers with whom the Company is in discussions about product qualification, production timelines, and potential supply agreements from Riverside and future facilities.

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The Company expects to complete updated engineering work to obtain the expanded capacity target at the Riverside facility at the end of the first quarter of 2024 and will enable the continued deployment of additional mass production equipment for the start of commercial production in late 2024.

The Biden Administration’s Inflation Reduction Act ("IRA") and the Bipartisan Infrastructure Law ("BIL") have provided financial incentives for companies to build a robust supply chain in the United States. On October 20, 2022, NOVONIX announced its selection by the DOE to enter negotiations for $150 million in grant funding to support the construction of a new synthetic graphite manufacturing facility with a targeted initial output of 30,000 tpa. Through negotiations with the DOE’s MESC Office, the Company announced in November 2023 that it successfully reallocated the funding more immediately to its Riverside facility, which has a target production of up to 20,000 tpa, finalised its award agreement and, accordingly, resized the award to $100 million, payable upon achieving certain milestones. The DOE grant funding will support the installation and commissioning of equipment to produce the targeted 20,000 tpa of capacity from Riverside. Under the terms of the grant, the Company must match government funds comply with a number of U.S. laws and regulations. In addition to the $100 million DOE grant funding, the Company expects its cash position, customer revenues, additional government programs, strategic partners and other capital sources to fund planned growth. Synthetic graphite is currently imported almost exclusively from China, and NOVONIX’s plant aims to be the first large-scale battery-grade synthetic graphite manufacturing operation in the U.S. The DOE's MESC Office will work closely with NOVONIX to oversee the award over the course of the project through full operation.

In the fourth quarter 2022, NAM was selected to submit a formal application to the DOE's Loan Programs Office ("LPO"). The LPO provides low-interest loans to support the manufacture of eligible vehicles and qualifying components under the Advanced Technology Vehicles Manufacturing Loan ("ATVM") program, authorised by the Energy Independence and Security Act of 2007. Through the ATVM program, LPO can provide access to debt capital that is priced at U.S. Treasury Rates for auto manufacturing projects in the United States and provide financing that meets the specific needs of individual borrowers.

NOVONIX continues to advance plans for a new production facility with an initial production target of at least 30,000 tpa. The Company continues to pursue funding support under the LPO's ATVM Program. A loan through the ATVM program may fund up to 80% of eligible project costs of the Company's next facility. The timing of this next facility and NOVONIX’s subsequent plans to reach at least 150,000 tpa of production in North America will be based on the timelines of current and future customer demand.

Aligned with its strategic partnership and investment in KORE Power, NOVONIX will be KORE Power's exclusive supplier of graphite anode material in North America. In 2022, KORE Power received strategic financing from investors and a $850 million conditional commitment from DOE LPO in 2023 for the construction of its KOREPlex facility in Phoenix, Arizona, targeted to begin production in the fourth quarter of 2024. To support KORE Power’s capacity requirement and other customers, NOVONIX's expanded production capacity target of 20,000 tpa at the Company’s Riverside facility in Chattanooga, Tennessee can fully meet KORE Power's contracted anode material needs. The production ramp will be aligned with the supply agreement starting at approximately 3,000 tpa and ramping up to 12,000 tpa as KORE Power's facility expands.

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In March 2023, we entered a joint venture agreement with TAQAT Development Company (“TAQAT”) with the intention to develop and produce anode materials for electric vehicle and energy storage system batteries in the Middle East & North Africa region. The parties planned to construct a production facility in the Kingdom of Saudi Arabia to leverage access to precursor material as feedstock for critical battery materials and to serve developing end-use markets for the manufacture and sale of EVs and ESS applications. If the parties, unless otherwise mutually agreed through an amendment, do not incorporate the joint venture, provide initial funding for a front-end engineering and design study, and obtain merger control clearance, if required, from the Kingdom of Saudi Arabia by March 31, 2024, the joint venture will terminate on its own terms. While the parties have had discussions relating to these conditions, there can be no assurance that any of the conditions will be satisfied by such date or that the parties will agree to extend the milestone.

In June 2023, NOVONIX and LGES, a global battery manufacturer, entered into a JDA providing for the joint development of active anode material for lithium-ion batteries that meets certain product quality specifications, with a term through June 2025. The material for testing will be supplied initially from NOVONIX’s pilot plant and is anticipated to be supplied in 2024 and 2025 from its mass production facilities. The JDA provides that, upon successful completion of certain development work under the JDA, LGES and NOVONIX will enter into a separate purchase agreement pursuant to which LGES will have the option to purchase up to 50,000 tons of artificial graphite anode material over a 10-year period from the start of mass production. In conjunction with the JDA, pursuant to an Unsecured Convertible Note Agreement dated as of 7 June 2023 (the "LGES Note Agreement"), NOVONIX issued an aggregate principal amount of US$30 million unsecured convertible notes to LGES on 21 June 2023. As a result of the issuance of the convertible notes and the conversion terms therein, LGES is as of 31 December 2023, the beneficial owner of more than 5% of our ordinary shares (based on the number of our outstanding ordinary shares).

In February 2024, NOVONIX and Panasonic Energy, a leading manufacturer of electric vehicle batteries in North America, each announced the signing of a binding off-take agreement for high-performance synthetic graphite anode material to be supplied to Panasonic Energy's North American operations from NOVONIX’s Riverside facility in Chattanooga, Tennessee. Under the off-take agreement, Panasonic Energy has agreed to purchase at least 10,000 tonnes of anode material for use in its North American plants over the term of 2025-2028, subject to NOVONIX achieving agreed upon milestones regarding final mass production qualification timelines prior to the fourth quarter of 2025. Panasonic Energy has the right to reduce the 10,000 tonnes volume (by up to 20%) if these milestones are not achieved by the required dates or to terminate the agreement if there is a substantial delay to achieving these milestones. During the term, if additional volumes are requested by Panasonic Energy, NOVONIX shall use its best efforts to deliver the increased volumes. The companies have agreed to a pricing structure that incorporates a mechanism for adjusting the price in response to significant changes in NOVONIX’s raw material costs.

Graphite Exploration Overview

We hold tenement rights in the Mount Dromedary Graphite Project (the "MDG Project"), a high-grade natural flake graphite deposit located in Northern Queensland, Australia. As of the date of this Annual Report, the Company has not generated any revenue from the sale of natural graphite. Despite the favourable characteristics of this natural graphite deposit and except to the extent of any exploration required under the tenement rights, in 2021 the Company put any exploration and development of

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the MDG Project on hold to conduct a strategic review of these assets. This decision was based on what the Company considered more favourable investment opportunities through the manufacturing of advanced battery anode materials and the development of new battery technologies.

During the twelve months ended 31 December 2023, the Company received and evaluated inquiries and expressions of interest in the MDG Project. In October 2023, the Company decided to pursue potential opportunities to realise the value of these assets through a strategic transaction. All tenement rights remain current, exploration activity is continuing to the extent required under the tenement rights, a resource, principally high-grade graphite, has been identified, and, as a result of the Company’s decision, the assets have been reclassified during the year ended 31 December 2023, as being available for sale. While the Company may engage in discussions with interested third parties regarding the MDG Project, there can be no assurances that any such discussions will result in any transaction involving these assets.

Tenement List

 

Tenement	Permit Holder	Grant Date	NVX Rights	Expiry Date
EPM 26025	Exco Resources Limited	14/12/2015	100% (Sub-Blocks Normanton 3123 D, J, N, O and S)	13/12/2025
EPM 17323	MD South Tenements Pty Ltd (Subsidiary of NOVONIX Limited)	20/10/2010	100%	19/10/2024
EPM 17246	MD South Tenements Pty Ltd	26/10/2010	100%	25/10/2024

 

End of Review of Operations and Activities

 

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Material Business Risks

Our business is subject to numerous risks and uncertainties that you should consider before investing in our securities. These risks are described more fully below and include, but are not limited to, risks relating to the following:

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Directors’ Report

For the Year Ended 31 December 2023

Your Directors present the following report for the year ended 31 December 2023 together with the consolidated financial report of NOVONIX Limited (the Company) and its subsidiaries (referred to hereafter as the Group) and the auditor’s report thereon. The comparative information is for the six-month period ended 31 December 2022 as the Company changed its year end to align the Company’s financial year with that of its industry peers.

