Governance - Xstrata

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Directors’ report Results and dividend The Group’s financial results are set out in the financial information section and in the Financial review section of this report. The Board recommends a final dividend of US$0.20 per share amounting to $586 million. The total 2010 dividend is US$0.25 per share or $732 million. The shareholders will be asked to approve the dividend at the Annual General Meeting on 4 May 2011, for payment on 13 May 2011 to ordinary shareholders whose names were on the register on 26 April 2011. Principal activities Xstrata is a major global diversified mining group with its headquarters in Zug, Switzerland, and has a Premium Listing on the London Stock Exchange. Xstrata also has a Secondary Listing on the SIX Swiss Exchange. Additional information on the Group’s operations is provided in the Business overview and strategy, Financial review and Operational review sections of this report. Review of the business, future developments and post balance sheet events A review of the business and the future developments of the Group is presented in the Chairman’s statement, Chief Executive’s report and the Business review from page 50 to page 95. A full description of acquisitions, disposals, and changes to Group companies undertaken during the year, including post balance sheet events, is included in the Financial review on pages 50 to 55. Corporate governance A report on corporate governance and compliance with the principles and provisions of the Combined Code on corporate governance is set out on pages 110 to 118 and forms part of this report by reference. Financial instruments The Group’s financial risk management objectives and policies, details of its financial instruments, hedging activities and its exposures to price risk, credit risk and liquidity risk are discussed on pages 50 to 55 of the Financial review and in Note 37 of the Financial statements. Creditor payment policy and practice In view of the international nature of the Group’s operations there is no specific Group-wide policy in respect of payments to suppliers. Individual operating companies are responsible for agreeing terms and conditions for their business transactions and ensuring that suppliers are aware of the terms of payment. It is Group policy that payments are made in accordance with those terms, provided that all trading terms and conditions have been met by the supplier. Xstrata plc is a holding company with no business activity other than the holding of investments in the Group and therefore had no trade creditors at 31 December 2010. Health, safety, environment & community (HSEC) An overview of health, safety and environmental performance and community participation is provided throughout the Strategy section on pages 18 to 47. www.xstrata.com | 105 Exploration and research and development The Group business units carry out exploration and research and development activities that are necessary to support and expand their operations. Political and charitable donations In accordance with Xstrata’s corporate social involvement (CSI) policy, no political donations were made in 2010. Xstrata’s corporate social involvement expenditure supports initiatives that benefit the communities local to the Group’s operations in the areas of health, education, sport and the arts, community development, job creation and enterprise. In 2010, Xstrata set aside over $84 million for CSI initiatives. Donations during the year to UK registered charities totalled £903,000. Employee policies and involvement The Group’s policy and performance regarding employee involvement, disabled employees, labour relations and employee share schemes are provided throughout the Strategy section on pages 18 to 47. Board of directors The directors during the year under review were Mick Davis (Chief Executive), Dr Con Fauconnier (independent non-executive), Ivan Glasenberg (non-executive), Peter Hooley (independent non-executive), Claude Lamoureux (independent non-executive), Sir Steve Robson (independent non-executive), David Rough (Deputy Chairman, Senior Independent Director and non-executive), Trevor Reid (Chief Financial Officer), Ian Strachan (independent non-executive), Willy Strothotte (Chairman and non-executive), and Santiago Zaldumbide (executive director). Further details about the directors, their skills and experience and their roles within the Group are given in the directors’ biographies on pages 102 and 103. Directors’ conflicts of interest Under section 175 of the Companies Act 2006, a director of a company must avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company. The duty is not infringed if the matter has been authorised by the directors of the relevant company. Under the Act, the board of directors of the relevant company has the power to authorise potential or actual conflict situations. The Board maintains effective procedures to enable Xstrata’s directors to notify the Company of any actual or potential conflict situations and for those situations to be reviewed and, if appropriate, to be authorised by the Board, subject to conditions and for a period of one year. The Nominations Committee undertakes the role of reviewing notifications in detail and making appropriate recommendations to the Board regarding authorisation. Directors’ conflict situations are reviewed annually. A register of authorisations is maintained. Overview Strategy Performance Governance Financials
