Summary remuneration report

The detailed 2018 remuneration report appears in the supplementary report and provides an overview of the remuneration policy for all employees, executive directors and senior management, as well as non-executive directors and prescribed officers.

No changes were made to the remuneration policy in the review period. The remuneration philosophy and policy are available on our website, www.exxaro.com.

2017 shareholder vote

The non-binding vote on the 2017 remuneration report was:

• Approval of remuneration policy: 82.9%
• Approval of the implementation of remuneration policy: 83.3%.

Key remuneration decisions in 2018

Notable matters and key areas of focus for the committee for the review period included:

• In the absence of the revised mining charter, a new equity share option plan (ESOP) for employees was not implemented
• The committee instead implemented an interim cash scheme, equivalent to a dividend payment. The base calculation used to determine the dividend payment is equal to 500 units (1 unit representing 1 share) or less (depending on the employees' length of service)
• The conclusion of two-year wage agreements in July 2018 for Exxaro FerroAlloys Proprietary Limited
• Share scheme offers to management for 2018
• Approving the mandate for the 2018 reward allocation
• Approving production-based incentives for tied and commercial mines
• Appointing new directors to the board, necessitated by the replacement BEE transaction and filling vacancies due to directors resigning from the board or at the end of their term of office.
• Approving adjustments to the long-term incentive plan (LTIP) and deferred bonus plan (DBP) awards and grants following the BEE transaction and Tronox Limited disposal, and subsequent special dividend, detailed below.

Remuneration advice

Exxaro continues to obtain independent and professional advice on remuneration matters. In the review period, we obtained advice from consultants who, in the view of the committee, can be regarded as fully independent:

• Deloitte advised the committee on how the Tronox and BEE transactions impacted long-term incentive schemes
• Deloitte advised on the structure and content of this remuneration report
• Remuneration benchmark data was procured from various consultants:
  • PwC and Mercer for non-executive, executive and general staff remuneration benchmarks
  • PwC, Mercer, Khokhela, 21st Century and EY for non-executive and executive director benchmarks
  • PwC for remuneration trends in the mining industry
  • Korn Ferry Hay benchmarks on specific positions.

2019 focus areas

• A replacement ESOP scheme will be developed in 2019, following promulgation of the revised mining charter and implementation guidelines
• Review metrics for annual incentives to ensure they drive value and are aligned with Exxaro's strategy
• Review incentive plans to confirm they are having the desired impact
• Review fee structure for non-executive directors
• Compliance with revised mining charter and measures to achieve targets
• Ensure human resource policies and relationships with stakeholders are fair, consistent and sustainable.

In the view of the committee, Exxaro's remuneration strategy delivered a sound value proposition to employees in the past year. The table summarises the outcome of our remuneration policies as applied to prescribed officers for FY18.

* Out of five.

In 2018, Dr Con Fauconnier stepped down as non-executive director and chairman of this committee. We are deeply grateful for his guidance and wisdom over the years.

I thank my fellow committee members for their support and wise counsel in the review period. I also thank the executive head of human resources and her staff for their hard work and dedication in ensuring Exxaro remains competitive in the market and an employer of choice for all its employees.

Mr EJ Myburgh

Chairman

24 April 2019