Directors and Company Secretary

The following persons were Directors of NOVONIX Limited during the financial period:

Dan Akerson – resigned 20 December 2023

Tony Bellas

Robert Cooper – resigned effective 5 April 2023

Ron Edmonds

Zhanna Golodryga – resigned effective 7 September 2023

Andrew Liveris

Admiral Robert Natter

Jean Oelwang

S Vaidyanathan – appointed effective 7 September 2023

The Company Secretary is Suzanne Yeates. Appointed to the position of Company Secretary on 18 September 2015, Ms. Yeates is a Chartered Accountant and Founder and Principal of Outsourced Accounting Solutions Pty Ltd. She holds similar positions with other public and private companies.

Principal Activities

During the financial year, the principal activities of the Group included investment in scalability efforts to increase production capacity of anode materials, commercialisation of the Company’s cathode technology and expansion of cell assembly and testing capabilities.

Dividends

The Directors do not recommend the payment of a dividend. No dividend was paid during the financial year.

Review of Operations

Information on the operations and financial position of the Group and its business strategies and prospects are set out in the review of operations and activities on pages 4-14 of this annual report.

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Significant Changes in the State of Affairs

There have been no significant changes in the state of affairs of the Group during the financial year.

Likely Developments and Expected Results of Operations

Comments on likely developments and expected results of operations are included in the review of operations and activities on pages 4-14.

Events Since the End of the Financial Year

In February 2024, NOVONIX and Panasonic Energy, a leading manufacturer of EV batteries in North America, each announced the signing of a binding off-take agreement for high-performance synthetic graphite anode material to be supplied to Panasonic Energy’s North American operations from NOVONIX’s Riverside facility in Chattanooga, Tennessee. Under the off-take agreement, Panasonic Energy has agreed to purchase at least 10,000 tonnes of anode material for use in its North American plants over the term of 2025-2028, subject to NOVONIX achieving agreed upon milestones regarding final mass production qualification timelines prior to the fourth quarter of 2025. Panasonic Energy has the right to reduce the 10,000 tonnes volume (by up to 20%) if these milestones are not achieved by the required dates or to terminate the agreement if there is a substantial delay to achieving these milestones. During the term, if additional volumes are requested by Panasonic Energy, NOVONIX shall use its best efforts to deliver the increased volumes. The companies have agreed to a pricing structure that incorporates a mechanism for adjusting the price in response to significant changes in NOVONIX’s raw material costs.

There have been no other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in future financial years.

Environmental Regulations

The Group is subject to environmental regulations in respect of its exploration and development activities in Australia and its operations in the United States and Canada and is committed to undertaking all its operations in an environmentally responsible manner.

To the best of the Directors’ knowledge, the Group has adequate systems in place to ensure compliance with the requirements of all environmental legislation and are not aware of any breach of those requirements during the financial year and up to the date of the Directors’ report.

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Information on Directors

The following information is current as at the date of this report.

 

Admiral R J Natter. Chair – Non-Executive (Appointed 14 July 2017)
Experience and expertise	Robert J. Natter retired from active military service with the US Navy in 2003 and now has 17 years’ experience in the private sector of the US and Australia markets.
	During his navy career, Admiral Natter served as the Commander of the US Seventh Fleet, controlling all U.S. Navy operations throughout the western Pacific and Indian Oceans. As a four-star Admiral, Natter was Commander in Chief of the U.S. Atlantic Fleet and the first Commander of U.S. Fleet Forces Command, overseeing all Continental U.S. Navy bases and the training and readiness of all Navy ships, submarines, and aircraft squadrons based there.
	He is on the Board and chairs the Governance and Compensation Committee and the Government Security Committee of Allied Universal Security Company with over 800,000 employees worldwide. He also served on the Board of Intellisense (ISI), a privately held technology company based in Torrance, California until 2023. He also serves on the U.S. Naval Academy Foundation Board and was Chairman of the Academy Alumni Association, representing over 60,000 living Academy alumni. He also served on the Navy Seal Museum and the Yellow Ribbon Fund Boards.
Other current directorships	N/A
Former listed directorships in last 3 years	N/A
Special responsibilities	Chairman Chair of the Nominating and Corporate Governance Committee
Interests in shares and options	2,132,758 ordinary shares 1,500,000 options 77,258 share rights

 

A Bellas. Deputy Chair – Non-Executive (Appointed 11 August 2015)
Experience and expertise	Mr. Bellas was the inaugural Chair of the Company on his appointment in August 2015. He brings over 35 years of experience in the public and private sectors. Mr. Bellas was previously CEO of the Seymour Group, one of Queensland’s largest private investment and development companies. Prior to joining the Seymour Group, he held the position of CEO of Ergon Energy Ltd, a Queensland Government-owned corporation involved in electricity distribution and retailing. Before that, he was CEO of CS Energy Ltd, also a Queensland Government-owned corporation and the State’s largest electricity generation company, operating over 3,500 MW of gas-fired and coal-fired plants at four locations. Mr. Bellas previously had a long career with Queensland Treasury, achieving the position of Deputy Under Treasurer.
	Mr. Bellas is a director of the listed companies shown below and is also a director of Healthcare Logic Global Ltd, Loch Explorations Pty Ltd, Green and Gold Minerals Pty Ltd and Burlington Mining Pty Ltd.
Other current directorships	Deputy Chairman of State Gas Limited.
Former listed directorships in last 3 years	Chairman of intelliHR Limited (ceased 2023)
Special responsibilities	Chair of the Audit & Risk Committee Member of the Remuneration Committee Member of the Nominating and Corporate Governance Committee
Interests in shares and options	2,412,374 ordinary shares 69,995 share rights

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J Oelwang. Non-Executive Director (Appointed 2 March 2022)
Experience and expertise	Ms. Oelwang has 18 years of experience in helping to start and lead telecommunications companies in South Africa, Colombia, Bulgaria, Singapore, Hong Kong, Australia, and the US. This included roles in marketing, customer service, sales, and as a CEO. Over the last 20 years, she has been the CEO and President of Virgin Unite, helping lead the incubation and start-up of several global initiatives, many with a focus on sustainability, including: The Elders, The B Team, The Carbon War Room (merged with RMI), Ocean Unite, and The Caribbean Climate Smart Accelerator. Ms. Oelwang also worked with 25 Virgin businesses across 15 industries to help embed purpose in all they do and served as a Partner in the Virgin Group leading their people strategy. She is on the Advisory Council of The Elders, is a B Team leader, is the cofounder of Plus Wonder, and the author of the book Partnering.
Other current directorships	N/A
Former listed directorships in last 3 years	N/A
Special responsibilities	Chair of Remuneration Committee. Member of the Nominating and Corporate Governance Committee
Interests in shares and options	79,165 share rights

 

 

A N Liveris. Non-Executive Director (Appointed 1 July 2018)
Experience and expertise	A recognised global business leader with more than 40 years at the Dow Chemical Company, Mr. Liveris' career has spanned roles in manufacturing, engineering, sales, marketing, and business and general management around the world.
	During more than a decade as Dow’s CEO, Mr. Liveris led Dow’s transformation from a cyclical commodity chemicals manufacturing company into a global specialty chemical, advanced materials, agro-sciences, and plastics company.
	Andrew is a director of the listed companies shown below and has also been appointed as the Chair of the Brisbane Organising Committee for the 2032 Olympic and Paralympic Games.
Other current directorships	Board member of Lucid Motors (NASDAQ: LCID). Non-executive director of Saudi Arabian Oil Company (Saudi Aramco) and Worley Parsons Limited (ASX: WOR). Non-executive director of International Business Machines (IBM) Corporation (NYSE: IBM).
Former listed directorships in last 3 years	None
Special responsibilities	N/A
Interests in shares and options	9,198,794 ordinary shares 9,000,000 options 69,995 share rights

 

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S Vaidyanathan. Non-Executive Director (Appointed 7 September 2023)
Experience and expertise	A global business leader with more than 30 years in the oil and gas energy industry, Mr. Vaidyanathan’s career has spanned roles in technical, operations, business functions and general management around the world. In his prior role as Vice President and Chief Engineer, Refining Business Improvement for Phillips 66, Mr. Vaidyanathan led Phillips 66’s effort to improve margins, cost, advancing use of digital technologies and to jump start the Renewable energy activities. Mr. Vaidyanathan currently leads the Renewable Fuels business for Phillips66.
Other current directorships	N/A
Former listed directorships in last 3 years	N/A
Special responsibilities	Member of the Remuneration Committee.
Interests in shares and options	N/A^

^Mr Suresh Vaidyanathan is not permitted to receive remuneration, including any equity incentives, in his personal capacity under the terms of his employment with Phillips 66 and terms of engagement with the Company. Accordingly, all fees earned by, and all equity instruments granted to, Mr Suresh Vaidyanathan are paid or granted directly to Phillips 66.

