KUMBA IRON ORE LIMITED (Registration number: 2005/015852/06) ( Kumba or the Company )

Transcription

1 INTERNAL KUMBA IRON ORE LIMITED (Registration number: 2005/015852/06) ( Kumba or the Company ) HUMAN RESOURCES AND REMUNERATION COMMITTEE ( Remco or the ) TERMS OF REFERENCE Kumba Iron Ore Limited Human Resources and Remuneration 9 February 2018 Page 1 14

2 1. CONSTITUTION 1.1 In line with the recommendations of the King IV Report on Corporate Governance for South Africa 2016 ( King IV ), the board of directors of the Company ( the board ) resolved to establish a of the board to be known as the Human Resources and Remuneration ( RemCo or the ). 1.2 The shall be appointed by the board from among others the non-executive directors, the majority of whom shall be independent. It shall consist of not less than three members, one of whom shall be the chairman of the board who shall be an ex officio member of the. 1.3 The deliberations of the assist the board of directors to discharge its oversight responsibilities regarding human resources and remuneration matters, but do not reduce the individual and collective responsibilities of the members of the board in regard to their fiduciary duties and responsibilities. Board members must continue to exercise due care and judgement in accordance with their legal obligations. 1.4 Provision shall be made for an induction programme and suitable training for all members of the. 1.5 The board shall appoint a chairman from the independent directors on the and determine the period for which he or she shall hold office. 1.6 In the absence of the chairman of the and/or an appointed deputy, the remaining members present shall elect one of their number present to chair the meeting. 1.7 Appointments to the will be made by the board on the recommendation of the Nominations and Governance. 1.8 The board shall, from time to time, review and revise the composition of the, taking into account the need for an adequate combination of skills and knowledge. The tenure of the members will be reviewed annually, after every Annual General Meeting. 2. ROLE, RESPONSIBILITIES AND FUNCTIONS 2.1 The purpose of this is to act as an independent and objective body that will make recommendations on the remuneration policies and practices for the executive directors, senior management and the Company in general. To align with the remuneration principle as set out in King IV, the shall facilitate the promotion of the strategic 9 February 2018 Page 2 14

3 objectives and positive outcomes of the Company in the short, medium and long term by ensuring that the Company remunerates fairly, responsibly and transparently. 2.2 Steering and setting strategic direction The duties of the shall be to assist the board and to be responsible for decisions and/or recommendations in respect of human resources and remuneration matters. 2.3 Approving policy and planning The is entrusted: to ensure alignment of the remuneration and human resources strategies and policies with the group s business strategy and the desired culture; to determine the group s general policy on executive and senior management remuneration; to determine specific remuneration packages for the executive directors and other senior management as deemed appropriate by the including but not limited to basic salary, benefits in kind, any annual bonuses, performance based incentives, share incentives, pension and other benefits; to position and recommend senior executive pay levels relative to appropriate benchmarks such that they are sufficient to attract, retain and motivate executives of the quality required by the board; to determine, annually, any criteria necessary to measure the performance of executive directors and senior management in discharging their functions and responsibilities to objectively test that performance conditions are met; to give the executive directors and senior management every encouragement to enhance the Company s performance and to ensure that they are fairly but responsibly rewarded for their individual contributions and performance; to approve any grants to executive directors and other senior employees made pursuant to the group s management share incentive scheme on recommendation from management and verify that performance conditions were met when such options are exercised; 9 February 2018 Page 3 14

4 2.3.8 to consider recommendations by management in respect of proposed amendments to the rules applicable to any incentive schemes and to approve and/or recommend same to the board and/or shareholders as appropriate, based on the nature of the proposed amendments; to approve salary increases for non-bargaining employees and provide executive management with the necessary mandates for negotiations with trade unions; to receive and review annual reports on the retirement and health care funding for the group; to consider recommendations by management in relation to nonexecutive director remuneration for final recommendation by the board to shareholders; to ensure that structures, policies and procedures facilitate good management and utilisation of human resources; to ensure adequate succession plans for executive and senior management; to review the remuneration disclosure in the integrated report to ensure that it is accurate, complete and transparent, provides clear explanation of how the remuneration policy has been implemented and provides sufficient forward looking information for the shareholders to assess the remuneration policy and for passing a resolution in terms of section 66(9) of the Companies Act, 2008; to ensure the proper discharge of the board s obligation regarding skills retention and employment equity; to ensure good administration in entities connected to the delivery of remuneration (share trusts, pension funds, etc); to attract, motivate, reward and retain human capital. 2.4 OVERSIGHT AND MONITORING The members must adhere to the minimum King IV disclosure requirements relating to remuneration background statements, an overview of the provisions in the remuneration policy and an implementation report. 9 February 2018 Page 4 14

