As with our previous reports, the 2020 remuneration report includes background and context, including matters managed by the committee, as well as the group remuneration policy and implementation report with specific disclosure of the executive director's remuneration. Every year, we endeavour to ensure these reports comply with the requirements of King IV as well as best market practice.

The global COVID-19 pandemic forced most businesses to rethink and redefine practices at work. Likewise, at Exxaro during 2020 we spent a considerable amount of time reflecting on our business strategies and ensuring our people are empowered and aligned with our strategy in order to deliver our purpose to power better lives. We made some adjustments to our people management, talent development and remuneration and incentives to ensure our people will continue to thrive in the work environment brought about by the pandemic.

Shareholder engagement

The 2019 remuneration policy and accompanying implementation report were tabled in two separate resolutions for non-binding advisory votes by shareholders at the 2020 AGM. We were pleased with the upward turn in Exxaro's voting record at this AGM.

We believe that the improvement was due to improved shareholder engagement as well as changes to the remuneration policy and reporting approach following inputs received during the engagements. The phased implementation of the changes are on track. During the year, the performance conditions of the LTIP were reviewed and implemented. A policy on minimum shareholding was also developed and adopted by the board for implementation by the next cycle. The targets of the SPR was split into 50% achievement of business targets and 50% achievement of individual targets as part of a transition process to change the current STI and SPR into a single STI for implementation during 2021. Shareholders will be asked to vote in favour of the introduction of the malus and clawback clauses for the LTIP scheme in the forthcoming AGM.

The committee plans to continue engagement with shareholders in terms of a two-year cycle or as required if either the remuneration policy or implementation report are voted against by 25% or more of voting rights exercised.

Other focus areas and achievements during 2020

Exxaro achieved top employer accreditation from the Top Employers Institute acknowledging our human resources policies and practices.

Fair pay

Aligned with the principles of the UNGC, our diversity and inclusion initiatives continue to focus on gender equality and women empowerment in partnership with UN Women as well as our connect2NEXT journey towards people empowerment.

Our diversity and inclusion strategy includes the principle of fair pay. We conducted detailed analysis to understand the extent of pay disparity in our management and specialist employee categories, as well as the circumstances and contexts of these disparities.

Learning and development

The COVID-19 pandemic negatively impacted the roll-out of learning interventions and the achievement of SLP commitments, including recruitment of new learners and interns. To mitigate these risks, Exxaro implemented online meeting platforms during lockdown and Exxaro's MyNexxt cloud-based learning management system was complemented by piloting Powering Knowledge, a business skills development initiative for communities at Belfast and Grootegeluk.

ESOP (Greenshare)

We implemented a new ESOP, the Greenshare scheme, for participating employees in Paterson D lower and below grades in 2020.

Independent remuneration advisers

We continue to seek independent and professional advice regarding remuneration matters from consultants regarded by the committee as fully independent. Exxaro received the following advice during the review period:

• Vasdex and Associates, PwC and SULT advised on remuneration reporting
• PwC provided insight into remuneration trends, fair pay, minimum shareholding requirement as well as malus and clawback
• PwC was appointed as the independent adviser to the remuneration committee
• SULT and Africa People Advisory Group advised on international remuneration practices
• Remuneration benchmark data was procured from the following consultants:
  • Mercer for non-executive and executive remuneration
  • PE Corporate for non-executive and executive director remuneration
  • Vasdex and Associates for STIs
  • Remchannel for remuneration data

 

At the AGM in May 2021, shareholders will be asked to endorse our remuneration policy and its implementation. Be assured that we value and appreciate your constructive inputs as we continue to strive for excellence also in this important aspect of our business.

I thank my fellow committee members for their support and wise counsel during the review period. I also thank the executive head of human resources and her team for their hard work and dedication in ensuring Exxaro remains competitive in the market and a sought after top employer.

EJ Myburgh

Remuneration committee chairperson

19 April 2021

REMUNERATION POLICY

Introduction

In this section, we provide a broad overview of the remuneration philosophy, principles and policies applicable to the various remuneration elements in terms of various employee categories including executive directors, prescribed officers, senior management and other employees.

Notwithstanding high levels of support from previous shareholder engagements, an internal review of our remuneration policy resulted in changes recommended to the remuneration committee. We share a summary of these changes to the remuneration policy.

Remuneration philosophy

Our remuneration philosophy underpins our strategy and enables us to achieve our business objectives. Our commitment to pay for performance in alignment with shareholder value creation drives all our remuneration activities and continues to deliver a sound value proposition to employees.

We strive to attract, retain and empower the best talent to achieve our strategy and create sustainable shareholder value.

Remuneration principles

Our vision for rewards is to provide simple, integrated, holistic solutions, common messages and transparency, and a package differentiated from the market for us to attract, retain and energise talented, high-performing people as our employee offering.

We understand that remuneration is critical in attracting and retaining high-performing individuals. As such, the committee firmly supports the principle that pay must be aimed at reinforcing, encouraging and promoting superior performance. We believe in ethical, fair and responsible remuneration principles, and this belief which continues to guide our policies directed at different remuneration elements in our remuneration framework.

Remuneration offering

The table below shows the remuneration offering used to reward employee categories in a fair and equitable manner. The policy provides for an annual assessment of the wage gap and consideration of any appropriate actions such as differentiating annual adjustments. In addition, the principles of internal parity, reward for performance and market competitiveness apply. These principles facilitate fair and responsible remuneration.

Remuneration offering by employee category

Employee category*	Total guaranteed remuneration		Variable pay
			STI schemes		LTI schemes
	Notional cost of  employment (NCOE)	Total guaranteed  package (TGP)	STI	SPR	LTIP	DBP**	ESOP
Executive management (F band)	x		x	x	x	x
Senior management (E band)	x		x	x	x	x
Middle management (D upper and middle bands)	x		x	x	x
Junior management (D lower and C upper bands)	x		x				x
Non-management and specialist employees at corporate office (C middle to A bands)	x		x				x
Bargaining unit employees (C middle to A bands)		x	x				x

*	The Paterson job grades are indicated by applicable employee category.
**	DBP excludes Paterson E lower grade.

The following changes to the variable pay schemes were introduced during 2020. This was a result of shareholder engagements in 2019, when we were able to make some changes to the variable pay schemes for the current cycle. Applicable changes will impact the performance-based reward outcomes for the executive directors and prescribed officers. The table below summarises the impact on applicable elements:

Element of remuneration	2020 change		2021 change Implementation of the first phase of the revised STI is planned during 2021. Current STI and SPR will be applicable until implementation of new STI.
STI and SPR	The SPR objectives were split between 50% individual and 50% business objectives for 2020 A process was started to design a new STI that will replace the current STI and SPR
LTIP	ROCE replaces headline earnings per share (HEPS) as performance condition with the weight remaining as 33.33%. Revised performance vesting conditions at threshold and maximum introduced Increased vesting percentages at threshold from 30% to 50% for TSR and environmental criteria The benchmark face value percentage for the 2020 LTIP awards was aligned with the market for E Lower and D Upper Paterson grades ESG performance conditions were aligned with the FTSE Russell index
MSR	The committee has approved a minimum shareholding requirement policy during 2020 whereby certain employees will be required to hold a specified number of shares in Exxaro for a period of five years from the date of the implementation of the policy or from date of appointment or promotion. The policy was approved in 2020 for implementation in 2021. CEO - 200% Target MSR as % of NCOE CFO - 150% Target MSR as % of NCOE Executive committee members and prescribed officers 100% Target MSR as % of NCOE		Implementation of policy.
Malus and clawback	Malus and clawback provisions have been introduced Exxaro's remuneration policy. Malus will be applicable to all STI, SPR, DBP and LTIP awards before vesting or settlement date and clawback will apply to all STI, SPR, DBP and LTIP awards for 36 months after vesting or settlement date.		The policy is still to be approved at the AGM 2021 for implementation in 2021.

Remuneration mix

The table below indicates the maximum percentage of total guaranteed remuneration (NCOE/TGP) applicable to the variable pay schemes by grade. The remuneration mix is benchmarked on an annual basis prior to the granting of annual LTI awards.

Remuneration mix for variable pay by Paterson grade at maximum (expressed as a percentage of total guaranteed remuneration)

Grade	Maximum  STI  (%)	Maximum  SPR  (%)	Maximum  STI  schemes  (%)	Maximum  LTIP  (%)	Maximum  DBP* (%)	Maximum  LTI  schemes  (%)	Maximum  total  variable  pay  (%)
F upper*	18.33	37.00	55.33	231.00	27.39	258.39	313.72
F lower*	18.33	32.00	50.33	143.00	24.91	167.91	218.24
E upper*	18.33	25.00	43.33	101.00	21.45	122.45	165.78
E middle	18.33	20.00	38.33	76.00	10.54	86.54	124.87
E lower and D upper	18.33	15.00	33.33	50.00	0.00	50.00	83.33
D middle	18.33	10.00	28.33	38.00	0.00	38.00	66.33
D lower and below	18.33	0.00	18.33	0.00	0.00	0.00	18.33

*	The maximum DBP matched portion is 90% of the total after-tax STI schemes for F band and E upper Paterson grades and 50% for E middle Paterson grade.