 

 

R Edmonds. Non-Executive Director (Appointed 27 October 2022)
Experience and expertise	Ron Edmonds is the Controller, Vice President of Controllers and Tax and the Chief Accounting Officer for Dow, a material science company with 2022 sales of $57 billion. He was formerly the Co-Controller of DowDuPont, a $73 billion holding company comprised of The Dow Chemical Company and DuPont which was spun into three independent, publicly traded companies in agriculture (Corteva), materials science (Dow) and specialty products sectors (DuPont). Edmonds leads all aspects of Dow’s Controllers & Tax organisations, overseeing 1250 employees and is responsible for all accounting, management reporting, external reporting, statutory reporting, internal controls, finance systems, tax planning, tax operations and strategy, and tax controversy globally for 500 legal entities. He oversees all corporate controls that guide enterprise strategy, investment decisions, and global initiatives for Dow. He is a member of the Public Accounting Oversight Board’s Standards and Emerging Issues Advisory Group and the IFRS Advisory Council.
Other current directorships	N/A
Former listed directorships in last 3 years	N/A
Special responsibilities	Member of the Audit & Risk Committee.
Interests in shares and options	N/A

 

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Meetings of Directors

The number of meetings of the Company’s Board of Directors and of each Committee held during the year ended 31 December 2023, and the number of meetings attended by each Director were:

 

	Full Meetings of Directors		Meetings of Audit & Risk Committee		Meeting of the Remuneration Committee		Meeting of the Nominating and Corporate Governance Committee
	A	B	A	B	A	B	A	B
Admiral R J Natter D Akerson	7 7	7 7	- 0	- 1	- 3	- 4	3 3	3 3
A Bellas	7	7	5	5	4	4	3	3
R Cooper R Edmonds	2 7	3 7	1 5	2 5	1 -	1 -	- -	- -
Z Golodryga	3	5	5	5	-	-	-	-
A Liveris J Oelwang	6 7	7 7	- -	- -	- 4	- 4	- 3	- 3
S Vaidyanathan	2	2	-	-	1	1	-	-

A = Number of meetings attended

B = Number of meetings held during the time the director held office, was a member of the committee during the year and was not absent from a meeting due to a conflict of interest.

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Remuneration Report

Dear Shareholders,

On behalf of the Board of Directors and as Chair of the Remuneration Committee, I am pleased to present the remuneration report for the financial year ended 31 December 2023.

Over the last year, we strengthened our Board and Committees. Through new and upcoming appointments to the Board, we have greatly enhanced the capacity of the Board in the areas of governance, financial management, manufacturing, people, and sustainability, and increased our diversity. I was honoured to become the Chair of the Remuneration Committee in May 2023, and to work with my fellow committee members Tony Bellas and Suresh Vaidyanathan, who together have more than 32 years of experience in the energy industry. As previously announced, Sharan Burrow AC will be joining the Board as an independent Director and member of the Remuneration Committee effective 28 February 2024. We welcome her deep experience in building healthy, diverse, high-performing teams with strong governance.

We are fortunate to be working with a great management team who we believe have unmatched expertise in this emerging battery industry to help advance clean energy. Their leadership has led to a high level of retention and to a high level of satisfaction across the organisation, as we have grown to over 200 employees over the last several years, a number that is expected to increase as the Company is anticipated to enter production at our anode materials business in its next phase of growth.

Both the Board and the management team are committed to retaining our strong team and to nurturing a culture that will deliver results to shareholders and key stakeholders.

We’ve taken very seriously the feedback from our shareholders at our 2023 Annual General Meeting (“AGM”), where we received our first-ever strike on our remuneration report. Over the last nine months, we’ve expanded our engagement with our investors and proxy advisors to better understand their feedback and recommendations. We’ve also worked closely with an independent executive remuneration consultant to review a range of potential compensation structures. This has led us to more clearly identify some of the realities we face in recruiting and retaining top talent as a company in a highly specialised, nascent industry, with operations based exclusively in North America, which has notably different remuneration practises than Australia. We’ve also taken into consideration the strong macro-economic headwinds that have had a negative effect on our share price. We are grateful for the team’s continued hard work towards the significant milestones reached this year, from securing a joint development agreement and investment with LG Energy Solution (“LGES”), to finalising a USD$100 million grant from the U.S. DOE MESC, and most recently to entering into a binding off-take with Panasonic Energy. As a Board and management team, we are more energised than ever behind delivering on our mission to help revolutionise the battery market towards cleaner energy.

Through a rigorous process guided by feedback from our investors, we have identified several key changes to our 2024 remuneration strategy, which we believe will set us up for success in the years ahead. These changes include:

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We’ve also ensured that the 2023 STI payout mirrors the impact our shareholders have experienced from the decline in share price. While investors have been very clear that they deeply respect the management team (something we heard in every investor feedback session), we acknowledge the market volatility that has impacted our share price and as such have only paid out to our executives 33% of the 2023 STI target opportunity. The non-executive Directors also wanted to show their long-term dedication to the team and Company and so their share rights for the period 1 July 2023 to 31 December 2023 will not be issued.

To further demonstrate our commitment to the important mission of this organisation, the Board has adopted formal share ownership guidelines (see page 39).

We remain deeply committed to NOVONIX and confident to deliver our mission to help revolutionise the battery industry to accelerate the adoption of clean energy. We know that we have the right team, technology, and strategy in place to make this happen, and a Board who is in it for the long run. Over the last year, the team has made significant steps towards our goals, and we are confident that this will lead to great future outcomes for all our stakeholders.

We look forward to continuing to partner with you as we build from strength to strength. We always welcome your feedback and insights and are grateful for the time many of you took over this last nine months to have honest conversations with us. We will continue to review our compensation plans and learn from best practises. Thanks so much for your ongoing belief in NOVONIX and its ability to be a part of revolutionising the battery industry.

With gratitude,

 

 

 

Jean Oelwang

Chairperson of the Remuneration Committee

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OVERVIEW OF THE REMUNERATION REPORT

 

The Board of Directors present the NOVONIX Limited 2023 remuneration report, outlining key aspects of our remuneration policy and framework and remuneration awarded this financial year ending 31 December 2023. The remuneration report also addresses our response to the vote on the remuneration report at last year’s AGM in form of our 2024 remuneration program and enhanced disclosures in this remuneration report. The remuneration report has been audited as required by s308 (3C) of the Corporations Act 2001 and contains the following sections:

 

REMUNERATION AND OUR 2023 PERFORMANCE

 

We are in the business of supplying advanced, high-performance battery materials, equipment, and services to the global lithium-ion battery market. Founded in 2012 and publicly traded since 2015, we started as a company in a nascent industry and continue to grow scale in an increasingly highly specialised industry.

 

As part of our business strategy, we currently maintain a lean but experienced team. To deliver on our ambitious business objectives, we aim to attract and retain high-quality employees who embody our core values of curiosity, collaboration, and commitment in a competitive market and even more competitive industry. We are a dual-listed Australian corporation with a management team and operations based entirely in North America, with over 200 full-time employees in the United States and Canada.

 

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In 2023, our management made important strides in our business, executing on several critical business goals, namely:

 

		signed a JDA with LGES for the joint research and development of artificial graphite anode material for lithium-ion batteries, and an agreement to issue US$30 million worth of unsecured convertible notes to LGES
		finalised US$100 million in grant funding from the U.S. Department of Energy’s Office of Manufacturing and Energy Supply Chains to expand domestic production of high-performance, synthetic graphite anode materials at our Riverside facility in Chattanooga, Tennessee
		ran a production campaign on our Generation 3 Furnaces that produced material meeting all specifications while also reaching the equipment design throughput targets
		signed a binding off-take with Panasonic for 10,000 tonnes of high-performance synthetic graphite from our Riverside facility, to be used in their North American operations, since the conclusion of FY2023.
		commissioned a 10 tpa cathode pilot line and released the results of a third-party engineering study on our proprietary all-dry, zero-waste cathode synthesis process highlighted potential improvements over conventional cathode synthesis.

