Exxaro Resources Limited
Environmental, social and governance report 2022
Dear shareholders,
The year was important from a governance perspective as the committee managed our CEO's succession and transition as well as new appointments to ensure the board has an appropriate balance of knowledge, skills, experience, diversity and independence to discharge its governance role and responsibilities objectively and effectively. In the coming year, we will continue to fulfil our commitment to reviewing board composition and overseeing the implementation plan arising from the board evaluation process aimed at achieving desired governance outcomes and the group's purpose.
The committee completed the CEO's transition when Dr Nombasa Tsengwa took over the reins from Mxolisi Mgojo. The committee also finalised the appointment of the managing director: minerals, Kgabi Masia, who joined the company to support the CEO.
Importantly, the committee recommended the reintroduction of an annual governance roadshow for equity shareholders. The chairpersons of the board and remuneration committee, the group company secretary and executive head: stakeholder affairs attended the roadshow.
In addition to annual board evaluations, rotation of directors and board committee composition, the committee also recommended, as mentioned earlier, Nondumiso Medupe's appointment as independent non-executive director and member of the audit committee to replace Vuyisa Nkonyeni.
Gender and racial diversity
Mvuleni Geoffrey Qhena
Nomination committee
chairperson
The committee's terms of reference leverage the benefit of cross-membership for the fulfilment of remuneration matters as well as board governance and nomination matters.
The committee is accountable to the board for the execution of its independent and objective oversight set out below.
| Duties and responsibilities of the nomination committee |
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The committee does not assume the functions of management, which remain the responsibility of executive directors, prescribed officers and other members of senior management. It is also not accountable for the functions performed by other committees of the board.
Where board committee focus areas dovetail or overlap with this committee's oversight, there is seamless collaboration between committees to execute the broader effectiveness objective of the board - for example, in support of the board diversity and inclusion strategy execution as it applies to fair pay or the application of mechanisms to achieve and exceed transformation targets.
The board ensures committee members have a suitably balanced blend of skills and experience to enable the committee to discharge its functions. The committee comprises a majority of independent non-executive directors.
Committee members are grateful for Ras Myburgh's commitment and contributions before he retired in 2022 and welcome Dr Phumla Mnganga as a new member of the nomination committee.
The CEO, FD and executive head: human resources attend meetings by standing invitation to make submissions and provide information the committee may require from time to time.
Refer to board of directors for members' qualifications and experience.
The committee met formally seven times during the year in review at four quarterly meetings and three special or ad hoc meetings.
| Members | Designation | Attendance at four quarterly meetings |
Attendance at one special meeting |
| Mvuleni Geoffrey Qhena | Independent non-executive director and nomination committee chairperson | 3/4 | 2/3 |
| Dr Geraldine Fraser-Moleketi | Lead independent non-executive director | 4/4 | 3/3 |
| Dr Phumla Mnganga | Independent non-executive director | 4/4 | 3/3 |
| Zwelibanzi Mntambo | Non-executive director | 4/4 | 2/3 |
| Ras Myburgh* | Independent non-executive director | 2/2 | 1/1 |
* Ras Myburgh, former independent non-executive director and member until retirement on 25 May 2022 - attended 2/2 quarterly meetings and one special meeting for the year in review until retirement.
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. In keeping with good corporate governance, the board embraces the constitutionally entrenched principles of equality and inclusion for all and adopted a diversity and inclusion policy in 2021, on recommendation of the committee and the SERC. The board is committed to remaining proactive in striving towards a knowledgeable, skilled, experienced, diverse and independent governing body that fully discharges its role and responsibilities with objectivity and effectiveness.
The committee has purposefully focused on achieving the gender diversity and inclusion target set by the board in 2021. The set target of 40% black women directors was achieved with Nondumiso Medupe's appointment at the end of 2022. The committee is pleased with progress to date and will continue to consider targets set by the board in any future appointments. The table below reflects current targets and Exxaro's achievement by the committee.
| Target | Previous reporting period (7 February 2022) |
Actual at 3 January 2023 |
Status as at 3 January 2023 |
| Size: Minimum of four and maximum of 20 members | 18 | 17 | Within target range |
| Race: 60% black (as defined in the B-BBEE Act) | 78% | 82% | Achieved |
| Gender: 40% black women (as defined in the B-BBEE Act) | 33% | 41% | Achieved |
| Age: Average of 55 years | 54 years | 55 years | Achieved |
| Tenure: Average tenure of seven years (two years mentoring a successor) | Four years | Three 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, experience, and tenure make for well-informed and thoughtful consideration of all board matters. |
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Note: The table above includes executive directors and the newly appointed Nondumiso Medupe, and excludes Ras Myburgh and Mxolisi Mgojo, who both stepped down in 2022.
In addition to its own targets, 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.
The number of board members should support the promotion of accountability, and 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 committee is therefore responsible for annual consideration of directors' retirement and recommendation for re-election to shareholders at the AGM. This is conducted with the utmost responsibility with assessment including 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. We also consider whether or not a director is regarded as fit and proper to continue as director, including assessment of independence in terms of King IV.
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. An induction session for four newly appointed directors was held in 2022. A session was concluded for our newly appointed director, Nondumiso, early in 2023.
Board induction includes 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 introduction to the company's strategy, group governance structure, operations and stakeholder engagement model as well as key advisers.
As mentioned earlier, following Vuyisa Nkonyeni's decision to stand down as member and chairperson of the audit committee, to fulfil our board mandate, this committee identified Nondumiso Medupe as a suitable candidate to fill this vacancy.
The board appointment process is formal and transparent in line with the board nomination and appointment policy.
In accordance with this policy, the board considers, among others, its skills and experience matrix, the group strategy, and feedback from board evaluation and alignment with the broader diversity policy. Proper due diligence is conducted, a fit and proper assessment is undertaken as well as consideration of any conflicts of interest. This includes consideration of whether or not directors' 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 consideration is 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 to shareholders for re-election.
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 and inclusion policy. The policy is couched in a holistic approach to diversity with the aim of inclusion and supporting the group's strategic focus areas. In accordance with succession planning needs, filling independent non-executive director board vacancies was addressed in 2021 and 2022.
Given the changing context, the committee contributes to a wide governance enhancement programme aimed at aligning strategic changes in the group to board and board committee composition. The committee's terms of reference and mandate are therefore reviewed annually.
During the period under review, an independent evaluation of the performance and effectiveness of the board, its committees and specific individuals was conducted. The purpose was also to identify and record possible areas in need of strengthening and/or refinement while considering internal and external dynamics, and factors that may positively or negatively impact the board's ability to enhance its performance and effectiveness. The evaluation found no significant matters of concern although director and executive succession plans will receive focused attention. The overall conclusion is that the committee functions effectively.
The committee's terms of reference were reviewed in 2022 and the amendments approved by the board. The terms of reference continue to be aligned with legislation, regulations and King IV.
| Key focus areas for 2023 | Status |
| Diversity and inclusion policy | Ongoing |
| Board composition | Ongoing |
| Induction and ongoing development of directors | Ongoing |
| Nomination and appointment of directors | Ongoing |
| Succession planning | Ongoing |
| Performance | Ongoing |
The nomination committee, in carrying out its respective duties, duly regarded the principles and recommended practices of King IV. The committee is satisfied that it has considered and discharged its responsibilities in accordance with its terms of reference.
On behalf of the nomination committee
Mvuleni Geoffrey Qhena
Nomination committee chairperson
14 April 2023
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