The table below provides an indication of the total variable pay due, by component, for achievement at target. The STI and SPR schemes explicitly state the target bonus quanta applicable at target. The LTIP performance vesting conditions are defined at maximum and threshold. To provide an indication of targeted total variable pay, target is considered halfway between threshold and maximum. In the case of the DBP, we applied the midpoint of the voluntary deferral, 50% to the target STI schemes.

Remuneration mix for variable pay by Paterson grade at target (expressed as a percentage of total guaranteed remuneration)

Grade	Target  STI  (%)	Target  SPR  (%)	Target  STI  schemes  (%)	Target  LTIP  (%)	Target  DBP* (%)	Target  LTI  schemes  (%)	Target  total  variable  pay  (%)
F upper*	8.33	33.30	41.63	150.15	11.45	161.60	203.23
F lower*	8.33	28.80	37.13	92.95	10.21	103.16	140.29
E upper*	8.33	22.50	30.83	65.65	8.48	74.13	104.96
E middle	8.33	18.00	26.33	49.40	7.24	56.64	82.97
E lower and D upper	8.33	13.50	21.83	24.70	0.00	24.70	46.53
D middle	8.33	9.00	17.33	24.70	0.00	24.70	42.03
D lower and below	8.33	0.00	8.33	0.00	0.00	0.00	8.33

*	The target DBP matched portion is 50% of the total after-tax STI schemes for F band and E upper Paterson grades and 50% for E middle Paterson grade.

Remuneration mix for CEO, FD and prescribed officers

 

Total guaranteed remuneration

Our policy at Exxaro is to:

• Benchmark using established industry remuneration surveys on an annual basis with a combination of job families and grades to anchor external benchmark jobs for comparison
• Position total guaranteed remuneration around the median of the external benchmark jobs
• Use mining industry peers to compare most Paterson grade E and below roles specific to the mining industry
• Use a combination of national remuneration surveys in South Africa for local roles at executive management and some senior management levels that are not specific to the mining industry
• Consider the outcome of the individual performance contract in the annual NCOE increase process – a three score (on a five-point rating scale) warrants positioning around the median of the benchmark for the job

NCOE

NCOE is the guaranteed remuneration portion of total pay and includes basic salary, benefits and retirement funding.

Basic salary

All bargaining unit employees receive a market-related basic salary complemented by guaranteed allowances (housing and commuting), variable allowances (shift and standby) as well as benefits (see full list of benefits below). Bargaining unit employees have received increases of between 0.5% and 1.5% higher than management and specialist category employees per annum over the past 14 years (2006 to 2019), to reduce the wage gap.

The committee unanimously agreed that, given the potential impact of the Covid-19 pandemic and a drop in export market demand, which is a significant revenue contributor to Exxaro's revenue stream, no salary adjustment in 2020 for the executive, management and specialist category of employees as well as NEDs would be implemented. Bargaining unit and non-management and specialists at corporate centre received an average increase of 5.5%.

Benefits

All employees are entitled to the same range of benefits appropriate to their role level and specific circumstances. Management and specialist employees have flexibility in structuring their remuneration within certain company and legislative limitations. During the year, no changes were made to the policies for medical, health and other benefits stated below. The only change was to the retirement funds.

Variable pay

STI

The STI schemes focus on annually contributing to the strategic goals and delivering on Exxaro's operational and financial objectives in the shorter term.

Exxaro has two STI schemes:

• The SPR scheme that rewards individual performance, predominantly aimed at over and above normal job performance objectives, mostly achieving tactical or strategic objectives.
• The STI scheme that rewards BU, commodity and group-level performance for reaching and exceeding stretched operational and financial performance targets.

SPR scheme

The SPR scheme applies to all permanent employees (Paterson grade D middle and above) in Exxaro's management and specialist category.

Participants in the scheme are required to have an SPR contract with individual SPR objectives for the 12-month period. It is evaluated twice a year and the final rating forms the basis for payment of the SPR scheme.

The SPR is measured on an annual basis and paid out in March of the following year. Once the SPR target has been achieved (three rating on a five-point rating scale), a potential of 90% will be paid out. Above-target achievement (four rating on a five-point scale) will qualify for a maximum of 100% pay out. If target was not achieved (two or below on a five-point rating scale), there will be no pay out applicable to the employee.

STI scheme

The STI scheme applies to the Exxaro group and is based on business performance with two components:

• Tier 1: 8.33% (NCOE/TGP) is for the achievement of the targeted net operating profit per BU. A downward modifier is applicable if production volume targets have not been met
• Tier 2: 10% (NCOE/TGP) is a "self-funded/gain share" scheme based on exceeding net operating profit targets at group level. Driven by the percentage improvement above budget, this is based on a 70/30 gain share principle (30% of the gain shared with employees). This component aligns a portion of the STI with the gain of shareholder

The STI is measured six-monthly for Tier 1 (January to June and July to December). It is paid out in August and February. A BU will qualify for Tier 1 on a sliding scale between a threshold of 90% and 100% performance against targets. When the modifier kicks in, if 90% of target is achieved, no payout is applicable. If 95% of target is achieved, 4.165% of the potential 8.33% payout will be applicable. If 100% of target is achieved, 8.33% (of annual guaranteed remuneration) will be payable.

Tier 2 is measured on an annual basis from January to December and paid out in February. To qualify for Tier 2 an improvement in group net operating profit between 101% and 131.4% above target is required for 2020 and a sliding scale is applied. If 131.4% improvement is achieved a maximum of 10% (of annual guaranteed remuneration) will be payable.

If a BU, coal commodity business or corporate achieved between 91% - 100% of Tier 1 they will only share in the same proportion in Tier 2. For example, maximum of Tier 2 is achieved (10% of annual remuneration will be paid) but a BU only achieved 95% of Tier 1, then only 50% of Tier 2 will be paid (5% of annual remuneration for Tier 2) to that BU.

STI scheme metrics

STI component	Percentage of total guaranteed remuneration (%)	Description of measures	Threshold (0% of STI)	Maximum (100% of STI)
1	8.33	BU BU net operating profit versus target Coal commodity business Average of business units Corporate centre Consolidated group core net operating profit target	90	100
2	10.00	Exxaro group Group net operating profit above target	101	131.4

Ferroland Grondtrust, Coastal Coal (Durnacol/Hlobane and Tshikondeni)

Tier 1 target for Ferroland is their operating expenditure target. Tier 1 target for Coastal Coal (Durnacol/Hlobane and Tshikondeni) is based on objectives set out in a scorecard based on the mines in closure and rehabilitation plans.

Tier 2 target for these BUs is the improvement above target of 101% to 131.3% in group net operating profit. Should 100% of the Tier 1 target be achieved, they share in the Tier 2 incentive on the same percentage ratio achieved in Tier 1.

Production-based incentives

Junior management and bargaining unit employees at commercial and tied operations, who are directly involved in production, qualify for line-of-sight STIs. The schemes are based on coal production with modifiers for safety and attendance per mining section. Both these schemes work on a sliding scale with threshold and full performance targets. Participants in these schemes do not qualify for the standard STI schemes.

TSR condition

Relative TSR has a weighting of 33.33% and will be compared to performance against the TSR peer group, namely the companies listed on the FTSE/JSE Resources 10 index as at the preceding December of the offer.

The peer group listed companies included in the FTSE/JSE Resources 10 index as at December 2020 were Anglo American Platinum, Anglo American, Northam Platinum, BHP Billiton, Impala Platinum, Sibanye-Stillwater, Sasol, AngloGold Ashanti, Harmony and Gold Fields.

Exxaro's TSR, for the purposes of this plan, is defined as the compound annual growth rate (CAGR) on a portfolio of Exxaro's ordinary shares purchased in December preceding the grant, holding the shares and reinvesting the dividends received from the portfolio in Exxaro shares until the end of the performance period, and then selling the portfolio on that day.

The monthly TSR calculation will be performed using the dividend payments and Reuters share price data on the nearest trading day to 31 December preceding the award and the nearest trading day to 31 December at the end of the performance period, and computing the CAGR between these values.