 

As a growth stage company, we incurred in FY 2023, and have historically incurred, operating losses due to significant expenses, which we expect will continue as we develop our technology and scale production ahead of eventual commercialisation and profitability. During the year, our share price also experienced some decline much like most in our sector. This stemmed from various factors, many of which were unrelated to leadership performance but which we recognise still negatively impacted shareholders, including: fluctuations in current and expected demand for EVs and ESS; trends in technology adoption; international market prices for battery anode materials; and general market sentiment towards the battery materials and lithium-ion battery sectors. Given the nature of our activities and the consequential operating results, we have not proposed or paid dividends to shareholders or returned capital to them.

 

In this critical growth phase where we aim to achieve important business milestones and the challenging goals we have set for ourselves, while sustaining losses and seeing our share price fluctuate, we must take care that our remuneration program accomplishes several aims: it must incentivise and reflect the performance of our pre-profitability business assessed mainly on technology and operating milestones, rather than conventional financial metrics; it must promote the interests of shareholders, whose investment in us is often impacted by macroeconomic factors outside our control; it must meet the expectations of both Australian and U.S. investors, each of whom have distinct expectations around remuneration; and, as a dual-listed Australian company with operations exclusively in North America, it must ensure the ability to attract and retain employees in an intensely competitive global industry.

 

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The details of share price movements are as follows:

 

	31 December 2023	31 December 2022	30 June 2022	30 June 2021	30 June 2020
Share price (AUD)	$0.735	$1.47	$2.28	$2.22	$0.87

 

As discussed in this remuneration report, our 2023 remuneration program, and even more so our 2024 program, achieves these goals. The program incentivises management to deliver growth and results, while at the same time motivating and retaining key talent in the North American market where our operations are located; we recognise these as vital to achieving both short and long-term business objectives and enhancing shareholder value in the long term. Our remuneration program also ensures that management feels the same shorter-term impact on share price coming from macroeconomic headwinds as do our shareholders. For instance, despite the achievement of the majority of required STI thresholds in 2023, in the context of our share prices performance, we exercised discretion to further reduce and pay out only 33% of the STI target opportunity.

 

The following table summarises total remuneration for each of the executive KMPs (as defined below) for 2023 showing the grant date fair values of the equity grants.

 

Name	Fixed Remuneration (USD$)				Variable Remuneration (USD$)
	Cash Salary	Post- Employment Benefits	Annual Leave Entitlements	Non-Monetary Benefits	STI	Performance/Share Rights	Options1	Total (USD$)
C Burns2	659,571	11,469	25,648	1,915	215,562	1,106,175	60,594	2,080,934
N Liveris	405,833	11,250	15,653	26,594	134,310	325,469	12,065	923,482
R Buttar	380,469	5,720	14,675	8,401	125,916	573,629	-	1,094,387

The following table shows the total remuneration realised by our executive KMPs in 2023, based on the value of outstanding equity awards that vested or were exercised during the year, excluding post-employment and annual leave entitlements:

 

Name	Fixed Remuneration (USD$)	Variable Remuneration (USD$)
	Cash Salary	STI	Value Realised on Performance Rights with Performance-Based Vesting	Value Realised on Performance Rights with Only Time-Based Vesting	Value Realised on Options Exercised	Total (USD$)
C Burns	659,571	215,562	-	-	-	875,133
N Liveris	405,833	134,310	-	-	-	540,143
R Buttar	380,469	125,916	-	103,9003	-	610,285

 

Additionally, a discussion of our 2024 remuneration is included under “Our Response to Last Year’s AGM Vote.”

 

1 Represents options held by the relevant KMP during the 2023 fiscal year. No options were granted during the 2023 fiscal year.

2 Cash salary amounts for Chris Burns throughout this remuneration report represent the USD translated amount of the salary he received in CAD.

3 Value converted from AUD.

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KEY MANAGEMENT PERSONNEL (KMPS) COVERED BY THE REMUNERATION REPORT

 

This remuneration report discusses the compensation of the key management personnel listed below (defined under Australian rules as individuals who have authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly, including all Directors).

 

Name	Position	Country	Term as KMP in FY2023
NON-EXECUTIVE DIRECTORS
R Natter	Independent Chairman	United States	Full year
D Akerson	Independent Non-executive Director	United States	Resigned effective 20 December 2023
A Bellas	Independent Deputy Chairman	Australia	Full year
R Cooper	Independent Non-executive Director	Australia	Resigned effective 5 April 2023
R Edmonds	Independent Non-executive Director	United States	Full year
Z Golodryga	Non-executive Director	United States	Resigned effective 7 September 2023
A Liveris	Non-executive Director	Australia	Full year
J Oelwang	Independent Non-executive Director	United States	Full year
S Vaidyanathan	Non-executive Director	United States	Appointed effective 7 September 2023
EXECUTIVE KMP
C Burns	Chief Executive Officer	Canada	Full year
N Liveris	Chief Financial Officer	United States	Full year
R Buttar	Chief Legal & Administrative Officer	United States	Full year

 

There have been no changes to KMPs, both since the end of the reporting period and as of the date of this remuneration report. As previously announced, effective 28 February 2024, Sharan Burrow AC will be joining the Board as an independent non-executive Director and member of the Remuneration Committee.

 

KMP REMUNERATION GOVERNANCE

 

Role of the Remuneration Committee

 

The Board is responsible for the Company’s remuneration strategy. The Remuneration Committee, comprised of a majority of independent, non-executive Directors, advises the Board on remuneration policies and practices generally, and makes specific recommendations on remuneration package and other terms of employment for executive KMPs and non-executive Directors. Individual pay structures and outcomes are developed in consultation with external and independent remuneration consultants, and reviewed and approved by the Remuneration Committee, which then recommends them for approval to the Board.

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In making recommendations to the Board, the Remuneration Committee considers, among other things, relevant market trends and practices, individual roles and responsibilities, legal and regulatory requirements, diversity (including with respect to gender), and feedback from shareholders and other stakeholders. This governance structure is aimed at ensuring that our remuneration program aligns the pay of our management team with shareholder value, within the context of our Company’s unique situation as a dual-listed Australian company in a critical growth stage with a management team and operations based entirely in North America.

 

Role of Management

 

Although the Remuneration Committee ultimately is responsible for reviewing and making recommendations to the Board for the Company’s remuneration policies and framework, the Remuneration Committee may receive input from the management team, which it reviews closely. The Remuneration Committee, at its discretion, may invite representatives of management and other employed personnel to attend committee meetings. Our executive KMPs do not participate in Remuneration Committee discussions about their own remuneration and may not have any indirect conflict in setting the remuneration of other KMPs. As discussed under “Oversight of Changes to our Remuneration Program,” the Remuneration Committee met with management extensively throughout 2023 to evaluate the remuneration strategy for 2024.

 

Role of Consultants

 

When appropriate, the Remuneration Committee will seek advice or recommendations from external and independent expert consultants, including benchmarking studies. In 2023, the Remuneration Committee retained AON Consulting Inc. (“AON”), which advised on various remuneration-related items, including peer group development, market practices, industry trends, investor views, and market data. Advice provided by consultants during the year did not constitute a “remuneration recommendation” as defined in section 9B of the Corporations Act and was received free from any undue influence by KMPs to whom the advice related. Furthermore, our Remuneration Committee concluded that AON is “independent” pursuant to Rule 5605(d)(3) of The Nasdaq Stock Market (“Nasdaq”).

Remuneration Peer Group

To understand the external market competitiveness of the compensation for our KMPs, our independent executive remuneration consultant analyzes publicly available information and compares the compensation of each KMP to data for comparable positions at companies in our peer group and provides a report to the Remuneration Committee. The Remuneration Committee reviews our peer group periodically, with input from its independent executive remuneration consultant. In creating the peer group, our independent executive remuneration consultant considers various factors, including: (i) relative size to our Company (revenue, market capitalisation, and other relevant criteria); and (ii) nature of business (business focus, model, and location).