5 2.4.2 The must oversee ongoing dialogue with shareholders based on mutual understanding of what performance and value creation constitutes for the purpose of evaluating the remuneration policy The must provide shareholders an opportunity to pass a separate, non-binding advisory vote on the remuneration policy and implementation report. In the event of a 25% or higher advisory vote against the adoption of a policy or an implementation plan, the remuneration policy should set out specific measures that the will take to address the shareholders objections and underlying concerns The has developed an annual work plan to ensure that all relevant matters are covered by the agenda of meetings planned for the year. The work plan is reviewed annually to ensure that the effectively discharges it role, responsibilities and functions The shall review and report to the board and shareholders on its operating effectiveness and performance at least annually. 2.5 ACCOUNTABILITY The is authorised by the board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee of the group and all employees are directed to co-operate with any request made by the. Such requests will be channelled through the company secretary The is authorised by the board to, at the Company s expense, obtain outside legal, accounting or other independent professional advice as it considers necessary to carry out its duties and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary The chairman, or in his absence, an alternate member, of the shall attend the annual general meeting to answer questions concerning matters falling within the ambit of the Subject to the above provisions and any relevant legislation, the members of the shall not attract any personal liability arising from their appointment The Company shall indemnify members of the to the extent possible in terms of its approved liability insurance coverage The shall annually approve its own terms of reference, subject to final board approval for all changes. 9 February 2018 Page 5 14

6 3. MEETINGS 3.1 Proceedings Unless varied by these terms of reference, the Company s Memorandum of Incorporation, regulating the meetings and proceedings of directors and s, will govern meetings and proceedings of the The secretary shall ascertain, at the beginning of each meeting, the existence of any conflicts of interest and minute these accordingly The secretary shall take minutes of the meetings. The minutes shall record the issues, the salient features pertaining to the issues and the decisions of the. The minutes will be formally approved by the at its next scheduled meeting or via electronic communication, if necessary, and will thereafter be signed by the chairman. Signed minutes shall be made available to all board members for noting The chairman of the shall report on the s proceedings and findings to the next meeting of the board. 3.2 Attendance The chief executive officer and the executive head: human resources shall be in attendance at meetings of the and shall have unrestricted access to the chairman or any other member of the as is required in relation to any matter falling within the remit of the. Other board members may also attend at the invitation of the chairman of the Suitably qualified persons may be invited to attend meetings of the when necessary to render such specialist services as may be necessary to assist the in its deliberations on any particular matter No invited attendee shall have a vote at the meetings of the Members and/or invited attendees of the may participate in and act at any meeting of the by means of telephone or video conference or other communication equipment provided that all persons participating in the meeting can hear each other. Participation in such meeting shall constitute attendance and presence in person by person(s) so participating. 9 February 2018 Page 6 14

7 3.2.5 A quorum for decisions of the shall be a majority of members present throughout the meeting either in person or via telephone or video conference facilities The company secretary shall act as secretary. 3.3 Frequency of meetings The must hold sufficient meetings to discharge all its duties as set out in these terms of reference Meetings shall be held not less than 4 (four) times a year. The board or any member thereof, including members of the may, in consultation with the chairman of the, call a meeting at any other time Quarterly meetings shall be scheduled in advance as part of the annual corporate calendar of the Company. In addition, ad-hoc meetings may be called as and when required with reasonable notice, to the extent possible. 3.4 Agendas The company secretary will be responsible for preparation of the meeting agenda in consultation with the chairman and the executive head of human resources. The number, timing and length of these meetings and the agendas are to be determined in accordance with the annual plan. 3.5 Meeting documentation The company secretary will endeavour to distribute the meeting pack to members of the at least 5 days before the scheduled meeting. 3.6 Written resolutions A resolution in writing signed by a majority of the members of the shall be as valid and effectual as if it has been passed at a duly constituted meeting of the, provided that each member of the shall have been afforded reasonable opportunity to express an opinion on the matter to which such resolution relates. 3.7 Remuneration Non-executive members of the shall be paid such special remuneration in respect of their appointment as approved by the shareholders, on recommendation from the board. 9 February 2018 Page 7 14

8 3.7.2 The above fees shall be subject to review by the board from time to time on recommendation from the. ANNEURES 1. King IV Principles 2. Annual Work plan 2018 APPROVED BY THE BOARD ON 9 FEBRUARY 2018 Chairman of the Board Chairman of the 9 February 2018 Page 8 14

