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You are here:   Home » About Exxaro » Corporate governance

Corporate governance

Exxaro is a company of the 21st century and therefore understands that diversity, empowerment and development at every level can only be achieved through effective, transparent and accountable leadership.
Exxaro’s leadership recognises that good corporate governance practices are essential in maintaining high
standards of integrity, professionalism and ethical behaviour.

Exxaro’s directors are fully committed to embedding the principles of transparency and accountability in our various business operations, ensuring we create value for all stakeholders.

In making good governance a hallmark of our group, the directors are guided by established tenets in creating long term value for all:

  • Adherence to sound principles of direction and
    • management
  • Implementation of best practices in corporate management

  • Understanding conceptual issues in corporate governance, including a review of national and international developments to gain a better appreciation of corporate governance systems and mechanisms

  • Clarification of issues pertaining to the board of directors and management

  • Recognition of shareholder/stakeholder rights and responsibilities.

Best-practice corporate governance structures ensure a dynamic cycle of improvement where every individual is guided by a common set of values as we expand our quality portfolio of assets. At Exxaro, our values guide the way this organisation is managed and controlled.

In compliance with the mining charter, Exxaro is one of the largest black-owned and managed resources companies listed on the JSE, comfortably exceeding charter requirements with a 53% black economic empowerment (BEE) shareholding.

Compliance with King II
The Exxaro board, committees and management believe compliance is key in maintaining the group’s values. The group supports the provisions and principles of corporate governance as defined by the King II report and the Listings Requirements of the JSE, and complied in all material respects with the Code of Corporate Practices and Conduct in King II and the requirements of the JSE during the review period.

To ensure excellent corporate governance practices are entrenched in the group, all our operations are obliged to subscribe to the spirit and principles of King II. While the Exxaro board takes overall responsibility for compliance with King II, directors of subsidiaries are required to continually monitor compliance with these principles within their legal entities.

Ethics
In line with Exxaro’s value of honest responsibility, compliance with the group’s code of ethics is monitored
by the group risk manager and company secretary, and ethical behaviour is encouraged throughout the group by communicating regularly with employees, using a number of different communication channels.
During the year, all business units were assessed for risks related to corruption and fraud. Training in anti corruption policies and procedures is integrated into the group induction programme for new employees and
during annual competence update training for existing staff.

Formal disciplinary measures are in place to deal with any identified incidents of corruption and fraud. In addition to Exxaro’s other compliance and enforcement activities, a reporting hotline (whistle-blowing) is in place through which all stakeholders can report suspected corruption, conflicts of interest, contraventions of group values or other reportable irregularities, with guaranteed anonymity. Details of the reporting mechanisms: Hotline: 0800 20 35 79 Hotmail: Exxaro@tip-offs.com.

Alleged irregularities reported on the hotline are fully investigated. Some resulted in criminal prosecution.
Exxaro regularly participates in industry initiatives focused on developing equitable public policies for the mining sector. However, the group does not directly or indirectly support political parties or, individual politicians through financial or in-kind contributions.

Board of directors
Functions
The board is the focal point of Exxaro’s corporate governance system, with ultimate accountability and
responsibility for the company’s performance and affairs. The board charter details the purpose and composition of the board, responsibilities of board members, requirements for board meetings and remuneration of directors. The charter was reviewed during the year to assess compliance with the current regulatory framework and international best practices.

During the review period, the Exxaro board completed a self-assessment of its performance. We intend to establish formal board evaluation procedures in future. The primary responsibility of the board is to determine
the company’s purpose and values and provide strategic direction. It is also responsible for identifying key risk
areas and performance indicators, monitoring performance against agreed objectives, advising on financial matters and reviewing the performance of executive management against defined objectives and industry standards.

Composition
The board is an appropriate mix of skills, experience, demographic diversity and personalities to ensure effective leadership and sound governance. As a truly South African company we support and actively
drive transformation in everything we do, and we are proud that the majority of our board members are historically disadvantaged South Africans.

The board currently comprises 12 directors:

  • Four independent non-executive directors
  • Two executive directors
  • Six non-executive directors.

In categorising the capacity of each director as executive, non-executive or independent, Exxaro is guided by the guidelines of King II.

Independence
There is a clear distinction in Exxaro between the roles of chairman and chief executive officer (CEO) to ensure no one has unfettered powers of decision-making. Identifying suitable candidates for the role of independent chairman has taken longer than anticipated. During the year our acting chairman, Dr Len Konar, ensured continuity in the board’s activities. Appointed in 2001, Dr Konar is an independent non-executive director, responsible for the effective functioning of the board in his acting capacity.