The 2023 compensation peer group consisted of 18 companies publicly traded in the United States in various industries, including electronic equipment and instruments, specialty chemicals, electrical components and equipment, automobile manufacturers, automotive retail, construction machinery

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and heavy transportation equipment, environmental and facilities services, and diversified metals and mining, with revenues generally less than USD$1 billion.

OUR RESPONSE TO LAST YEAR’S AGM VOTE

At last year’s AGM, 40% of the votes cast at the meeting voted against the adoption of the remuneration report and a “first strike” was recorded. A “first strike” occurs under Australian rules when more than 25% of the votes cast at the meeting voted against the adoption of the remuneration report. In this section, we discuss how we engaged with shareholders, what we heard from them, and how we considered their valued input in creating our 2024 remuneration program and enhancing the disclosures in this remuneration report.

Outreach to Shareholders

We remain committed to listening to our shareholders as we continually review and evaluate our remuneration program. We maintain an ongoing, proactive outreach effort with our shareholders and regularly engage with our shareholders to seek their input, to remain well-informed regarding their perspectives, and to help increase their understanding of our business. As part of that ongoing commitment and to understand the concerns that gave rise to the prior year’s voting results, we engaged extensively with our shareholders and proxy advisors in the latter half of 2023.

We believe that our shareholder engagement program was robust. Close to a majority of our shareholders are individual and retail investors, many of which, to the extent they voted at last year’s AGM, are either unidentifiable or hold less than 100,000 shares. Additionally, at our last AGM, more than one third of all shares outstanding were held by current and former insiders and Phillips 66. All former insiders voted for the adoption of our remuneration report. Phillips 66 was not permitted to vote toward the remuneration report due to restrictions under Australian law.

 

Company Participants		Results of Outreach
ü ü ü ü	Chairperson of the Board Deputy Chairperson of the Board Chairperson of the Remuneration Committee Chief Legal and Administrative Officer	Shareholders We Contacted: • 21 of our largest shareholders   Shareholders We Met or Spoke with Individually: • More than 70% of shareholders who voted against remuneration at 2023 AGM • Two of our four largest shareholders after Phillips 66 • Seven of our largest shareholders overall

 

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The resulting discussions provided consistent and valuable feedback that reflected the following views:

 

ü	Our current management team is well-respected and critical to the growth of our business, and competition for talent in our sector is fierce.
ü	Recent enhancements to communication with shareholders were well-received.
ü	Investors have long-term confidence in the Company and believe pay should be better aligned with performance, including with regard to share price and other operational metrics.
ü	The Company is in a unique and complex situation with respect to its geography, market, industry, and growth stage.
ü	A better understanding of benchmarking against industry compensation would be helpful, in part given our primary listing in Australia.
ü	Greater understanding of financial/non-financial metrics impacting our profitability, as well as disclosure around compensatory performance metrics and their achievement, is key.

 

Oversight of Changes to our Remuneration Program

After the AGM, the Remuneration Committee met extensively with management, our independent executive remuneration consultant, and other external advisors to develop a long-term plan for improving the alignment of our remuneration program with enhancing shareholder value. A total of 15 meetings were held. The Remuneration Committee considered the following criteria in its deliberations:

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Results of Shareholder Outreach and Changes to our Remuneration Program

In response to shareholder and proxy advisor concerns, we committed to reforming our remuneration program for 2024, and to include enhanced disclosures in this 2023 remuneration report. The key changes made to the 2024 remuneration program are as follows:

 

What We Heard	What We Did
Remuneration was not sufficiently aligned with performance.
STI performance criteria: STIs should be more closely aligned to well-understood quantitative and financial metrics.	For STIs granted in 2024, goals include forward-looking revenue and revenue in-hand (aggregate 25% weight), budget variance (10% weight) and access to capital (10% weight), with the rest made of up strategic, operational, and people/ESG-based metrics, in light of our continued emphasis on scaling our business as a growth-stage company.
STI performance criteria: STI payouts should better reflect negative share price performance.	For STIs granted in 2024, the Remuneration Committee retains discretion to reduce annual STI payout based on negative annual TSR and other factors, thus further aligning our management’s interests with those of shareholders.
Long-term incentive (“LTI”) performance criteria: With STI payouts linked to business goals, LTI payouts should be better linked to share price performance. LTI payouts should also be based on multi-year performance.	For LTI awards granted in 2024, all performance rights vest based on corporate performance, with none vesting solely based on time. Payouts are measured based on achievement of relative TSR (versus a peer group of 20 companies primarily focused in the diversified metals and electronic equipment industries) over a three-year performance period and are capped at the target opportunity. Performance rights require a minimum level of relative TSR (35th percentile) to achieve any payout, regardless of revenue earned, and a relative TSR of at least 60th percentile to pay out at the highest level. This establishes a rigorous framework for evaluating Company performance and is directly aligned with shareholders’ interests.
LTI performance criteria: LTI payouts should align with longer-term business goal of achieving revenues.	Performance rights granted in 2024 also include a revenue modifier based on the attainment of a three-year revenue goal (with the payout still capped at the target opportunity). The addition of this modifier reinforces our focus on top-line revenue growth, a core metric for effectively scaling and growing the business.
Size of equity grants was not in line with market practise for Australia.
LTI quantum: Generally, local Australian companies pay their executives LTIs of a more modest quantum.	For LTIs granted in 2024, awarded LTI opportunities with a quantum substantially below the median of our U.S. peer group.
Director compensation: Market in Australia is to pay directors LTIs with a lower value.	For 2024, Director LTI quantum reduced 50% in value from the prior year.
Investors could benefit from enhanced disclosure of performance metrics.	This 2023 remuneration report includes enhanced detail of: • how 2023 incentives and payouts were determined; • greater context around the “why” of our remuneration design and key decisions • our compensation governance

 

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In addition, the Company changed its fiscal year-end from June 30 to December 31. As a consequence of this change, Directors were scheduled to receive share rights for the period 1 July 2023 to 31 December 2023 (“2023 partial year”) to align with the new fiscal year-end. Shareholders approved the 2023 partial year share rights; however, they were not issued and will not be issued. The Board has determined that one Director shall be granted his share rights for the period from his appointment in October 2022 to 30 June 2023, subject to shareholder approval. We view this as an additional sign to shareholders of the Board’s long-term commitment to the team and Company. See “Non-Executive Director Remuneration.”

OUR REMUNERATION STRATEGY

As discussed in “Remuneration and our 2023 Performance,” our remuneration strategy is informed by both U.S. and Australian pay practices, our market, industry, and growth stage, and is designed to ensure we can:

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These strategic priorities have led us to implement the following pay practices in 2023 and 2024:

 

	Fixed Remuneration1	Performance-Based Remuneration
		Short-Term Incentives	Long-Term Incentives
Rationale	Attracts and retains key personnel via competitive baseline pay and provides a level of cash income predictability and stability.	Focuses attention on corporate KPIs that promote achievement of strategic objectives and shareholder wealth.	Serves multi-pronged purpose: • retains employees • provides a framework for increasing shareholder value and business performance through key objectives that we believe are critical to long-term profitability • conserves cash
Delivered as	Cash	Cash	Performance rights in our ordinary shares (in 2023, both performance-vesting and time-vesting, and in 2024, performance-vesting only).
Process	Set annually.	Granted annually. Remuneration Committee sets one-year performance goals upon grant at beginning of year and assesses their achievement after end of that year.	Granted annually. For performance-vesting grants, Remuneration Committee sets multi-year performance goals upon grant at beginning of year and assesses their achievement after a typical 3-year period.
Quantum of opportunity	Set according to each KMP’s accountabilities, experience and qualifications, and market relativities.	Opportunity set as a percentage of fixed remuneration. Pay outcomes are variable based on the achievement of performance criteria and Remuneration Committee’s discretion.	Opportunity set based on target number of shares. Actual pay outcomes following vesting are variable subject to share price fluctuations and/or the achievement of performance criteria.
Performance criteria	N/A	Corporate KPIs (business milestones), allowing use of negative discretion.	For 2023, revenue. For 2024, relative TSR with a revenue modifier.
Performance and service period	N/A	1 year.	3 years.
Cessation of employment	N/A	No award will be made to employees who have ceased employment.	Unvested performance rights are forfeited, unless Board exercises discretion.