9 ANNEURES 9 February 2018 Page 9 14

10 REMCO WORK PLAN 2018 For discussion / Approval February 2018 (Quarter 1) May 2018 (Quarter 2) Performance incentive payments: o Chief Executives; o Executive ; Personal performance contracts for CEO and Executive ; - Deferred Bonus Arrangement (DBA) and Long Term Incentive (LTIP) allocations for 2018; - Vesting share plan awards: 2015 shares and GBF6/12 deferred bonus; - Amendments to the Kumba short Term Incentive (STI) policy for 2018; - Non-executive directors fees review; - Ad-hoc allocation of forfeitable shares to new appointees (if any); - Replacement ESOP; - Other items for approval to be advised as necessary. Updates - Human Resources Quarterly report Q4 2017; - Remuneration report 2017; - Feedback on salary increases non-bargaining employees. For discussion / approval - Executive remuneration policy. For discussion / Approval - Ad-hoc allocation of forfeitable shares to new appointees(if any); - Other items to be advised as necessary. Updates - Human Resources Quarterly report Q1 2018; - Kumba AGM: o Proxy reports; o Feedback on meetings with key investors and proxy holders. Kumba Iron Ore Limited Human Resources and Remuneration 9 February 2018 Page 10 14

11 For discussion / Approval July 2018 (Quarter 3) November 2018 (Quarter 4) For discussion / Approval - Ad-hoc allocation of forfeitable shares to new appointees(if any); - Other items for approval to be advised as necessary. Updates - Human Resources Quarterly report Q Salary mandate - CEO and ExCo members - Non-bargaining unit employees - Ad-hoc allocation of forfeitable shares to new appointees(if any); - Executive and Company Secretary year-end performance; - CEO 2018 performance contract ratification; STI annual production bonus metrics; - Feedback on 2018 wage agreement implementation for bargaining unit employees; - Non-Executive Director fees review - Annual work plan 2019; - Annual review of Terms of Reference; - Other items for approval to be advised as necessary. Updates - Human Resources Quarterly report Q February 2018 Page 11 14

12 King IV Principles Allocation of responsibilities to Board s Principle Principle 1: Leadership should lead ethically and effectively. The board Board Audit Social, Ethics and Transformation Risk & Opportunities Human Resources and Remuneration Principle 2: Organisational ethics The board should govern the organisation in a way that supports the establishment of an ethical culture. Principle 3: Responsible Corporate Citizenship The Board should ensure that the organisation is and is seen to be a responsible corporate citizen. Principle 4: Strategy and performance The Board should appreciate that the organisation s core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value creation process. Principle 5: Reporting The Board should ensure that the reports issued by the organisation enable stakeholders to make informed assessments of the organisation s performance and its short, medium and long term prospects. Principle 6: Primary role and responsibilities of the governing body The board should serve as the focal point and custodian of corporate governance in the organisation. Principle 7: Composition of the governing body The board should comprise the appropriate balance of 9 February 2018 Page 12 14

13 Principle knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively. Board Audit Social, Ethics and Transformation Risk & Opportunities Human Resources and Remuneration Principle 8: s of the governing body The board should ensure that its arrangements for delegation within its own structures promote independent judgement and assist with balance of power and the effective discharge of its duties. Principle 9: Evaluation of the performance of the governing body The board should ensure that the evaluation of its own performance and that of its committees, its chair and its individual members, support continued improvement in its performance and effectiveness. Principle 10: Appointment and delegation to management The board should ensure that the appointment of, and delegation to, management contribute to role clarity and the effective exercise of authority and responsibilities. Principle 11: Risk Governance The board should govern risk in a way that supports the organisation in setting and achieving its strategic objectives. Principle 12: Technology and information governance The board should govern technology and information in a way that supports the organisation setting and achieving its strategic objectives. 9 February 2018 Page 13 14

14 Principle Board Audit Social, Ethics and Transformation Risk & Opportunities Human Resources and Remuneration Principle 13: Compliance governance The board should govern compliance with applicable laws and adopted, non-binding rules, codes and standards in a way that supports the organisation being ethical and a good corporate citizen. Principle 14: Remuneration governance The board should ensure that the organisation remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term. Principle 15: Assurance The board should ensure that assurance services and functions enable an effective control environment, and that these support the integrity of information for internal decisionmaking and of the external reports. Principle 16: Stakeholders In the execution of its governance role and responsibilities, the board should adopt a stakeholder-inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interest of the organisation over time. 9 February 2018 Page 14 14