The CEO is in charge of the company as a whole and directly responsible to the board. Among other things, he is responsible for ensuring the company achieves its strategic and financial objectives, and for monitoring its day-to-day operational requirements.

Appointments and succession planning
Within its powers, the entire board selects and appoints directors, including the CEO and executive directors, on the recommendations of the transformation, human resources, remuneration and nomination committee (TREMCO).

All appointments are based on a formal and transparent process. Candidates are selected against criteria deemed appropriate for Exxaro, its industry and its transformation objectives.

The chairman is appointed for a term not exceeding one year and is nominated from the ranks of independent non-executive directors.

To ensure efficient staggering of director rotation, directors retire and may be nominated for re-election every three years. No director may hold office for more than three consecutive periods. The retirement age for non-executive directors is 70 years, effective at the annual general meeting after the date on which they turned 70.

Accountability
Exxaro’s directors bring appropriate judgement to bear on the issues at hand. Non-executive directors understand Exxaro’s mission, strategy and business and add varied expertise to the group.

We believe open communication with our directors is a priority in ensuring their accountability. Therefore all
material information is disseminated to them between board meetings.

The company secretary is responsible for the duties set out in section 268G of the Companies Act. In terms of
Exxaro policy, directors have free access to the company secretary and to independent professional advisers,
whether in legal, technical or accounting areas, at the company’s expense.

Remuneration
TREMCO considers and submits recommendations to the board on fees to be paid to each non-executive director. Any changes to fees are recommended by the board and submitted to shareholders at the annual general meeting for approval prior to implementation and payment. In line with generally accepted governance practices, independent non-executive directors do not have service contracts, are not members of the group’s pension scheme and are not given incentive awards.

Non-executive directors’ remuneration is summarised below:    
       
Non-executive remuneration    
   
Fees for   
Benefits and   
   
services   
allowances   
Name  
R   
R   
PM Baum  
181 570   
   
JJ Geldenhuys  
267 083   
23 427   
U Khumalo  
146 427   
   
Dr D Konar  
540 686   
   
SEA Mngomezulu  
55 642   
   
VZ Mntambo  
206 990   
   
RP Mohring  
307 146   
21 357   
PKV Ncetezo**  
68 997   
7 314   
NMC Nyembezi-Heita*  
38 125   
   
NL Sowazi  
193 284   
   
J van Rooyen  
64 545   
   
D Zihlangu  
206 990   
8 735   
 
   
   

Attendance            
   
Appointed
19
23
30
12  
Board meetings  
to board
Feb
May
Jul
Aug  
PM Baum  
17 Feb 04
•
v
•
•  
JJ Geldenhuys  
1 June 01
v
v
v
v  
U Khumalo  
28 Nov 06
v
•
v
v  
MJ Kilbride  
1 June 01
v
•
v
v  
Dr D Konar (acting chairman)  
1 June 01
v
v
v
v  
SEA Mngomezulu  
13 Aug 08
–
–
–
–  
VZ Mntambo  
28 Nov 06
v
•
•
v  
RP Mohring  
28 Nov 06
v
v
v
v  
PKV Ncetezo  
28 Nov 06
v
**
**
**  
SA Nkosi  
18 Oct 01
v
v
v
v  
NMC Nyembezi-Heita  
28 Nov 06
v
*
*
*  
NL Sowazi  
28 Nov 06
v
•
v
v  
J van Rooyen  
13 Aug 08
–
–
–
–  
DJ van Staden  
1 June 01
v
v
v
v  
D Zihlangu  
28 Nov 06
v
v
v
v  
v Attended • Apologies * Resigned on 29 February 2008
** Resigned on 30 April 2008 *** Retired on 31 August 2008

Board committees
The board has appointed three committees to assist in effectively discharging its responsibilities. All committees
fulfil their responsibilities within clearly defined written terms of reference, which deal explicitly with their purpose and function, reporting procedures and written scope of authority.

These terms of reference were reviewed during the year and changes made where necessary to reflect our continuous drive to comply with regulatory changes and international best practices.

To ascertain their performance and effectiveness, committees are subject to regular evaluation by the board.
To ensure that board committees effectively discharge their responsibilities, the chairman of the board provides
quarterly feedback to the board on their performance and achievement of their mandate.

Audit, risk and compliance committee Composition and meeting procedures
The committee consists of four members and the majority (including the chairman) are independent directors.
Executive directors, the senior audit partner and head of the outsourced internal audit function also attend meetings and have unrestricted access to the chairman and committee members. Non-executive directors may also attend by invitation. When required, suitably qualified people may be co-opted to render specialist services.

The committee meets at least four times a year.