1 Fixed remuneration includes cash salary, post-employment benefits, annual leave entitlements and non-monetary benefits.

OUR REMUNERATION MIX

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Our Remuneration Committee reviews and recommends to the Board the remuneration strategy for our KMPs annually to ensure it remains aligned to our business needs and outcomes. In our current, early stage of growth, setting quantitative target performance levels can be challenging. This is further complicated by rapidly shifting market and regulatory conditions. The majority of our target compensation is performance-based and at risk, and, for our CEO, focused on long-term performance. Our 2024 pay mix also reflects a significant reduction in LTI opportunity (without a significant change in cash salary and STI opportunity levels).

REMUNERATION OUTCOMES FOR THE YEAR ENDED 31 DECEMBER 2023

Cash Salary/Fixed Remuneration

The Remuneration Committee provides guidance in setting cash salaries for the Company’s KMPs at levels that reflect the Remuneration Committee’s assessment of competitive compensation averages within our peer group for individuals with similar responsibilities at companies with similar financial, operating and industry characteristics, in similar locations. The members of the Remuneration Committee also evaluate KMP compensation using their accumulated individual knowledge and industry experience, as well as publicly available compensation information with respect to companies within our peer group.

In 2023, the Remuneration Committee increased our KMPs’ cash salaries in amounts ranging from 2% to 5%, as a cost-of-living adjustment, as shown below.

 

KMP	2022 Cash Salary (USD$)	2023 Cash Salary (USD$)	% Change
Chris Burns	$637,738	$653,217	2%
Nick Liveris	$400,513	$407,000	2%
Rashda Buttar	$361,944	$381,563	5%

 

Short-term Incentives

The purpose of our STIs is to motivate and reward our KMPs for the attainment of measurable performance objectives, including annually set goals for financing, strategic, and operational performance in line with KPIs. These are criteria that management is focused on for the Company in our current growth stage. The KPIs are the same among all KMPs and measure the Company’s achievement during the fiscal year. Financial metrics do not currently make up the majority of KPIs given that we remain focused on scaling the business and that certain of our long-term incentives already include a revenue metric.

During the year for which performance is measured, each KMP receives an STI target award, which is a percentage of their salary for that year. Following the end of the year, Company performance against each KPI is measured. The level of achievement on each KPI is multiplied by the relative weight for that KPI, which then translates to a defined payout expressed as a percentage of the target STI.

For 2023, the target STI was 100% of salary for all KMPs. The table below shows the STI objectives and outcomes for the fiscal year.

 

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Metric Category (Weighting)	Goals	% of Total STI Assuming Highest Rating	Rating	Outcome as % of total STI
NAM Operational (35%)	Product reaching customer specifications	7.0%	80%	5.6%
	Definition of mass production equipment and process	7.0%	90%	6.3%
	Equipment on site or on order to align with production targets	7.0%	80%	5.6%
	Customer off-take agreements	7.0%	50%	3.5%
	Engineering progress on Greenfield facility	7.0%	25%	1.8%
	NAM Operational Subtotal			22.8%
Financing (25%)	Secure target funding for Greenfield facility	12.5%	20%	2.5%
	Secured funding relative to ongoing operational spend	12.5%	80%	10%
	Financing Performance Subtotal			12.5%
Strategy (20%)	Secure cathode technology partnership	6.7%	0%	0%
	Secure non-US partner for anode materials expansion plan	6.7%	100%	6.7%
	Establish key ESG program metrics and disclosures	6.7%	100%	6.7%
	Strategy Subtotal			13.4%
BTS Operational (10%)	Develop long term strategic partnerships at BTS	3.3%	33%	1.1%
	Cathode material performance meeting targets	3.3%	90%	3%
	Data solution customer onboarding	3.3%	100%	3.3%
	BTS Operational Subtotal			7.4%
People (10%)	TRIFR targets	3.3%	100%	3.3%
	Employee engagement metrics	3.3%	100%	3.3%
	Employee retention metrics	3.3%	100%	3.3%
	People Subtotal			10%
STI Performance Ratio				66%
STI Payout Ratio Approved by the Committee and Board				33%

 

The Remuneration Committee assessed the Company’s performance of KPIs for the financial year ended 31 December 2023 as achieving 66% of target. This reflects achievement of several significant operational, financial, and people goals. Despite the achievement of the majority of required STI thresholds, in the context of the share price performance in the year, the Remuneration Committee recommended that the Board exercise its discretion to further reduce and pay out only 50% of the calculated STI to ensure KMP remuneration is aligned to enhancing shareholder value. This represents a significant reduction from the payout of 77.5% for the six-month period ending 31 December 2022. This led to the following payouts for 2023, which the Company believes reflects the close link between the STI remuneration and the Company performance during the financial year.

 

KMP	Cash Salary (USD$)	STI Target (%)	Achieved Performance Ratio	STI Payout Ratio	Actual Payout (USD$)
Chris Burns	$653,217	100%	66%	33%	$215,562
Nick Liveris	$407,000	100%	66%	33%	$134,310
Rashda Buttar	$381,563	100%	66%	33%	$125,916

 

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Long-term Incentives

Performance rights

KMPs participate in the LTIP, composed of grants of performance rights with varying vesting conditions. The dollar value of the LTI award is converted into a fixed number of performance rights based on the market value of NOVONIX shares at the time of grant.

In 2023, we granted both performance rights, including performance rights vesting based on the achievement of performance criteria, such as corporate goals, and those vesting only based on continued service over time (referred to in this remuneration report as vesting based on “time”) to the Company, as follows:

 

KMP	Performance Rights Vesting Based on Performance (Target Opportunity)(#)	Details Regarding Vesting Criteria	Performance Rights Vesting Only Based on Time(#)	Details Regarding Vesting Criteria	Total Rights(#)
Chris Burns	802,435	Vest subject to achievement of revenue, for the 12-month period preceding vesting date (31 December 2025) as follows:   · 0-50% of target opportunity for revenue up to USD$50M (calculated using linear interpolation). · 50-100% of target opportunity for revenue from USD$50M - $125M+ (calculated using linear interpolation, capped at 100%).	802,436	Vest subject to continued employment	1,604,871
Nick Liveris	274,517		274,518		549,035
Rashda Buttar	126,701		126,700		253,401

 

The mix of performance-and time-based grants, the performance criteria used, and three-year vesting period for all awards were unchanged in 2023 from 2022. Payouts of performance-vesting rights are capped at target.

The performance rights (both performance and time-based rights) listed above were granted to Mr. Liveris on 5 April 2023 and to Mr. Burns and Ms. Buttar on 13 April 2023. Any unvested performance rights will lapse. The long-term incentives will be issued as performance rights under the Company’s existing Performance Rights Plan.

The Remuneration Committee believes that the performance criteria in the performance rights provide challenging but appropriate incentives to KMPs given our focus on producing revenue over the coming years and our recognition of the necessary runway for achieving that goal.

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Options

No options were awarded to executive KMPs during the 2023 financial year.

OTHER ASPECTS OF OUR REMUNERATION PROGRAM

Share Ownership Guidelines

To further align the interests of our non-executive Directors and other leadership with those of shareholders, the Company has adopted share ownership guidelines. These require (1) each non-executive Director (other than those who do not receive remuneration from us, as further described below) to retain ordinary shares having a value of at least three times the annual cash retainer fee and (2) the Chief Executive Officer to retain ordinary shares having a value equal to three times his annual salary. Until reaching the required ownership level, non-executive Directors covered by the guidelines and the Chief Executive Officer are required to retain at least 50% of their shares, net of applicable tax withholding and the payment of any exercise or purchase price (if applicable), received upon the vesting or settlement of equity awards or the exercise of share options. Each non-executive Director covered by the guidelines and the Chief Executive Officer has five years to comply with the guidelines, and options and unvested performance rights do not count toward the requirement. The following shows compliance with the ownership guidelines as of 31 December 2023:

 

KMP	Share Ownership Guideline (Multiple of Salary or Retainer)	Share Ownership as of 31 December 2023
C Burns	3x cash salary	Guidelines met
Non-executive Directors*	3x cash retainer	Guidelines met**

* Does not include Ms. Golodryga and Mr. Vaidyanathan, who are not permitted to receive remuneration, including any equity incentives, in their personal capacity under the terms of their employment with Phillips 66 and terms of engagement with the Company (all of whose equity grants are paid or granted directly to Phillips 66).

