Exxaro Resource limited Report Selector 2018

Report Selector

Exxaro Resources Limited Integrated report 2018

Remuneration and nomination committee report

Dear shareholders, I am pleased to present the remuneration and nomination committee report for the year ended 31 December 2018. The full remuneration policy and implementation report appears in our supplementary report online.


This committee enables the board to effectively discharge its duties in relation to the group's remuneration and nomination aspects. It provides independent and objective oversight that will:

  • Assist the board in ensuring that the group remunerates fairly, responsibly and transparently to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term, as all performance conditions inevitably have an impact on the company's financial results and should lead to sustainable long-term value creation.
  • Make recommendations to the board to ensure that:
    • The board and its committees have the appropriate structure, size and composition to execute their duties effectively based on the factors listed in King IV
    • Directors are appointed through a formal and transparent process for nominating, electing and appointing executive and non-executive directors to fill vacancies as these arise
    • Induction and ongoing training and development of directors take place
    • Formal succession plans for the board, including executive directors, are in place
    • The performance of the board, its committees and individual members is regularly evaluated
  • Exxaro's performance and progress against its social and labour plans are monitored.

The committee does not assume the functions of management, which remain the responsibility of executive directors, prescribed officers and other members of senior management, nor does it assume accountability for functions performed by other committees of the board.


The board ensures that members of this committee have a suitably balanced blend of skills and experience to enable the committee to discharge its functions.

For the review period, the committee comprised a majority of independent non-executive directors. Attendees include the chief executive officer, finance director, executive head: human resources (HR) and other individuals with specific skills and expertise to assist members in their deliberations.


Name and designation Attendance
Mr EJ Myburgh
Independent non-executive director and chairman
Ms GJ Fraser-Moleketi
Lead independent non-executive director
Mr VZ Mntambo
Non-executive director
Mr J van Rooyen
Independent non-executive director
Dr CJ Fauconnier*
Former independent non-executive director and chairman
Dr D Konar*
Former independent non-executive director

*Dr CJ Fauconnier and Dr D Konar retired as directors of the company on 24 May 2018

2018 In overview

Chief executive officer (CEO) performance summary

Mxolisi Mgojo

Output     Weight     Target     Comment     Score out of 5
Operational excellence     25     Stretch targets     Demonstrated stretching controllable drivers     4.00
R/tonne/product group measured versus stretch budget   Budget not achieved     3.00
Cash flow against budget   15% improvement on budget     5.00
Sustainability     10     LTIFR improvement     Actual achievement worse than target     2.00
JSE SRI rating   No material findings on assurance report     4.00
Improve portfolio   10     Improvement in HEPS against peers     Improvement 4% better than peers     5.00
Value and fit of growth portfolio   Growth portfolio aligned with vision and strategy     4.00
Corporate citizenship   10     King IV (ethics and activities)     Ethics actively and frequently encouraged and acted on     4.00
Exxaro brand   5     Perception of the Exxaro brand among stakeholders     Perception well managed with frequent interactions     4.00
Compelling strategy   20     Develop and implement a long-term strategy that will support the Exxaro vision     Developed, approved and communicated vision and strategyImplementation tracked and reported     3.00
Leadership and people     20     Progress against employment equity plan     Acceptable plan, 5% improvement against plan     4.00
Preferential procurement   5% better than 2014 mining charter targets     4.00
Employer of choice   5% better than planned     4.00
Performance rating     100             3.66
Finance director (FD) performance summary

Riaan Koppeschaar

Output     Weight     Target     Comment     Score out of 5
Vision and strategy   30     Group finance aligned with Exxaro strategy     Actively leading formulation, finalisation, approval, communication and implementation     3.00
Sufficient funding for growth, compliance with loan covenants     Net debt 150% covered by term facilities and interest cover >8     5.00
Sustainability   15     Effective combined assurance framework, risk-based and with sufficient cover     Methodology established, communicated and risks managed at committee level     4.00
Audit findings resolved     Not all findings resolved     1.00
Reputation (Exxaro brand)   5     Positive contribution to the image of the company     Plays major role in improving image and perception survey     4.00
Leadership and people   25     Talent management fast-tracking and performance management of own employees     Talent benchmark defined. Performance tracked and measured     3.00
Achievement of 2014 mining charter targets     +15% better than 2014 mining charter targets     5.00
Capital process roll out in Exxaro and capital projects meet targets     Process defined and sufficient controls established     3.00
Culture initiative and implementation   5     Roll out of culture themes and associated implementation     80% of plan implemented     3.00
Improvement portfolio   5     Achieve own cost budget, including labour-cost reduction     Target achieved     3.00
Operational excellence   10     Effective financial, management reporting and budgeting process     Accurate, on time, with no uncontrollable delays     3.00
Corporate citizenship   5     R235 million savings from strategic sourcing, business unit supply chain management and capital buying     +5% above target     4.00
Performance rating   100                 3.66
Other key issues that received attention during the year:
  • Preparation of an amended skills and experience matrix to be used for future board and committee succession planning, which includes the new strategic focus of the company
  • Retirement of three non-executive directors, as well as directors resigning post-unwinding the BEE transaction, followed by appointing new non-executive and independent directors to the board, including this committee, on recommendations from the nomination committee
  • The annual remuneration review of non-executive directors, CEO, FD and group company secretary
  • Management share scheme: long-term incentive and deferred bonus plan general offer and vesting
  • Approving the revised line-of-sight incentive scheme for implementation. This has resulted in a significant decline in absenteeism and created positive competition
  • Overseeing the status of attracting and retaining talent in the company
  • Tracking and monitoring the HR and payroll-related internal and external audit findings.
Key performance indicators

The table below shows the average rating for each KPI. A rating of 1 to 4 was used where 1 is the lowest score:

2018 KPI     Score
(out of 5)
Ensure Black Economic Empowerment consequences are appropriately managed for both executive directors and others   3.00
Review metrics for annual bonus to ensure they are aligned with Exxaro’s strategy   3.67
Consider effectiveness of current remuneration advisers and whether we need to change   3.00
Review incentive plans to confirm they are having the desired impact   3.67
Review skills set on board, and address, taking account of representivity and independence   3.67
Ensure human resources policies, relationships with business and stakeholders is fair, consistent and sustainable   3.67
Remuneration committee summary
2019 KPI
Review Remco KPIs quarterly and understand management plans for out-of-appetite KPIs; periodically review management plans
Review the remuneration philosophy and policy, and ensure implementation of the Deloitte recommendations, including whether Exxaro’s employees are remunerated adequately
Review whether a gender-based disparity gap exists
Review the Exxaro people strategy and ensure alignment with business strategy (including workforce of the future strategy)
Review whether seven-day work week is achieving the desired objectives
Review the employment equity plan in support of the overall Exxaro strategy
Track implementation of the new Exxaro culture journey


The committee, in carrying out its duties, has due regard to the principles and recommended practices of King IV. It is satisfied it has considered and discharged its responsibilities in accordance with its terms of reference.

On behalf of the committee

Mr EJ Myburgh



24 April 2019