Nomination committee report

As part of the work of delivering the most effective leadership, the committee formulated a continuing professional development policy for directors. The themed approach to targeted topics, relevant to our board, will ensure the honing of skills and experience, and build resilience in the practice of corporate governance.

Diversity policy

Achieving suitable board composition and appropriate balance of power between individual directors and/or groups of directors so the board will operate effectively, and in the interests of the company, requires deliberate policy parameters and careful consideration.

The JSE Listings Requirements seek to strengthen regulation of primary and secondary listings, and require companies to adopt a policy on the promotion of broader board diversity, focusing on gender and race. The board of directors or nomination committee developed a policy position on the promotion of broader diversity at board level, specifically focusing on promoting gender, race, culture, age, field of knowledge, skills and experience.

The following targets were recommended by the committee in consultation with the SERC in respect of board composition:

TARGET			ACTUAL AT 7 FEBRUARY 2022			STATUS AS AT 7 FEBRUARY 2022
Size: minimum of four and maximum of 20 members			18			Within target range
Race: 60% black			78%			Achieved
Gender: 40% black women			33%			Ongoing
Age: average of 55 years			54 years			Achieved
Tenure: average tenure of seven years (two years mentoring a successor)			Four years			Ongoing
Appropriate diversity mix based on prevailing strategic objectives			The board directs its attention to the principles of balanced governing body authority by directing strategic decision making around broader diversity at board level. The range in gender, race, age, field of knowledge, skills and experience, and tenure make for well-informed and thoughtful consideration of all board matters.

The board is pleased with the progress made to date. In addition, the board aims to pursue the compliance targets set by the DTIC in respect of management and control, and positively contributes to the B-BBEE rating.

Board composition

The number of board members should support the promotion of accountability and lend itself to healthy, constructive debate within the parameters of the company's MoI and regulatory framework.

In terms of the company's MoI, one-third of non-executive directors are subject to retirement by rotation and re-election by shareholders at least once every three years, if available and eligible to stand.

This means this committee has the responsibility to annually consider the names of directors to retire and be recommended for re-election to shareholders at the AGM. This is conducted with the utmost responsibility and assessment includes the individual's performance, meeting attendance, age and diversity targets, tenure and the need to introduce members with new expertise and perspectives while retaining valuable knowledge, skills and experience, and maintaining continuity. A fit and proper assessment is also conducted to consider whether a director is regarded as fit and proper to continue as director, including assessment of independence in terms of King IV.

Nomination and appointment of directors

Due to resignations and retirements of three of our directors, and to fulfil our board mandate, this committee had to identify suitable candidates to be appointed to our board.

With effect from 1 February 2021, Chanda Nxumalo joined the board, and, on 18 March 2021, Nombasa Tsengwa was appointed as CEO designate and a member of the board.

Mark Moffett resigned as independent non-executive director of the company and member of the audit committee, effective 11 May 2021. The board expressed their gratitude for his service to the organisation during his tenure.

We said farewell to our board chairperson and nomination committee chairperson, Jeff van Rooyen, at the close of the AGM in May 2021. The board recorded its gratitude for his valued contribution during his extended tenure. Following his retirement, Geoffrey Qhena took over the helm of board chairperson and nomination committee chairperson.

In line with the broad-based empowerment structure, with effect from 15 March 2021, Mandlesilo Msimang and Isaac Malevu, with effect from 22 June 2021, were appointed as nominee directors to the board in line with the relationship agreement.

The board appointment process is formal and transparent in line with the board nomination and appointment policy. In accordance with that policy, the board considers, among others, its skills and experience matrix, the group strategy, feedback from board evaluation and alignment with the broader diversity policy. A proper due diligence is conducted, a fit and proper assessment is undertaken and consideration of any conflicts of interest. This includes consideration of whether any director's interests, position, association or relatives are likely to influence or unduly cause bias in decision making when judged from the perspective of a reasonable and informed third party. An important question is the consideration of other time commitments and availability for full board participation. A director who is appointed by the board holds office until the next AGM, in line with the MoI, retires and is then presented for shareholder election.

Induction and ongoing development of directors

Two governance sessions are scheduled annually when directors receive focused inputs from a regulatory, strategic and economic perspective. Throughout the year, our directors also receive information and opinions on changes within the regulatory framework. As the appointments were staggered throughout 2021, two induction sessions were hosted during the course of 2021.

Board induction includes an introduction to management, access to all relevant company administration information, and meeting management systems and processes as well as founding documents, the delegation of authority framework and other policies. A bespoke induction programme includes an introduction to the company's strategy, group structure, operations and stakeholder engagement model as well as an introduction to key advisors.

Succession planning

Succession planning for non-executive directors is typically iterative and part of an ongoing programme of planning and discussion by the nomination committee. Succession planning is based on the board's broader diversity policy. The policy is couched in a holistic approach to diversity with the aim of inclusion and supporting the group's strategic focus areas. The committee considers succession and tenure, planned retirement ages of existing members and rotation plans, and addresses identified skills gaps following rigorous board effectiveness evaluation. In accordance with succession planning needs, the process of filling non-executive director board refreshment is underway.

Given the changing context, the nomination committee contributes to the process of a wide governance enhancement programme aimed to align strategic changes in the group to board and board committee composition. Therefore, the committee's terms of reference and mandate are reviewed annually.

PERFORMANCE

The committee is not required to complete annual performance evaluations. While King IV recommends regular performance evaluations of board committees, it is governance practice at Exxaro to biannually evaluate committee performance and effectiveness.

Exxaro's board committees embarked on a significant transformation journey in 2020, which culminated in the group governance framework, revised delegation of authority, board committee mandate and work plan review as well as committee name changes following this process. Allowing an opportunity for the changes to settle and make impact, the board did not undertake a review in 2021 following the high-level assessment in 2020 but will commence formal performance evaluations in November 2022 for disclosure in the integrated report 2022.

CONCLUSION

The remuneration and nomination committee, in carrying out its respective duties, duly regarded the principles and recommended practices of King IV. The committees are satisfied that they have considered and discharged their responsibilities in accordance with their terms of reference.