The TSR will be smoothed by computing the TSR in the same manner for the three-year period following each trading month for the six months preceding 31 December of the award, which means that the TSR is computed from:

• Grant date to end date (one month)
• Grant date to end date (two months)
• Grant date to end date (three months)
• Grant date to end date (six months)

The TSRs computed in this manner will then be arithmetically averaged to yield the final "smoothed TSR" for the TSR performance condition.

The smoothed TSR for each member of the peer group will be computed over the same period in the same manner. This period of smoothing is in line with the market.

If the TSR of Exxaro over the three-year period is equal to the minimum TSR target, the minimum LTIP award (50% of the TSR portion of the grant) vests.

If the Exxaro TSR is equal to or greater than the maximum TSR target, then 100% of the grant will vest.

The award vests linearly between 50% and 100% for performance between the minimum TSR target and the maximum TSR target.

The TSR targets for the LTIP grant are:

• The minimum TSR target is equal to at least the median position of the smoothed TSR of the peer group over the three-year period. The smoothed TSR of the peer group will be the simple average, not weighted on a market capitalisation basis
• The maximum TSR target is equal to the top three TSR of the peer group returns over the three-year period

The remuneration committee has the discretion to make adjustments to the method of computation of the TSR for the peer group and for Exxaro. Under the rules of the plan, the remuneration committee may vary the TSR condition if events occur that would make such a variation necessary or desirable or would make the amended performance condition a fairer measure of performance.

Achievement of ESG targets

ESG targets have a weighting of 33.34%. The targets will be measured in terms of the approved strategic dashboard used to monitor achievement of the business strategy:

• The targets will be measured as per the FTSE Russell index including international resource peer companies
• A 50% to 100% vesting sliding scale will apply for an annual ESG rating between the median percentile ranking (50% vesting) and the upper quartile percentile ranking (100%)
• The average performance over the three-year period will be measured

The table below summarises the performance vesting conditions applicable to the 2020 awards.

Performance vesting conditions

Performance vesting condition	Weight (%)	Vesting of awards (after year three)
ROCE	33.33	17% ROCE achievement will result in 50% vesting (threshold)
		19% ROCE achievement will result in 90% vesting (target)
		22% ROCE achievement will result in 100% vesting (stretched)
TSR	33.33	Median TSR peer group position will result in 50% vesting
		Top three TSR peer group position will result in 100% vesting
ESG as per FTSE Russell index	33.34	Median ranking will result in 50% vesting
		Upper quartile ranking will result in 100% vesting

Where the actual performance falls between the stated ranges, linear interpolation will be applied between the stated vesting points.

The rules and calculating principles will follow the same approach as set out in detail for the 2020 LTIP above.

DBP

The remuneration committee selects participants, based on employee grouping and performance, from executive management and senior management to participate in the DBP. The scheme encourages share ownership while reinforcing retention.

Participants from F upper to E upper Paterson grades can elect to voluntarily use a portion (0, 50% or 90%) and E middle (50%) of their after-tax STI payments to acquire Exxaro shares at the prevailing market price.

Participants are entitled to all rights in respect of the shares (pledged) purchased with their after-tax STI, including dividends. If the pledged shares are held for the three-year pledged period, and participants remain in the employ of Exxaro for this period, Exxaro will provide a matching award on a one-for-one basis.

No performance vesting conditions are applicable to the matching award.

ESOP

Our new ESOP scheme, Greenshare, was implemented in 2020.

It is broadly based on the principles of Mining Charter III:

• It is an evergreen scheme
• It provides non-transferable carried interest (dividends) to qualifying employees
• Employees should not carry any risks
• It is for all employees not participating in any management share scheme

When dividends are declared, participants in service will receive a cash payment equal in value to 560 Exxaro shares minus dividend tax. Participants will remain in the scheme for the duration of employment. Employees will not have capital appreciation rights.

Employment contracts

Normal termination benefits (i.e. leave benefits) are payable whenever employment is terminated before the normal retirement date by Exxaro or when the employees accept voluntary redundancy.

No special agreements are in place regarding severance packages for executive employees, except for Mr Wim Diedericks who applied for a targeted voluntary package (TVP) and was approved to exit at the end of 2021 as per the TVP rules.

Executive employment contracts for management are generally valid for until retirement age of 63, with a notice period of three to six months or payment in lieu thereof.

The current executive employment contracts do not have a restraint-of-trade clause but include confidentiality undertakings.

Any shares due in terms of participating in the LTIP and DBP:

• Good leaver provisions triggered in the event of terminations due to:
  • personal events such as retirement, ill health, disability or death in service. Prorate vesting of awards.
  • company events such as retrenchments, space creations and business divestment. Normal vesting of awards.

 

Forward-looking performance and SPR contracts for CEO, CEO designate and FD in 2021

The forward-looking performance contract and the SPR contract for the CEO are shown in the table below. The performance contract and SPR/STI will in due course be adjusted with this in mind.

Performance contract and SPR contract for the CEO in 2021

Individual key objectives	KPIs	Weight
Strategic growth and financial performance	Drive implementation of Sustainable Growth and Impact strategy.	35%
	Drive implementation of the energy strategy.
	Oversight – implementation of the minerals strategy by CEO designate.
	Achievement of TSR top 3 performer vs RESI 10 peer group companies. Achieve ROCE target of 20% for capital projects in terms of LTIP sliding scale.
Business transformation and operational excellence	Tonnages delivered from coal operations as approved by the board.	25%
	Oversight – demonstrable actions by CEO designate to maximise coal early value.
	Clear evidence of the approval and implementation of an operating model that empowers people.
Leading people change and social impact	Embed connect2Next and Exxaro culture by effectively communicating the approved strategy and plans ensuring execution and alignment across the group.	15%
	Drive the implementation of Sustainable Growth and Impact strategy.
	Oversight on the implementation of diversity and inclusion strategy by CEO designate.
	Achieve 90% of total score (13.5 out of 15 points) and 1 bonus point on B-BBEE rating.
	Achieve Mining Charter and DoL employment equity targets aligned to the approved EE and SLP mechanisms.
	Achieve gender representation targets for the group in core and in management levels aligned to the approved employment equity plan and mechanisms.
Safety and business sustainability	Demonstrable actions on group level to reduce environmental impact.	15%
	Protect our people, assets and environment. Sustain ESG rating aligned to top 3 participants; achieve LTIFR target of 0.08
Cost management and prudence	Oversight – demonstrable actions by CEO designate to strategically manage costs to ensure alignment to the risk appetite framework and be mindful of the trade-offs in respect of the Sustainable Growth and Impact strategy.	10%

Performance contract and SPR contract for CEO designate in 2021

Individual key objectives	KPIs	Weight
Strategic growth and financial performance	Drive the implementation of the minerals strategy (including coal early value strategy).	30%
	Deliver optimal exit strategy and valuation for each asset in the coal portfolio.
	Optimise domestic and seaborne (including diversification) market (COVID-19 dependent).
	Achievement of TSR top 3 performer vs RESI 10 peer group companies.
	Achieve ROCE target of 20% for capital projects in terms of LTIP sliding scale.
Business transformation and operational excellence	Tonnages delivered from coal operations as approved by the board.	30%
	Integrate, report on and manage commodity-related risks in risk management framework including COVID-19 related as part of operations committee review process.
	Implement optimisation, monitoring and reporting to improve operations/productivity through operational excellence and digitalisation.
Leading people change and social impact	Drive people and capability development at operations through mentorship programmes and talent development to facilitate retention and high performance.	20%
	Support group to achieve 90% of total score (13.5 out of 15 points) and 1 bonus point on B-BBEE rating.
	Execute and achieve employment equity targets as per approved employment equity and SLP mechanisms for the minerals business.
	Drive the implementation of diversity and inclusion strategy at group level as approved by the board with, by demonstrable actions to question practices and break down any form of unintentional exclusions/differentiation that can be related to race, gender, sexual orientation, religion, etc.
	Support and cultivate sound and healthy union, community and labour relationships.
Safety and business sustainability	Drive the implementation of demonstrable actions at group level to reduce environmental impact (including decarbonisation strategy).	10%
	Demonstrable actions to reduce environmental impact and build a cleaner world, by reducing water buffer gap, carbon emissions, energy intensity, specific interventions at mine closures, rehabilitations, disturbed vs rehabilitated land.
	Sustain current ratings on carbon disclosure for both water and energy.
	Protect our people, assets and environment. Sustain ESG rating aligned to top three participants. Achieve LTIFR target of 0.08.
	Influence analyst and market expectations with stakeholder affairs to sustain current stakeholder perception rating as benchmarked.
Cost management and prudence	Drive actions to strategically manage head office costs aligned to the risk appetite framework and mindful of the trade-offs in respect of the Sustainable Growth and Impact strategy.	10%
	Demonstrable actions to strategically manage mine costs (excluding corporate office costs) with 2% year-on-year saving, aligned to the risk appetite framework and mindful of the trade-offs in respect of the Sustainable Growth and Impact strategy.
	No overdue level 1 and level 2 audit findings in area of responsibility.