** Non-executive Directors who joined the Company in the past two years have not yet met the required ownership level but retain at least 50% of their shares as required.

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Clawback Policy

We maintain a clawback policy as required by the rules of Nasdaq. Our clawback policy covers each of our current and former executive officers (i.e., executive KMPs). The policy provides that, subject to the limited exemptions provided by the Nasdaq rules, if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the securities laws, the Remuneration Committee must reasonably promptly seek recovery of any cash or equity-based incentive compensation (including vested and unvested equity) paid or awarded to the covered individual, to the extent that the compensation (i) was based on erroneous financial data and (ii) exceeded what would have been paid to the executive officer under the restatement. Recovery applies to any such excess cash or equity-based bonus/other incentive compensation received by any covered individual, while he/she was an executive officer, on or after 2 October 2023 during the three completed fiscal years immediately preceding the date on which the Company determines an accounting statement is required. For more information, see the full text of our claw-back policy, which is filed as an exhibit to our Annual Report on Form 20-F.

REMUNERATION EXPENSES FOR KMPS

The following table details the remuneration expenses recognised for the Company’s KMPs and non-executive Directors, for the current period and previous financial year measured in accordance with accounting standard requirements.

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Year ended 31 December 2023 – All amounts are shown in USD$.

Name	Fixed Remuneration				Variable Remuneration
	Cash Salary	Post- Employment Benefits	Annual Leave entitlements	Non-Monetary Benefits1	STI	Performance/ Share Rights	Options2	Total
Key Management Personnel
C Burns	659,571	11,469	25,648	1,915	215,562	1,106,175	60,594	2,080,934
N Liveris	405,833	11,250	7,961	26,594	134,310	325,469	12,065	923,482
R Buttar	380,469	5,720	252	8,401	125,916	573,629	-	1,094,387
Non-executive Directors
D Akerson (Ceased 20/12/2023)	63,333	-	-	-	-	-	-	63,333
A Bellas	92,743	9,974	-	-	-	22,593	-	125,310
R Cooper (Ceased 5/04/2023)	17,281	1,814	-	-	-	5,476	-	24,571
R Edmonds	60,000	-	-	-	-	31,943	-	91,943
Z Golodryga (ceased 7/9/2023)	41,500	-	-	-	-	22,593	-	64,093
A Liveris	45,241	4,865	-	-	-	22,593	-	72,699
R Natter	116,000	-	-	-	-	22,593	-	138,593
J Oelwang	68,125	-	-	-	-	22,593	-	90,718
S Vaidyanathan (appointed 7/9/2023)	18,034	-	-	-	-	-	-	18,034
Total KMP remuneration expensed	1,968,130	45,092	33,861	36,910	475,788	2,155,657	72,659	4,788,097

1 Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6, primarily health insurance.

2 Represents options held by the relevant KMP during the 2023 fiscal year. No options were granted during the 2023 fiscal year.

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Six-month period ended 31 December 2022 – All amounts are shown in USD$.

Name	Fixed Remuneration			Variable Remuneration
	Cash Salary	Post- Employment Benefits	Non-Monetary Benefits1	STI	Performance/ Share Rights	Options	Total
Key Management Personnel
C Burns	303,971	5,714	975	250,635	2,270,362	11,394	2,843,051
N Liveris	200,000	4,527	9,536	155,000	600,418	2,445	971,926
R Buttar	185,250	-	4,422	108,984	677,226	-	975,882
Non-executive Directors
D Akerson (Appointed 27/10/2022)	9,583	-	-	-	-	-	9,583
A Bellas	45,547	4,782	-	-	112,8572	-	163,186
R Cooper	33,582	3,526	-	-	112,8572	-	149,965
R Edmonds (Appointed 27/10/2022)	10,000	-	-	-	-	-	10,000
Z Golodryga	30,000	-	-	-	112,8572	-	142,857
A Liveris	23,318	2,448	-	-	112,8572	-	138,623
R Natter	56,388	-	-	-	126,9712	-	183,359
J Oelwang	30,708	-	-	-	130,6772	-	161,385
Total KMP remuneration expensed	928,347	20,997	14,933	514,619	4,257,082	13,839	5,749,817

 

1 Short-term benefits as per Corporations Regulation 2M.3.03(1) Item 6, primarily health insurance.

2 Revised to reflect the appropriate vesting period for the FY23 Share Rights award, resulting in an increase of $44,099 in performance/share rights for each of A Bellas, R Cooper, A Liveris, J Oelwang, R Natter and Z Golodryga.

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Contractual Arrangements with KMPs

Component	Chris Burns	Nick Liveris	Rashda Buttar
Annual fixed remuneration (USD$)	653,217	407,000	381,563
Contract duration	Ongoing contract	Ongoing contract	Ongoing contract
Notice by the individual / company	3 months	3 months	3 months

AON, an external remuneration consultant, is engaged to benchmark KMP salaries, with those salaries positioned at the 50th percentile of the peer group. KMP salaries also are set taking into account each KMP’s accountabilities, experience, and qualifications.

NON-EXECUTIVE DIRECTOR REMUNERATION

Non-executive Director remuneration includes both a cash component and an annual grant of equity awards using a value-based approach by issuing share rights to non-executive Directors each financial year.

At the 2022 AGM, the shareholders approved the granting of the financial year 2023 share rights (covering the period 1 July 2022 to 30 June 2023) to Directors. The number of share rights granted was calculated by dividing the value of the share rights (USD$110,000) by the closing share price of the Company’s shares on the ASX on 30 June 2022 and the USD$/AUD$ spot rate as of 30 June 2022. The share rights automatically vested on 30 June 2023.

 

In addition, the Company changed its fiscal year-end from June 30 to December 31. As a consequence of this change, Directors were scheduled to receive share rights for the period 1 July 2023 to 31 December 2023 (“2023 partial year”) to align with the new fiscal year-end. Shareholders approved the 2023 partial year share rights; however, they were not issued and will not be issued. The Board has determined that one Director shall be granted his share rights for the period from his appointment in October 2022 to 30 June 2023, subject to shareholder approval. We view this as an additional sign to shareholders of the Board’s long-term commitment to the team and Company.

In addition, and with effect from 1 January 2024, the value of the share rights to be granted to Directors each year has been reduced from USD$110,000 to USD$55,000.

If a non-executive Director is appointed during the financial year, the number of share rights to be issued comprises a pro-rata amount of the value of the share rights, based on the date of the non-executive Director’s appointment, as a proportion of the financial year. The number of share rights is then calculated by dividing the value of the share rights by the closing share price of the Company’s shares on the ASX and the USD$/AUD$ spot rate on the trading day immediately prior to the non-executive Director’s appointment.

If a non-executive Director ceases to hold office as a Director prior to the vesting date, that person's share rights will lapse, and they will be entitled to a pro-rata amount of shares representing the proportion of the relevant financial year that such person was a non-executive Director.

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Ms. Golodryga and Mr. Vaidyanathan are not permitted to receive remuneration, including any equity incentives, in their personal capacity under the terms of their employment with Phillips 66 and terms of engagement with the Company. Accordingly, all fees earned by, and all equity instruments granted to, Ms Golodryga and Mr. Vaidyanathan are paid or granted directly to Phillips 66.

The table below shows the value of share rights that were granted, exercised and forfeited during the year ended 31 December 2023.

 

Non-executive Director share rights
2023	Number Granted	Value Granted (AUD$)1	Value Exercised (AUD$)1	Number Forfeited	Value Forfeited (AUD$)1
D Akerson	-	-	-	-	-
A Bellas	-	-	72,095	-	-
R Cooper	-	-	54,910	16,684	48,384
R Edmonds	65,405	48,073	-	-	-
Z Golodryga	-	-	72,095	-	-
A Liveris	-	-	72,095	-	-
R Natter	-	-	79,576	-	-
J Oelwang	-	-	81,540	-	-

1 Amounts are disclosed in AUD$ as the value is determined based on the ASX share price at grant date, which is denominated in AUD.

The non-executive Directors received the following cash fees:

 

	USD$
Chairman	106,000
Base non-executive Director fee	50,000
Chair of Audit & Risk Committee	20,000
Member of Audit & Risk Committee	10,000
Chair of Nominating and Corporate Governance Committee	10,000
Member of Nominating and Corporate Governance Committee	5,000
Chair of Remuneration Committee	15,000
Member of Remuneration Committee	7,500

The current base fees were reviewed with effect from 1 September 2022.