106 | Governance Directors’ report continued Directors’ liabilities The Company has granted qualifying third party indemnities to each of its directors against any liability that attaches to them in defending proceedings brought against them, to the extent permitted by the Companies Acts. In addition, directors and officers of the Company and its subsidiaries are covered by Directors & Officers liability insurance. Directors and their interests Details of interests in the share capital of the Company of those directors in office as at 31 December 2010 are given below. None of the shares were held non-beneficially. No director held interests in the shares of any subsidiary company. Name of director Ordinary shares held beneficially as at 1 January 2010 Ordinary shares held beneficially as at 31 December 2010 Executive Mick Davis 1,378,958 2,517,849 Trevor Reid 260,046 511,389 Santiago Zaldumbide Non-executive – 27,139 Con Fauconnier – – Ivan Glasenberg – – Peter Hooley – – Claude Lamoureux 27,000 27,000 Sir Steve Robson – – David Rough 24,999 24,999 Ian Strachan 43,098 43,098 Willy Strothotte – – In addition to the above interests in shares, the executive directors, have also been granted interests in the share capital of the Company in the form of conditional rights to free shares and options to subscribe to shares under the Long Term Incentive Plan; and nil cost share options under the Xstrata Executive Committee Bonus Plan, which are forfeitable in certain circumstances. Details of these interests are disclosed in the Directors’ Remuneration report on pages 127 and 129. During the period from the end of the financial year to 15 March 2011, the following changes in directors’ interests have occurred: Mick Davis acquired legal and full beneficial interest in 72,751 ordinary shares, Trevor Reid acquired legal and full beneficial interest in 36,653 ordinary shares, and Santiago Zaldumbide acquired legal and full beneficial interest in 82,220 ordinary shares upon the vesting of deferred bonus shares awarded under the Executive Committee Bonus Plan in 2010. Santiago Zaldumbide sold 316,948 ordinary shares following the exercise of share option awards and the vesting of deferred bonus shares. The following awards were made on 18 February 2011: Name of director Share options 1 Conditional shares 2 Deferred Bonus shares 3 Deferred Bonus shares 4 Mick Davis 562,791 204,856 91,944 91,944 Trevor Reid 283,480 103,187 46,312 46,312 Santiago Zaldumbide 233,371 84,947 58,149 43,611 1 Granted under the Xstrata Long Term Incentive Plan at an option price of £14.68 per share, exercisable between 18 February 2014 and 18 February 2021. 2 Granted under the Xstrata Long Term Incentive Plan vesting on 18 February 2014. (The number of options and conditional share awards granted under the Xstrata Long Term Incentive Plan are maximum numbers and are subject to the satisfaction of performance conditions over a three-year period under the terms of the Long Term Incentive Plan rules.) 3 Deferred share options granted under the Xstrata Executive Committee Bonus Plan at an option price of £1 in aggregate, exercisable between 1 February 2012 and 1 February 2021. 4 Deferred share options granted under the Xstrata Executive Committee Bonus Plan at an option price of £1 in aggregate, exercisable between 1 February 2013 and 1 February 2021. (The share options are forfeitable if the director leaves employment in certain circumstances specified in the Xstrata Executive Committee Bonus Plan rules.) Share capital At the date of this report, the ordinary share capital of the Company was $1,482,346,038 represented by 2,964,692,076 ordinary shares of $0.50 each. Following the full and final conversion of all the outstanding bonds under the $375 million 4.00% Guaranteed Convertible Bonds due 2017 issued in October 2006 by Xstrata Capital Corporation A.V.V. (Xstrata C.C.) into redeemable preference shares of Xstrata C.C., and the subsequent exchange of such shares into fully paid ordinary shares of Xstrata plc (Xstrata), the Company’s issued ordinary share capital increased to 2,964,692,076 shares of $0.50 each. The Company has in place an equity capital management programme (ECMP) under which up to 10% of the issued share capital of the Company can be purchased in the market by Batiss Investments Limited (Batiss). Batiss currently holds 28,428,786 ordinary shares, 0.96% of Xstrata’s current issued ordinary share capital. Batiss waives its rights to receive dividends on the ordinary shares that it holds from time to time. Major interests in shares As at 16 March 2011, the Company had been notified of the following interests representing 3% or more of the issued ordinary share capital of the Company: Number of ordinary shares % of ordinary Name of shareholders of US$0.50 each issued share capital Glencore International AG, Zug* 1,010,403,999 34.08 BlackRock, Inc 176,597,103 5.95 * The voting rights comprised in this interest are directly controlled by Finges Investment B.V., a wholly owned subsidiary of Glencore International AG.
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Governance - Xstrata

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