Performance contract and SPR contract for the FD in 2021

Individual key objectives	KPIs	Weight
Strategic growth and financial performance	Refinancing Exxaro's existing term facility in 2021 through a combination of bank and bond funding (ensure forecast net debt covered 120% by term facility and interest rate comparable with existing facilities).	30%
	Divestment from the business of tomorrow investments as well as the ECC and Leeuwpan operations as approved by the investment panel.
	Monetise the remaining 10% shareholding in Tronox as well as flip up shares (dependent on market conditions).
	Deliver supply chain procurement savings through, operational expenditure, capital and strategic sourcing.
	Achieve ROCE target of 20% in terms of LTIP sliding scale.
Business transformation and operational excellence	Satisfactory outcome in respect of diesel rebate dispute with the South African Revenue Service.	30%
	Facilitate integration of financial reporting of the new energy and minerals business (aligned to progress of the investment strategy).
	Accurate, timely and relevant financial reporting within seven days of month-end-closing.
Leading people change and social impact	Achievement of the culture plan as agreed for implementation.	15%
	Embed diversity and inclusion by demonstrable actions to question practices and break down any form of unintentional exclusions/ differentiation that can be related to race, gender, sexual orientation, religion, etc.
	Achieve 90% of total score (13.5 out of 15 points) and 1 bonus point on B-BBEE rating.
	Achieve 30% out of 40% for MCIII + 21 points out 27 for dtic preferential procurement targets.
	Achieve group employment equity plans and targets.
	Achieve gender representation in management levels as per approved employment equity plan and mechanisms.
Safety and business sustainability	Positive impact as spokesperson for strategy and financial-related matters. Sustain current stakeholder perception rating benchmarked by Singular and set baseline for 2021.	15%
	Protect our people, assets and environment. Sustain ESG rating aligned to top 3 participants; achieve LTIFR target of 0.08.
Cost management and prudence	Demonstrable actions to strategically manage costs to ensure a roll-over from 2020 to 2021 (inflation saving), aligned to the risk appetite framework and mindful of the trade-offs in respect of the Sustainable Growth and Impact strategy.	10%
	No overdue and/or repeat level 1 and level 2 internal audit findings in area of responsibility.

Implementation report

Introduction

Our implementation report discloses remuneration outcomes for NEDs, executive directors and prescribed officers. It includes total remuneration received as well as a single, total figure of remuneration receivable (as per King IV) for the review period and all constituent remuneration elements.

In addition, details of all awards made under the Exxaro variable incentive schemes are disclosed under sections for STIs and LTIs, including reference to awards in current and prior years that have not yet vested, vesting and expiry dates where applicable, the fair value at the end of the review year, as well as the cash value of awards settled. The performance measures used and their weightings are disclosed.

In the review period, implementation complied fully with the remuneration policy.

Total guaranteed remuneration

Based on the economic climate no increases apart from bargaining unit employees were awarded.

The image below provide details on the standard performance rating scale.

Standard performance scale applied to each KPI

Performance contract and rating of the CEO in 2020

Individual key objectives	KPIs	Weight	Rating
Strategic growth and financial performance	Articulate the revised strategy for growth and transformation into 24-month horizons with clear milestones.	35%	3
	Execution of the implementation plan with sufficient board oversight and tracking, aligned with the energy strategy, inclusive of the appointment of the head of the energy business.		3
	Approval of minerals strategy (inclusive of focus areas) and subsequent exco recommendation on the implementation plan.		3
	TSR top 3 performer versus FTSE/JSE Resources 10 index peer group companies and achieve ROCE target of 20% for capital projects in terms of LTIP sliding scale.		3
Business transformation and operational excellence	Tonnages delivered from coal operations at EBITDA as per board-approved budget.	25%	4
	Demonstrable actions to maximise early value such as Grootegeluk, Mafube and Belfast mine plans all updated and used for 2021 and beyond business plans and budget, including exit and terminal values at exit of assets.		4
	Establish internal capability in mergers and acquisitions as well as strategy development.		2
	Clear evidence of the approval and implementation of an operating model that empowers people.		3
Leading people change and social impact	Embed connect2next and Exxaro culture by effectively communicating the approved strategy and plans ensuring execution and alignment across the group.	15%	4
	Board-approved sustainability and impact strategy as well as diversity and inclusion strategy.		3
	Achieve 90% of total score (13.5 out of 15 points) and one bonus point for B-BBEE rating.		4
	Achieve Mining Charter and Department of Employment and Labour employment equity targets aligned to the approved employment equity and SLP mechanisms.		3
	Achieve gender representation targets for the group in core and in management levels aligned with the approved employment equity plan and mechanisms.		3
Safety and business sustainability	Demonstrable actions at group level to reduce environmental impact.	15%	4
	Protect our people, assets and environment, sustain ESG rating aligned with top three participants and achieve LTIFR target of 0.11.		5
Cost management and prudence	Demonstrable actions to strategically manage costs to ensure a roll-over from 2019 to 2020 (inflation saving) aligned with the risk appetite framework and mindful of the trade-offs in respect of the growth strategy.	10%	3
Performance rating			3.4

Performance contract and rating of the FD in 2020

Individual key objectives	KPIs	Weight	Rating
Strategic growth and financial performance	Develop funding strategy to refinance Exxaro's existing term facility in 2021 through combination of bank and bond funding (ensure forecast net debt covered 120% by term facility and interest rate comparable with existing facilities).	30%	4
	Divestment from business of tomorrow investments as approved by investment panel (as per project plan, due diligences complete and successful negotiations of final agreements).		2
	Monetise remaining 10% shareholding in Tronox and flip-up shares (dependent on market conditions).		4
	Deliver supply chain procurement savings of R290 million through operating expenditure, capital and strategic sourcing.		3
	Achieve ROCE target of 20% for capital projects in terms of LTIP sliding scale.		4
Business transformation and operational excellence	Appoint new internal and external auditors to meet objectives and timelines as set out by audit committee through open tender process.	30%	3
	Make progress towards no overdue assurance findings, level 1 and/or 2 findings resolved within agreed timelines, and no overdue findings for finance and supply chain.		4
	Facilitate integration of financial reporting on Cennergi by financial year end and deliver the plan for other energy businesses (aligned with progress of the investment strategy).		4
	Accurate, timely and relevant financial reporting within seven days of month-end closing.		3
Leading people change and social impact	Embed connect2NEXT by effectively utilising digital platforms, principles and technology that support the new way of doing business in everyday dealings with internal and external stakeholders.	15%	3
	Embed diversity and inclusion by demonstrable actions to question practices and break down any form of unintentional exclusions or differentiation that can be related to race, gender, sexual orientation and religion among others.		3
	Achieve 90% of total score (13.5 out of 15 points) and one bonus point for B-BBEE rating.		4
	Achieve 30% out of 40% for Mining Charter III + 21 points out of 27 for dtic preferential procurement targets.		5
	Achieve Mining Charter and dtic targets for employment equity as cascaded from group targets for finance.		3
	Achieve gender representation in management levels as per approved employment equity plan and mechanisms.		3
Safety and business sustainability	Positive impact as spokesperson for strategy and financial matters, sustain current stakeholder perception rating benchmarked by Singular and set baseline for 2021.	15%	3
	Protect our people, assets and environment, sustain ESG rating aligned with top three participants and achieve LTIFR target of 0.11.		5
Cost management and prudence	Demonstrable actions to strategically manage costs to ensure a roll over from 2019 to 2020 (inflation saving) aligned with the risk appetite framework and mindful of the trade-offs in respect of the growth strategy.	10%	3
	No overdue level 1 and level 2 internal audit findings in area of responsibility.		4
Performance rating			3.4

Awards under STI schemes

In the table below, we disclose the performance outcomes for each executive director and prescribed officer supporting the SPR as well as the two components of the STI scheme. All payments are due as per policy and there were no deviations.

