Exxaro Resource limited Report Selector 2018
Currently viewing Integrated Report 2018
Currently viewing Integrated Report 2018
Exxaro Resources Limited Integrated report 2018
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:
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 |
100% | ||
| Ms GJ Fraser-Moleketi Lead independent non-executive director |
100% | ||
| Mr VZ Mntambo Non-executive director |
100% | ||
| Mr J van Rooyen Independent non-executive director |
100% | ||
| Dr CJ Fauconnier* Former independent non-executive director and chairman |
100% | ||
| Dr D Konar* Former independent non-executive director |
50% |
*Dr CJ Fauconnier and Dr D Konar retired as directors of the company on 24 May 2018
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 |
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 |
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 |
| 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
Chairman
Pretoria
24 April 2019