Role, purpose and principal functions
The committee reviews the principles, policies and practices adopted in preparing the financial statements of the company and its subsidiaries. It also ensures that interim and annual financial statements and any other formal announcements on the company’s financial performance comply with the Companies Act, the JSE Listings Requirements and International Financial Reporting Standards.

The committee reviews the work of the group’s external and internal auditors to ensure the adequacy and effectiveness of Exxaro’s financial, operating, compliance and risk management controls.

Exxaro’s policy on non-audit services, reviewed annually by the committee, details which services may or may not be provided by Exxaro’s external auditors and covers:
  • Basic accounting assistance
  • Payroll services
  • Tax services
  • Human resources services
  • Information technology services
  • Appraisal or valuation services
  • Legislative and administrative decision-making and corporate governance
  • Internal audit and risk management.

    • This policy was complied with in the year under review.

    The committee meets at least four times a year.          
    Attendance          
     
    Appointed to
    18
    23
    12
    28  
     
    Director committee
    Feb
    May
    Aug
    Nov  
    Dr D Konar (chairman)
    11 Feb 02
    v
    v
    v
    v  
    RP Mohring
    30 May 07
    v
    v
    v
    v  
    NL Sowazi
    30 May 07
    •
    •
    v
    v  
    J van Rooyen
    13 Aug 08
    —
    —
    —
    v  
    v Attended • Apologies          

    Safety, health and environment committee (SHE)
    Composition and meeting procedures
    The committee consists of five members with an independent chairman. The CEO and executive general manager: safety and sustainable development attend meetings as standing invitees.

    Executive general managers of commodity businesses, human resources and technology management attend meetings by invitation. Suitably qualified people may be co-opted onto the committee when necessary to render specialist services.

    The committee meets at least three times a year.

    Role, purpose and principal functions
    The purpose of the committee is to develop the framework, policies and guidelines for health, environmental and safety management and sustainable development group-wide.

    The role of the committee is to:

    • Oversee independent assurance of sustainability performance
    • Oversee the development of policies and guidelines for its specific fields
    • Review the policies and performance of the group on the progressive implementation of safety and sustainability policies
    • Encourage independently managed subsidiaries, associates and significant investments to develop their own policies, consistent with those of the group
    • Receive reports on substantive safety and sustainability risks and liabilities
    • Monitor key indicators on accidents and incidents and, where appropriate, ensure this information is communicated to other companies managed by or associated with the company
    • Consider for adoption substantive national and international regulatory and technical developments
    • Facilitate participation, co-operation and consultation on related matters with government, national and international organisations, supranational authorities, other companies and other relevant associations.
    Attendance          
       
    Appointed
    17
    29
    31  
    Director  
    to committee
    April
    July
    Oct  
    JJ Geldenhuys (chairman)
    11 April 02
    v
    v
    v  
    MJ Kilbride  
    11 April 02
    v
    v
    ***  
    RP Mohring  
    1 June 08
    –
    v
    v  
    D Zihlangu  
    18 April 07
    v
    v
    v  
    v Attended *** Retired on 31 August 2008        

    TREMCO
    Composition and meeting procedures

    The committee consists of four members, chaired by an independent director. The CEO, financial director (FD), executive general manager: human resources, and compensation and benefits advisers may be invited to attend any meeting.

    Suitably qualified people may be co-opted onto the committee to render the specialist services required to assist the committee in its deliberations on any particular matter.

    The committee meets at least four times a year.

    Role, purpose and principal functions

    The purpose of the committee is to:

    • Make recommendations on the composition of the board and board committees and ensure that the board consists of individuals equipped to fulfil the role of director of the company
    • Guide, monitor, review and evaluate the company’s progress on transformation, specifically employment equity, community involvement and preferential procurement
    • Ensure the company’s remuneration strategies, packages and schemes are related to achieving business objectives and delivering shareholder value
    • Ensure compliance with statutory and best-practice requirements on labour and industrial relations management, and that appropriate human resources strategies, policies and practices are in place.
    Attendance          
     
    Appointed to
    19
    15
    30
    29  
    Director
    committee
    Feb
    May
    Jul
    Oct  
    NMC Nyembezi-Heita (chairman)
    9 May 07
    v
    *
    *
    *  
    RP Mohring (chairman)
    1 Mar 08
    —
    v
    v
    v  
    PM Baum
    16 Mar 04
    •
    v
    •
    v  
    JJ Geldenhuys
    1 Jun 08
    —
    —
    v
    v  
    VZ Mntambo
    9 May 07
    v
    v
    v
    v  
    PKV Ncetezo
    9 May 07
    v
    **
    **
    **  
    v Attended • Apologies * Resigned on 29 February 2008
    ** Resigned on 30 April 2008          

    Executive committee
    The executive committee (Exco) is chaired by the CEO and consists of 10 members. It meets formally every six weeks and informally weekly.