STI awards for executive directors and prescribed officers in 2020

	NCOE (R)	SPR			STI				Total STI awards (R)	STI awards as % of NCOE (%)
		Rating (number)	Total factor (%)	Actual (R)	Tier 1 factor (%)	Tier 2 factor (%)	Total factor (%)	Actual (R)
MDM Mgojo	7 533 816	4.0	37.0	2 787 512	8.33	0	8.33	627 568	3 415 080	45.33
PA Koppeschaar	5 719 117	4.0	32.0	1 830 118	8.33	0	8.33	476 404	2 306 522	40.33
V Balgobind	3 419 820	3.0	25.0	769 460	8.33	0	8.33	284 872	1 054 332	30.83
AS De Angelis	2 915 100	4.0	25.0	702 270	8.33	0	8.33	242 830	945 100	32.42
AW Diedericks	4 057 728	4.0	25.0	1 014 432	8.33	0	8.33	338 010	1 352 442	33.33
JG Meyer	4 205 568	4.0	25.0	1 051 392	8.33	0	8.33	350 324	1 401 716	33.33
MI Mthenjane	3 964 176	4.0	25.0	991 044	8.33	0	8.33	330 216	1 321 260	33.33
Dr N Tsengwa	4 788 451	4.0	32.0	1 532 304	8.33	0	8.33	398 878	1 931 182	40.33
SE van Loggerenberg	2 263 300	3.0	20.0	407 394	8.33	0	8.33	188 534	595 928	26.33
M Veti	3 909 972	3.0	25.0	977 494	8.33	0	8.33	325 702	1 303 196	33.33
Total STI awards				12 063 420				3 563 338	15 626 758

The SPR actual includes the individuals' voluntary deferral into the DBP.

The remuneration committee approved that, due to COVID-19, the financial targets originally set for 2020 should be replaced by the 2020 forecasted financial (four months actual financial information and eight months forecasted financial information) targets and that Tier 2 would not apply for 2020.

The evaluated SPR contracts for 2020 of the CEO and the FD are stated below.

SPR contract for the CEO in 2020

SPR contract for the FD in 2020

Summary graphs are provided to highlight the impact of performance-based pay on total remuneration due between 2020 - 2019.

The significant increase in 2020 and 2019 total remuneration is explained by the significant increase in the value of the LTIP awards that vested. The share price increased significantly over the period from 1 April 2017 to 31 March 2020. The portion of total remuneration due to STI decreased in 2020 in absolute value as well as percentage when compared to 2019.

The notes below explain the calculations supporting the graphs.

1	Minimum 2020 reflects the NCOE for the period
2	Maximum 2020 reflects the sum of the following: NCOE earned during the 2020 period Maximum potential STI value for the 2020 performance period Expected value of 2018 LTIP share award: if 100% vest, multiplied by the 31 December 2020 share price Impact of DBP matching award maturing in 2021 is included under LTI
3	On-target 2020 reflects the sum of the following: NCOE earned during the 2020 period On-target potential STI value for the 2020 performance period Expected value of 2018 LTIP share award: if the percentage that vested was midway between threshold and maximum, multiplied by the 31 December 2020 share price Impact of the DBP matching award is included under LTI
4	Actuals for 2020 and 2019: NCOE earned during the respective periods Actual STI accrued as a result of performance during the respective cycles Expected values of LTIP awards: actual percentage of the award vested as a result of the performance outcomes of respective cycles (2018 award in 2021 due to 2020 performance and 2017 award in 2020 due to 2019 performance) multiplied by the share price at 31 December and share award Any matching proceeds realised from the DBP

The summary provides insight to the SPR contract outcomes, which resulted in the SPR incentives accrued for 2020.

MDM Mgojo

CEO

Objective: Map out horizons in clear objectives to build sustainable core businesses in mining, minerals and energy respectively, specifically in terms of divestments, mergers and acquisitions, strategic partnerships, and non-traditional value proposition.

Outcomes: The CEO developed the refined strategy process for the group, incorporating foresight, objectives, risks and core performance to determine appropriate capital and resource allocation. This will ensure that Exxaro is able to deliver long-term sustainable growth and impact for all our stakeholders. Using this process, we refined the Exxaro strategy and adopted a new vision "resources powering a green world" with a view to growing beyond coal.

Our energy strategy, and refinement of the coal and broader minerals strategy, was developed in alignment with this transition to a low-carbon future. It incorporates key considerations and milestones associated with the TCFD findings and broader Sustainable Growth and Impact strategy objectives.

Some of the already publicised steps supporting the strategy include:

• Continued investment in renewable energy (as demonstrated by the acquisition of the remaining 50% of Cennergi)
• The intended sale of non-core thermal coal assets
• The decision not to make any new investments in thermal coal
• Disposal of our remaining interests in Tronox

These steps towards the vision and strategic objectives have been shared with stakeholders across various platforms.

Objective: Deliver signed agreement for sale of Leeuwpan and ECC by 31 December 2020 (or amended timeline as approved by the board) within target range proposed to the board in respect of divestment of non-robust assets.

Outcomes: The original target was to sign agreements for Leeuwpan and ECC by the end of December 2020 and or at a time approved by the board. The CEO approached the board in November 2020 and the board approved completion of both transactions in 2021.

Objective: Effective management of COVID-19 response in terms of the regulatory requirements of the sector and state of national disaster.
Outcomes: The CEO proactively led the process of developing a COVID-19 response strategy aimed at limiting infection rate, hospitalisation and loss of employees. Among numerous responses unleashed during this period, Exxaro respected and adhered to government directives and regulations in terms of alert levels periodically announced by government. In certain instances, the adopted company measures were largely stricter than government regulations. Exxaro worked closely with the Mineral Council South Africa, the Department of Health and neighbouring companies. Central in these efforts was increasing resources to guarantee sustainability and resilience so as to limit loss of life, jobs, revenue and business. The chosen strategic pathways ensured minimal impact on Exxaro.

PA KOPPESCHAAR

FD

Objective: Capital allocation.
Outcomes: Funding for coal mining companies is scarce and expensive. With Exxaro’s R8 billion facility maturing in 2021 the FD is overseeing a project to refinance these facilities at competitive terms and conditions. Good progress has been made and it is expected that the refinancing will be completed in 1H2021. With the onset of the uncertainties associated with COVID-19 in 2020, the FD also ensured that the group was not exposed to liquidity risks. A short-term facility of R3.75 billion was put in place as a precautionary measure. In accordance with the group’s capital allocation framework and free cash flow increasing substantially after completing the R17 billion expansion programme, shareholder returns are high on our agenda. With oversight of capital allocation, the FD revised the group’s dividend policy to include value-accretive buy-back programmes.

Objective: Implement digital procurement, budgeting and forecasting strategy to enable more efficient procurement and financial planning as per agreed project plan).
Outcomes: The FD successful roll-out of the digitalisation programmes at Grootegeluk, catering for modern financial reporting and enabling agile decision making with less time and effort. These programmes were also rolled out at other Exxaro operations. Standardised, simplified and efficient budgeting and forecasting processes are now embedded in financial, workforce and capital expenditure planning areas.

Self-service technology was also successfully implemented in the supply chain environment. This includes guided buying channels improving execution speed, value creation, insight-driven decision making and professional coaching to support impactful sourcing events. The digital procurement platform is the first new cloudbased enterprise resource planning system to be implemented by Exxaro.

V BALGOBIND

Executive head: human resources

Objective: Deliver suitable variable workforce and employment models for differing requirements of energy and minerals businesses to enable transitioning at speed and scale and operationalise the new operating model through structures with sufficient agility and flexibility to support new business ventures and divestments, flexible work environments and decentralised decision making.
Outcomes: Considering our strategy revision, we continue to review the organisational design principles to reflect fit-for-purpose design in strategy execution, new ways of working and decision making. In addition, we are revising employment models for the future strategy, culture fit and workforce. In defining our design to transition our workforce, the principles of purpose and performance, capabilities, structural and learning agility, collaborative partnerships, inclusivity and autonomy as well as increased efficiency will guide the enhancement of the Exxaro employee offering.

Objective: Deliver a financial wellbeing strategy with a specific focus on alleviating indebtedness of employees and driving home ownership as a consequence.
Outcomes: Exxaro recognises the importance of enhancing the health, resilience and wellbeing of our workforce. The effects of COVID-19 continue to highlight the importance of wellness. To meet the needs of employees, our focus is on financial wellbeing, specifically employee indebtedness. Addressing mental strain and workplace risk, including unsafe behaviour and absenteeism is key. The long-term plan for financial wellness includes employee financial awareness training, household budgeting and financial rehabilitation. Improving the financial health and wellbeing of employees enables them to pursue positive financial milestones such as home ownership and education for their families and has a positive impact on society at large. In line with Exxaro culture, the creation of an enabling environment with adequate mechanisms for employees to take responsibility for their financial health and wellbeing.

AW DIEDERICKS

Executive head: business development

Objective: Deliver signed agreement for sale of Leeuwpan and ECC by 31 December 2020 (or amended timeline as approved by the board) within target range proposed to the board in respect of divestment of non-robust assets.
Outcomes: The original target was to sign agreements for Leeuwpan and ECC by the end of December 2020 and/or at a time approved by the board. The executive approached the board in November 2020 and the board approved completion of both transactions in 2021. The board extended finalisation of the sale of Leeuwpan and ECC from November 2020 to 2021.