The maximum annual aggregate non-executive Directors’ fee pool limit is USD$700,000 (excluding share-based payments) and was approved by shareholders at the 2023 AGM.

Any Director who devotes special attention to the business of the Company, or who otherwise performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director may be paid extra remuneration as determined by the Directors, which will not form part

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of the aggregate fee pool limit above. Non-executive Directors are not entitled to any performance-related remuneration or retirement allowances outside of statutory superannuation entitlements.

All non-executive Directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board policies and terms, including remuneration relevant to the office of Director.

Additional Statutory Information

Performance Based Remuneration Granted, Forfeited, and Cancelled During the Year

The table below shows for each KMP how much of their STI cash bonus was awarded and how much was forfeited. It also shows the fair value of performance rights that were granted, exercised, forfeited and cancelled (where applicable) during the year ended 31 December 2023. The number of performance rights and percentages vested/forfeited for each grant are disclosed in section (ii) on page 50 below.

 

	Total STI Bonus			LTI Performance Rights
2023	Total STI Opportunity $	Awarded %	Forfeited %		Value Granted AUD $	Value Exercised AUD $*
C Burns	654,217	33%	67%		1,749,309	-
N Liveris	407,000	33%	67%		664,332	-
R Buttar	381,563	33%	67%		276,207	155,738

 

* The value at the exercise date of options/performance rights that were granted as part of remuneration and were exercised during the year has been determined as the intrinsic value of the options at that date.

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(ii) Terms and conditions of the share-based payment arrangements

Options

The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are as follows:

 

Name Grant Date	Vesting Date	Expiry Date	Number Under Option	Exercise Price AUD $	Value per Option at Grant Date AUD $	Performance Achieved	Vested %
C Burns
13/03/2019	30/09/2025~	Cessation of employment	850,000	$0.50	$0.54	-	-
13/03/2019	31/12/2025~	Cessation of employment	850,000	$0.50	$0.55	-	-
13/03/2019	31/07/2026~	Cessation of employment	850,000	$0.50	$0.56	-	-
13/03/2019	30/09/2026~	Cessation of employment	850,000	$0.50	$0.56	-	-
13/03/2019	30/11/2026~	Cessation of employment	850,000	$0.50	$0.57	-	-
13/03/2019	31/12/2026~	Cessation of employment	850,000	$0.50	$0.57	-	-
13/03/2019	31/08/2027~	Cessation of employment	850,000	$0.50	$0.57	-	-
13/03/2019	30/09/2027~	Cessation of employment	850,000	$0.50	$0.57	-	-
13/03/2019	31/10/2027~	Cessation of employment	850,000	$0.50	$0.58	-	-
13/03/2019	30/11/2027~	Cessation of employment	850,000	$0.50	$0.58	-	-
N Liveris
21/11/2019	30/09/2025~	Cessation of employment	250,000	$0.50	$0.36	-	-
21/11/2019	31/12/2025~	Cessation of employment	250,000	$0.50	$0.37	-	-
21/11/2019	31/07/2026~	Cessation of employment	250,000	$0.50	$0.38	-	-
21/11/2019	30/09/2026~	Cessation of employment	250,000	$0.50	$0.38	-	-
21/11/2019	30/11/2026~	Cessation of employment	250,000	$0.50	$0.39	-	-
21/11/2019	31/12/2026~	Cessation of employment	250,000	$0.50	$0.39	-	-
21/11/2019	31/08/2027~	Cessation of employment	250,000	$0.50	$0.39	-	-
21/11/2019	30/09/2027~	Cessation of employment	250,000	$0.50	$0.39	-	-
21/11/2019	31/10/2027~	Cessation of employment	250,000	$0.50	$0.40	-	-
21/11/2019	30/11/2027~	Cessation of employment	250,000	$0.50	$0.40	-	-

~ These options vest in 10 equal tranches upon the achievement of progressive incremental production milestones of 1,000 tonnes. The vesting dates in the table represent the current estimate of when the vesting conditions will be met, and the options can be exercised.

The number of options over ordinary shares in the Company provided as remuneration to key management personnel is shown in the table below on page 49. The options carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share of NOVONIX Limited.

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Performance Rights

The terms and conditions of each grant of performance rights affecting remuneration in the current or a future reporting period are as follows:

 

KMP	Number	Grant Date	Vesting Date	Vesting Conditions	Grant Date Fair Value Per Unit (AUD$)
C Burns	1,412,000	28/01/2022	30/06/2024	50% vest subject to continued employment at 30 June 2024 and 50% vest subject to achievement of revenue for the period 1 July 2023 to 30 June 2024: a) 0-50% of award for linear revenue up to USD$45M b) 50-100% of award for incremental revenue linearly from USD$45m - $105m.	$7.21
N Liveris	667,831	26/10/2022	30/06/2024		$2.90
R Buttar	255,238	28/01/2022	30/06/2024		$7.21
C Burns	2,275,400	26/10/2022	30/06/2025	50% vest subject to continued employment at 30 June 2025 and 50% vest subject to achievement of revenue, for the 12-month period preceding vesting date as follows: a) 0-50% of award for linear revenue up to USD$75M b) 50-100% of award for incremental revenue linearly from USD$75m - $180m.	$2.90
N Liveris	778,400	26/10/2022	30/06/2025		$2.90
R Buttar	359,300	26/10/2022	30/06/2025		$2.90
C Burns	1,604,871	13/04/2023	31/12/2025	50% vest subject to continued employment at 31 December 2025 and 50% vest achievement of revenue targets for the 2025 financial year as follows: a) 0-25% of award for linear revenue up to USD$50M b) 25-50% of award for incremental revenue linearly from USD$50m - $125m+.	$1.09
N Liveris	549,035	05/04/2023	31/12/2025		$1.21
R Buttar	253,401	13/04/2023	31/12/2025		$1.09
R Buttar Tranche 1 Tranche 2 Tranche 3	37,500 37,500 37,500	6/10/2021 6/10/2021 6/10/2021	22/04/2023 22/04/2024 22/04/2025	Vest subject to continued service with the Company up to the vesting date.	$4.92 $4.92 $4.92

The number of performance rights over ordinary shares in the Company provided as remuneration to KMPs is shown on page 50. The performance rights carry no dividend or voting rights. Rights granted are dependent on the recipient’s continued service, or achievement of performance related vesting conditions, by the vesting date.

Upon vesting, each performance right is convertible into one ordinary share of NOVONIX Limited. If a KMP ceases employment before the rights vest, the rights will be forfeited, except in limited circumstances that they are approved by the Board on a case-by-case basis.

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Share Rights

The terms and conditions of each grant of share rights affecting remuneration in the current or a future reporting period are as follows, for each of our non-executive Directors:

 

	Number	Grant Date	Vesting Date	Grant Date Fair Value Per Unit AUD $
A Bellas	69,995	26/10/2022	30/06/2023	$2.90
R Cooper	69,995	26/10/2022	30/06/2023	$2.90
R Edmonds	10,542	31/12/2023	31/12/2023	$0.735*
R Edmonds	54,863	31/12/2023	31/12/2023	$0.735*
Z Golodryga	69,995	26/10/2022	30/06/2023	$2.90
A Liveris	69,995	26/10/2022	30/06/2023	$2.90
R Natter	69,995	26/10/2022	30/06/2023	$2.90
J Oelwang	69,995	26/10/2022	30/06/2023	$2.90

* Estimated grant date fair value at the end of the reporting period, subject to shareholder approval at the 2024 AGM.

The number of share rights over ordinary shares in the Company provided as remuneration to key management personnel is shown on page 51. The share rights carry no dividend or voting rights.

These share rights vest in full in one instalment based solely on service to us through the vesting date and do not have any performance related vesting conditions.

Upon vesting, each share right is convertible into one ordinary share of NOVONIX Limited. If a non-executive Director ceases to hold office before the share rights vest, the rights will vest on a pro rata basis representing the proportion of the relevant financial year that such a person served as a non-executive Director. For example, if a non-executive Director who is issued share rights ceases to hold office halfway through the financial year, then that non-executive Director will only be entitled to half of the shares initially awarded.

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