    Exco is mandated, empowered and held accountable for implementing the strategies, business plans and policies determined by the Exxaro board. It is also responsible for managing and monitoring the business affairs of the company in line with board-approved plans and budgets, prioritising the allocation of capital and other resources and establishing best management and operating practices.

    Exxaro follows a structured process to ensure it invests in projects aligned with group strategy and which yield the required returns. In this process two forums are engaged: an initial assessment is completed by the strategic co-ordination forum and a comprehensive review is then undertaken by the investment review committee. The offshore review committee assists the board in financially co-ordinating Exxaro’s portfolio
    of offshore investments and interests.

    Management committees
    The strategic co-ordination forum
    The forum met every six weeks until the retirement of the chief operating officer on 31 August 2008. This forum will be replaced by the portfolio review committee, chaired by the CEO.

    The mandate of this forum is to:

    • Ensure alignment of strategy execution and new developments
    • Determine strategic priorities and co-ordinate, support and monitor strategic initiatives throughout the group
    • Allocate resources and accountabilities for investigations or studies.
    Investment review committee
    The committee meets monthly and its primary responsibility is to undertake comprehensive investment reviews and assess the technical feasibility and financial viability of proposed capital projects or investments prior to these requests being presented to the executive committee and Exxaro board for approval.

    In fulfilling these objectives, the committee ensures that:

    • Each project meets the strategic, technical and investment requirements defined by the board
    • Critical decisions, project parameters and potential risks are adequately addressed and researched prior to recommending the commitment of funds
    • Each project enhances the portfolio value of Exxaro.

    Offshore review committee
    The committee meets quarterly, or more frequently, if required. Its primary responsibilities include:

    • Financial control and governance of Exxaro’s offshore investments and multi-disciplinary interests
    • Efficient financial structuring
    • Providing for offshore investment funding and expenditure
    • Ensuring financial reporting, auditing and tax-related issues are properly managed
    • Ensuring the company’s overseas offices are effectively staffed, managed and used.

    Intellectual property committee
    Exxaro acknowledges the importance of intellectual property and its proper management.This committee ensures possible innovations are exploited and, if appropriate, patented and properly maintained. Copyright, trademark and possible infringement issues are also addressed. The committee also comprises the company secretary, representatives of the finance and technology departments, and Exxaro’s legal representatives.

    Sustainability
    Sustainability is a cornerstone of the Exxaro group and our approach is embedded in the first of our corporate values: “empowered to grow and contribute”. Our aim is to encourage entrepreneurship as far as possible to transform this value into reality for as many stakeholders as possible.

    Black economic empowerment codes of good practice
    While we understand that companies need to verify the BEE status of suppliers in terms of the Codes of Good Practice, Exxaro confines its reporting to the requirements set out in the Mineral and Petroleum Resources Development Act and its associated mining charter scorecard.

    Our approach to transformation and empowerment, however, fits well with the requirements of the BBBEE codes and scorecard. In structuring the new group, we ensured that the:

    • Majority of voting rights are exercised by HDSAs
    • Majority of profits accrue to black people
    • Majority of the board comprises black people.

    Disclosure policy
    The board has adopted a formal policy of continual disclosure of interests to ensure full and timely disclosure by directors.

    Conflicts of interest
    Exxaro has drawn up a comprehensive conflicts of interest policy that applies to all directors, management and employees in regulating conditions which could or do constitute a conflict.

    The primary objectives of this policy are to:

    • Provide guidance on the behaviour expected in accordance with the company’s values
    • Promote transparency and avoid business-related conflicts of interest
    • Ensure fairness in dealing with the interests of all employees, other affected individuals, and the company
    • Document the process for disclosure, approval and review of activities that may amount to actual, potential or perceived conflict of interests
    • Provide a mechanism for the objective review of personal outside interests.

    External communications
    Briefing analysts, investors and fund managers is an important element of maintaining investor relations. However, we will only provide “price-sensitive” information after disclosing that information to the market.

    Broader stakeholder communication plans have been implemented. The group believes in clear, transparent, concise and timely dissemination of relevant information to all stakeholders. This is achieved through a multitude of channels and media, including written, electronic and verbal presentations. Specifically, there are a number of mechanisms for stakeholders to interact with the board and its sub-committees. These include annual general meetings, representative forums, internal communications across a range of platforms and more.

    Marketing communication
    In line with its corporate values, Exxaro communicates regularly and openly with all stakeholders. At all times, our communications adhere to the laws, standards and voluntary codes of accepted marketing communication in the areas where we operate. During the year, no incidents of non-compliance were recorded.


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