JG MEYER

Executive head: projects and technology

Objective: Contribute to the development of the minerals and services strategy, and develop the technical services model for consideration by the executive committee (COVID - 19 dependent).
Outcomes: The executive supported the development of an additional services strategy as part of the overall Exxaro strategy and objectives of the board and CEO. The services strategy was presented to the executive and board but was not approved to be implemented given the current focus on the minerals and energy strategies of Exxaro. All lessons learned as part of the services strategy development will be incorporated in the various functional strategies going forward.

Objective: Manage the project deliverables associated with the Moranbah South joint venture agreement to reach a "decision to mine" (COVID-19 dependent).
Outcomes: The executive managed the project deliverables as part of the agreed scope for the period. These deliverables included the geoscience exploration strategy and seismic surveys for the Moranbah South project mining right area. Additional exploration plans were subsequently developed to enhance the understanding of the geology model of the project. As part of the early value coal strategy Exxaro embarked on evaluating three additional open cast and underground business cases to supplement the overall Moranbah South long wall project. The timing and exploitation strategies were developed but will be influenced by geological definitions and the time to obtain licence to operate requirements.

Objective: Update project processes and procedures to the new Exxaro 4.0 standard aligning to fourth industrial revolution principles.
Outcomes: The previous project lifecycle excluded new technology developments. The executive was revised and updated the new standards to ensure future Exxaro projects are completed according to new internal standards and processes. The new project standards developed included lean construction and building information modelling guidelines. The fourth industrial revolution principles were strategically aligned from a functional perspective in terms of the Digital@Exxaro programme.

MI MTHENJANE

Executive head: stakeholder affairs

Objective: Effective use of relations and channels to share success stories of social impact targeted at specific stakeholders as per the stakeholder relations plan and aligned with the Exxaro brand strategy.
Outcomes: A stakeholder survey in 2018 indicated, among others, the need for Exxaro to be more engaging and communicative with stakeholders about its activities within communities. The executive developed a stakeholder communications and public relations plan to address this concern. In 2020, Exxaro built the current platform, maintaining consistent communication on various digital platforms about Exxaro’s community and people development activities as well as key issues with specific stakeholders in the private and public sectors. Our social media sentiment showed a net positive improvement from 4% to 15% across various channels.

Objective: Demonstrable actions, plans and outcomes where Exxaro is creating sustainable economies and accelerating businesses, participating in a collaborative regional platform with at least one impact investment project implemented and another in the pipeline for investment or implementation. (COVID-19 dependent).
Outcomes: The ESD programme supporting local community SMME development continued to grow in 2020 despite COVID-19. Exxaro remains on target to achieve its compliance objective in terms of the DTIs scorecard level 2. In addition, Exxaro continued to positively impact SMME growth, focusing our efforts on ensuring the business continuity for the 67 beneficiary SMMEs in the ESD programme. Exxaro awarded repayment holidays to 18 candidates to ease cash constraints and others received additional funding to support business growth. Exxaro disbursed a total of R79 million, including R18.1 million in repayment holidays, to preserve approximately 1 300 employment opportunities and enabled businesses to continue operating in 2021. The Impact Catalyst, a collaborative regional development initiative, in partnership with Anglo American, the Council for Scientific and Industrial Research (CSIR), Zutari and World Vision South Africa, launched in October 2019, developed several project concepts. Some began execution in 2020, such as the community-based healthcare programme.

The executive has signed memoranda of understanding with seven implementers for the development of seven significant impact investment projects. All the impact projects have regional scope in at least three provinces. Exxaro has created a partnership with a multi-faith group, which will support regional engagement.

Objective: Integrate ESD, ECF, SLP and mineral succession planning, ecosystems to communicate and track impact on communities during and after mining.
Outcomes: In response to climate change opportunities, we embarked on the development of a Sustainable Growth and Impact strategy, which will support the transition of communities dependent on coal mining operations to a lower-carbon future. This support will be in the form of enterprise development, repurposing our rehabilitated landholdings for agriculture and other industry development. The executive engaged with implementation partners and impact investors to develop key conceptual plans for several sites. This approach will integrate existing and new approaches to community development with impact-investing criteria and enable the participation of thirdparty funders in sustainable community development opportunities.

N TSENGWA

Managing director: minerals

Objective: Manage robustness of the Exxaro portfolio by concluding Moranbah South joint venture agreement to reach "decision to mine" (COVID-19 dependent).
Outcomes: Over the past year, Exxaro has intensified efforts to advance the Moranbah South studies and enable an investment decision. Due to delays in finalising the bankable feasibility study, Exxaro adopted a revised and more decisive approach that enabled focused engagement between Exxaro and Anglo American. We reached an agreement in November 2020, outlining the immediate process and steps to be followed, and timelines that would help determine the way forward for both joint venture partners. A management subcommittee has been constituted, with members representing Exxaro and Anglo American, to oversee the process and monitor progress on a monthly basis. Exxaro believes that this constructive approach is necessary and will lead to more meaningful progress in work to be done.

Objective: Deliver approved mining and minerals strategy, and execute initiatives for investment.
Outcomes: Over the years, Exxaro has been a diversified mining company with indirectly managed equity investments alongside a good-performing coal business. Exxaro retains its diversified position by, first and foremost, operating a robust coal portfolio while maintaining equity investments that make business sense and, from time to time, explores opportunities presented by other minerals that could contribute to a decarbonised economy, considering the rapid energy transition away from fossil fuels. This is in line with Exxaro’s ambition to be carbon-neutral by 2050.

Objective: Optimise and execute the value of LoM plans for divestment operations.
Outcomes: This intervention reviews LoM plans, using a zero-based principle, for Leeuwpan and ECC to identify potential value add presented by opportunities. In the first half of 2020, an extensive exercise was undertaken by an external consultant at Leeuwpan and ECC operations to identify capital investment opportunities and to quantify the potential value of each opportunity. This exercise identified short, medium- and long-term interventions that could release value by increasing throughput or cost savings. The identified opportunities were incorporated into a revised operational plan and added in value to performance for the year. The medium- to long-term opportunities were incorporated into the 2021 operational plan and 2022 to 2025 business plans, which improved net present value for Leeuwpan and ECC in comparison with the base operational plan due to improved throughput and cost reductions.

SE VAN LOGGERENBERG

Former group company secretary

Objective: Optimising the governance model in line with empowering our people and enabling new ways of working to enhance agile, quality decision making and increase accountability at relevant levels within the organisation.
Outcomes: To support the governance model, the company secretary revised the delegation of authority, and selected policies and processes in line with the evolving strategy. The board committees’ governance processes were also reviewed to ensure alignment with agile decision making, and appropriate risk consideration and mitigation, regarding the shaping and delivery of the strategy

M VETI

Executive head: sustainability

Objective: Progress against land use plan and strategy to enable social impact by leasing land to emerging farmers and donating land to communities.
Outcomes: Exxaro owns vast tracts of land, which places us in afavourable position, given the state of affairs in our communities, to leverage and repurpose our assets for positive impacts across society. In the face of ever-increasing levels of unemployment, inequalities and poverty, Exxaro adopted a deliberate strategy of donating and leasing land as well as collaborating with other organisations to develop communal land for the purposes of creating livelihoods in remote rural areas of the country. This deliberate action aims to ensure a legacy by improving employment opportunities, reducing inequalities and eradicating poverty in host communities. Exxaro firmly believe that our future, in terms of sustainability and resilience, is inextricably linked with efforts to act as catalyst and create parallel economies that help sustain communities long after mining has ceased.

Objective: Demonstrable actions to reduce environmental impact and build a cleaner world by reducing paper use and carbon emissions, improving energy efficiency, driving specific interventions at mine closures, rehabilitation, with zero level 3 environmental incidents reported.
Outcomes: Exxaro recognises that its business does not exist in isolation and that it is part of an international community with guaranteed long-term sustainability by adopting the protocols of the 2016 Paris Agreement. Against this background, Exxaro has embarked on a robust and deliberate strategy of decarbonisation in line with South Africa’s commitment to a low-carbon future. Accordingly, Exxaro introduced digitalisation throughout the company to reduce its carbon footprint by minimising paper printing and managing rehabilitation within a digital platform for greater visibility.

Objective: TCFD reporting requirements integrated into group reporting on sustainability.
Outcome: Climate change presents business risks and opportunities now and in the future. The TCFD develops recommendations for more effective climate-related disclosures that could improve investment, credit and insurance underwriting decisions. In 2019, Exxaro released its first public climate change statement, which stated its support of the TCFD and a long-term strategy to reduce carbon emissions. Our board committed to the publication of a climate change response strategy outlining Exxaro’s chosen pathway to a low-carbon future.

AS DE ANGELIS

Executive head: strategy and business transformation

Objective: Contribute to the development of the Exxaro growth strategy and transformation including articulation into horizons with clear milestones, and coordinating strategy communication and strategic messages with stakeholder affairs.
Outcomes: The executive developed a new strategy process, integrating foresight, group objectives, risks and core performance to support capital and resource allocation decisions, positioning Exxaro to deliver long-term sustainable growth and impact for all stakeholders.

Objective: Embed a robust opportunity review process and increase the use of foresight to support the strategy planning process, ensure alignment across the group, and support our transition to a low-carbon world.
Outcomes: To support current and future growth for Exxaro, and to protect Exxaro from potential disruption, we have increased our foresight capabilities. Using a three-horizon model, the executive is better equipped to anticipate potentials threats and opportunities. These capabilities are being integrated into the broader strategy process and integrated risk management framework to support the achievement of Exxaro’s strategic objectives and associated decision making across the business.

Exxaro has also defined a rigorous process to filter and assess potential opportunities for growth or operational improvement in alignment with our vision, strategic objectives, and capital return expectations and requirements.

Objective: Build new capabilities in the strategy and business transformation team.
Outcomes: A key outcome of the strategy review was reconfiguring Exxaro’s strategic capability. As part of this process, the executive focused on combining strategy and internal business transformation into a single area. The executive has strengthened our strategy team to include new roles and focus areas, and defined new ways of working to enable agility and alignment with our strategic objectives. Exxaro has also defined business development as well as mergers and acquisitions capabilities required to shape and achieve our Sustainable Growth and Impact strategy across minerals, energy and impact areas.

Objective: Support group implementation and management of COVID-19 response in terms of the regulatory requirements of the sector and state of disaster aligned with the strategy of the business.
Outcomes: The executive provided input and support to the crisis management team, part of our business continuity management plan, formed in response to COVID-19. Beyond the operational considerations and investments, we made to proactively manage the pandemic, Exxaro contributed to work by Business for South Africa and PwC on the impacts of COVID-19 in the mining industry.

Awards under LTI schemes

We also disclose the outcome of the 2018 (and 2017) conditional LTIP awards that vest in April 2021 (and vested in April 2020).

Of the awards made in April 2018, 66.67% vest in April 2021. A summary showing the vesting percentages by vesting conditions for the awards appears in the table below.

Performance vesting conditions outcome

Performance vesting condition	Weight (%)	2020 (%)	2019 (%)
HEPS	33.33	100.00	100.00
TSR	33.33	0.00	100.00
ESG	33.34	100.00	76.90
Overall vesting		66.67	92.30

2020 HEPS was 3 814 cents per share (cps) compared to the maximum vesting (100%) required at 2 775cps.

2019 HEPS was 2 193cps compared to the maximum vesting (100%) required at 1 572cps.

2020 TSR was 0% and positioned 8th (1st Impala Platinum: 64%, 2nd Anglo Platinum: 57%, 3rd Gold Fields: 50%, 4th AngloGold Ashanti: 49%, 5th Sibanye-Stillwater: 42%, 6th Anglo

American: 31%, 7th BHP Billiton: 24% and 9th Sasol: -31%).

2019 TSR was 31% and positioned 3rd (1st Anglo Platinum: 45%, 2nd Anglo American: 35%, 4th: AngloGold Ashanti: 28%, 5th BHP Billiton: 27%, 6th Impala Platinum: 22%, 7th Gold Fields: 13%, 8th Mondi: 8%, 9th Sasol: -5% and 10th Sappi: -13%).

In both periods, a minimum of 3rd position was required to vest 100% of the TSR portion of awards.

The environmental component of ESG resulted in an achievement at threshold (30% vesting) due to a total of eight level 2 cases reported over the three-year period:

• Eight level 2 cases recorded in 2018
• No level 2 cases recorded in 2019
• No level 2 cases recorded in 2020

LTIP

The table below illustrates the shares held by each participant, shares exercised and shares forfeited due to performance conditions not being met in the review period.

LTIP transaction details for executive directors and prescribed officers in 2020

	Rights held at 31 December Number	Exercisable period	Proceeds if   exercisable at   31 December1 R	Pre-tax gain if   exercisable at   31 December1 R	Options exercised during the year Number	Shares   forfeited2 Number	Sale price/ market price R	Pre-tax gain R	Date exercised
Executive directors
MDM Mgojo		01/04/2020			136 871	11 418	99.25	13 584 447	01/04/2020
	161 974	01/04/2021	22 498 189	22 498 189
	111 942	01/04/2022	15 548 744	15 548 744
	175 347	01/04/2023	24 355 698	24 355 698
	449 263		62 402 631	62 402 631	136 871	11 418		13 584 447
PA Koppeschaar		01/04/2020			59 410	4 956	99.25	5 896 443	01/04/2020
	76 047	01/04/2021	10 562 928	10 562 928
	52 605	01/04/2022	7 306 835	7 306 835
	82 402	01/04/2023	11 445 638	11 445 638
	211 054		29 315 401	29 315 401	59 410	4 956		5 896 443
Prescribed officers
V Balgobind		01/04/2020			26 744	2 230	99.25	2 654 342	01/04/2020
	32 148	01/04/2021	4 465 357	4 465 357
	22 218	01/04/2022	3 086 080	3 086 080
	34 802	01/04/2023	4 833 998	4 833 998
	89 168		12 385 435	12 385 435	26 744	2 230		2 654 342
AS de Angelis3	14 930	01/04/2021	2 073 777	2 073 777
	14 084	01/04/2021	1 956 268	1 956 268
	10 366	01/04/2022	1 439 837	1 439 837
	32 361	01/04/2023	4 494 943	4 494 943
	71 741		9 964 825	9 964 825	–	–		–
AW Diedericks		01/04/2020			33 804	2 819	99.25	3 355 047	01/04/2020
	38 687	01/04/2021	5 373 624	5 373 624
	26 362	01/04/2022	3 661 682	3 661 682
	41 293	01/04/2023	5 735 598	5 735 598
	106 342		14 770 904	14 770 904	33 804	2 819		3 355 047
JG Meyer		01/04/2020			33 804	2 819	99.25	3 355 047	01/04/2020
	39 720	01/04/2021	5 517 108	5 517 108
	27 323	01/04/2022	3 795 165	3 795 165
	42 798	01/04/2023	5 944 642	5 944 642
	109 841		15 256 915	15 256 915	33 804	2 819		3 355 047
MI Mthenjane		01/04/2020			33 181	2 767	99.25	3 293 214	01/04/2020
	37 975	01/04/2021	5 274 728	5 274 728
	25 754	01/04/2022	3 577 231	3 577 231
	40 341	01/04/2023	5 603 365	5 603 365
	104 070		14 455 324	14 455 324	33 181	2 767		3 293 214
Dr N Tsengwa		01/04/2020			50 008	4 171	99.25	4 963 294	01/04/2020
	58 762	01/04/2021	8 162 042	8 162 042
	40 991	01/04/2022	5 693 650	5 693 650
	64 208	01/04/2023	8 918 491	8 918 491
	163 961		22 774 183	22 774 183	50 008	4 171		4 963 294
SE van Loggerenberg4		01/04/2020			6 057	505	99.25	601 157	01/04/2020
		01/10/2020			7 043	587	124.01	873 402	07/10/2020
	16 187	01/04/2021	2 248 374	2 248 374
	11 146	01/04/2022	1 548 179	1 548 179
	17 458	01/04/2023	2 424 916	2 424 916
	44 791		6 221 469	6 221 469	13 100	1 092		1 474 559
M Veti		01/04/2020			32 726	2 730	99.25	3 248 056	01/04/2020
	37 455	01/04/2021	5 202 500	5 202 500
	25 402	01/04/2022	3 528 338	3 528 338
	39 790	01/04/2023	5 526 831	5 526 831
	102 647		14 257 669	14 257 669	32 726	2 730		3 248 056

1	Based on a share price of R138.90 which prevailed on 31 December 2020.
2	Shares forfeited due to performance conditions not being fully met.
3	Appointed 1 April 2020.
4	Resigned on 18 February 2021.

DBP

No further performance conditions apply to this scheme other than continued employment at the time of vesting.

The table below illustrates the shares held by each participant as well as shares exercised and shares forfeited as a result of resignations in the review period.

DBP transaction details for executive directors and prescribed officers in 2020

	Rights held at 31 December Number	Exercisable period	Proceeds if   exercisable at   31 December1 R	Pre-tax gain if   exercisable at   31 December1 R	Options exercised during the year Number	Sale price/ market price R	Pre-tax gain R	Date exercised
Executive directors
MDM Mgojo		31/08/2020			1 209	138.35	167 265	01/09/2020
	4 372	09/03/2021	607 271	607 271
	11 139	31/03/2021	1 547 207	1 547 207
	1 003	31/08/2021	139 317	139 317
	1 414	15/03/2022	196 405	196 405
	8 347	31/03/2022	1 159 398	1 159 398
	12 710	31/03/2023	1 765 419	1 765 419
	1 277	31/08/2023	177 375	177 375
	40 262		5 592 392	5 592 392	1 209		167 265
PA Koppeschaar	732	31/08/2021	101 675	101 675
	5 369	31/03/2022	745 754	745 754
	4 628	31/03/2023	642 829	642 829
	972	31/03/2022	135 011	135 011
	11 701		1 625 269	1 625 269
Prescribed officers
V Balgobind		09/03/2020			1 054	104.33	109 964	24/03/2020
		31/03/2020			1 891	97.81	184 959	03/04/2020
		31/08/2020			303	138.35	41 920	08/09/2020
	1 089	09/03/2021	151 262	151 262
	1 880	31/03/2021	261 132	261 132
	253	31/08/2021	35 142	35 142
	351	15/03/2022	48 754	48 754
	2 540	31/03/2022	352 806	352 806
	2 170	31/03/2023	301 413	301 413
	8 283		1 150 509	1 150 509	3 248		336 843
AS de Angelis	1 057	31/03/2023	146 817	146 817
	451	31/08/2023	62 644	62 644
	1 508		209 461	209 461
AW Diedericks		09/03/2020			2 406	104.33	251 018	18/03/2020
		31/03/2020			4 368	97.81	427 234	01/04/2020
		31/08/2020			688	138.35	95 185	31/08/2020
	2 484	09/03/2021	345 028	345 028
	4 287	31/03/2021	595 464	595 464
	557	31/08/2021	77 367	77 367
	773	15/03/2022	107 370	107 370
	3 098	31/03/2022	430 312	430 312
	4 641	31/03/2023	644 635	644 635
	690	31/08/2023	95 841	95 841
	16 530		2 296 017	2 296 017	7 462		773 437
JG Meyer		09/03/2020			2 413	104.33	251 748	16/03/2020
		31/03/2020			4 375	97.81	427 919	01/04/2020
		31/08/2020			688	138.35	95 185	02/09/2020
	4 786	31/03/2023	664 775	664 775
	4 786		664 775	664 775	7 476		774 852
MI Mthenjane		09/03/2020			1 304	104.33	136 046	24/03/2020
		31/08/2020			670	138.35	92 695	08/09/2020
	1 346	09/03/2021	186 959	186 959
	2 331	31/03/2021	323 776	323 776
	3 677		510 735	510 735	1 974		228 741
Dr N Tsengwa		09/03/2020			1 308	104.33	136 464	18/03/2020
		31/08/2020			396	138.35	54 787	09/09/2020
	265	31/08/2021	36 809	36 809
	519	15/03/2022	72 089	72 089
	2 359	31/03/2022	327 665	327 665
	418	31/08/2023	58 060	58 060
	3 561		494 623	494 623	1 704		191 251
M Veti		09/03/2020			1 271	104.33	132 603	23/03/2020
		31/08/2020			369	138.35	51 051	07/09/2020
	1 326	09/03/2021	184 181	184 181
	2 314	31/03/2021	321 415	321 415
	302	31/08/2021	41 948	41 948
	419	15/03/2022	58 199	58 199
	1 675	31/03/2022	232 658	232 658
	660	31/08/2023	91 674	91 674
	6 696		930 075	930 075	1 640		183 654

1	Based on a share price of R138.90 which prevailed on 31 December 2020.

DBP income for executive directors and prescribed officers

Executive director and prescribed officers	DBP shares held as a percentage of NCOE at 31 December 2020	DBP shares held at 31 December 2020		2017 DBP shares matched
	%	R	Number	R	Number
MDM Mgojo	74	5 592 392	40 262	167 265	1 209
PA Koppeschaar	28	1 625 269	11 701
V Balgobind	34	1 150 509	8 283	336 843	3 248
AS de Angelis	7	209 461	1 508
AW Diedericks	57	2 296 017	16 530	773 437	7 462
JG Meyer	16	664 775	4 786	774 852	7 476
MI Mthenjane	13	510 735	3 677	228 741	1 974
Dr N Tsengwa	10	494 623	3 561	191 251	1 704
M Veti	24	930 075	6 696	183 654	1 640

Total executive management remuneration

The total single figure remuneration for executive directors and prescribed officers is stated in the table below to align with King IV disclosure. The 2020 LTIP reflected the 1 April 2017 LTIP award that will vest as a result of 2020 performance on 1 April 2020. Since the portion of the DBP voluntary deferral is included under the STIs, proceeds from the matched portion of the DBPs are reflected under LTIs.

Single figure remuneration as per King IV for 2020 and 2019

	Year	NCOE R	Recognition and other payments R	STIs R	LTIs R	Total remuneration R
Executive directors
MDM Mgojo	2020	7 533 816	141 586	3 415 080	15 040 578	26 131 060
	2019	7 410 601	5 260	2 741 922	18 107 777	28 265 560
PA Koppeschaar	2020	5 719 117	2 500	2 306 522	7 061 571	15 089 710
	2019	5 624 332	5 260	1 799 786	7 791 003	15 220 381
Prescribed officers
V Balgobind	2020	3 419 820	14 338	1 054 332	2 985 199	7 473 689
	2019	3 363 889	5 260	840 972	3 933 020	8 143 141
AS de Angelis	2020	2 915 100	2 500	945 100	1 386 371	5 249 071
	2019	1 865 891	50 099	416 683		2 332 673
AW Diedericks	2020	4 057 728	2 500	1 352 442	3 592 398	9 005 068
	2019	4 004 844	5 260	1 001 211	5 411 496	10 422 811
JG Meyer	2020	4 205 568	2 500	1 401 716	3 688 320	9 298 104
	2019	4 141 399	5 260	1 035 350	5 413 332	10 595 341
MI Mthenjane	2020	3 964 176	2 500	1 321 260	3 526 283	8 814 219
	2019	3 916 983	55 575	979 246	4 610 097	9 561 901
Dr N Tsengwa	2020	4 788 451	2 500	1 931 182	5 456 521	12 178 654
	2019	4 373 844	10 760	1 399 630	6 781 408	12 565 642
SE van Loggerenberg	2020	2 263 300	2 500	595 928	1 503 093	4 364 821
	2019	2 244 531	10 760	448 906	1 717 831	4 422 028
M Veti	2020	3 909 972	2 500	1 303 196	3 477 996	8 693 664
	2019	3 863 424	5 260	965 856	4 506 743	9 341 283

The STIs are inclusive of the voluntary individual deferral made for 2020. The LTIs reflects 66.67% of the April 2018 award that will vest on 1 April 2021 at 31 December 2020 volume weighted average share price of R139.28.

For 2020

An amount of R2 500 includes fatality free recognition payment. Leave encashment amounts are included for MDM Mgojo: R139 086 and V Balgobind: R11 838.

For 2019

An amount of R5 260 includes fatality free recognition payment and R2 760 for LTIFR recognition. An additional total amount of R10 760 for suggestion award was received by Dr N Tsengwa and SE van Loggerenberg. Leave encashment of R50 315 for M Mthenjane is included.

Non-executive directors' remuneration

	2020			2019
	Fees for services R	Benefits and allowances R	Total R	Fees for services R	Benefits and allowances R	Total R
Non-executive directors
GJ Fraser-Moleketi	1 162 496		1 162 496	938 235	5 478	943 713
L Mbatha	582 337		582 337	702 899	–	702 899
VZ Mntambo	728 933		728 933	638 068	–	638 068
MJ Moffett	933 861		933 861	923 063	–	923 063
LI Mophatlane	819 174		819 174	1 045 616	2 913	1 048 529
EJ Myburgh	1 229 321		1 229 321	1 168 912	–	1 168 912
V Nkonyeni	959 545	2 059	961 604	956 784	21 879	978 663
J van Rooyen (chairperson)	2 128 588		2 128 588	2 016 072	–	2 016 072
A Sing1	294 136		294 136	787 867	–	787 867
PCCH Snyders	879 159	1 067	880 226	1 041 060	55 472	1 096 532
Total non-executive directors' remuneration	9 717 550	3 126	9 720 676	11 233 404	85 742	11 319 146

1	Retired on 28 May 2020.