Board Appointments and Diversity Policies

Introduction

The Nominations Committee is responsible for making recommendations to the Board on the structure, size and composition of the Board and its committees and succession planning for the Directors and other senior executives. Before making appointments of new Directors, the Committee is responsible for evaluating the balance of skills, knowledge and experience on the Board and identifying and nominating suitable candidates.

The Nominations Committee has approved Board Appointments and Board Diversity Policies which provide the framework for the Nominations Committee and the Board’s approach to Board appointments.

Board Appointments Policy and Process

The Nominations Committee and the Board are committed to the principle of appointments to the Board being made on the basis of merit. The criteria for determining the composition of the Board and future Board appointments continues to be based on:

  • The Relationship Agreement requirements for appointments to the Board by Peñoles
  • The Company’s leading position as a precious metals miner in Mexico
  • The Company’s inclusion in the FTSE 100 Index
  • The specific functions on Board committees which independent Directors will be required to fulfil
  • The criteria set out in the current terms of reference of the Nominations Committee

The process for making new appointments to the Board is led by the Chairman. Potential candidates are considered on the basis of their skills and experience and their fit with the blend of skills of the rest of the Board.

The Board Appointments Policy provides a frame of reference for the process. The candidates identified by the Chairman are presented to the Nominations Committee for approval prior to being recommended to the Board for appointment. The Nominations Committee does not use open advertising or retain any external consultants when making new appointments to the Board as such assistance is considered unnecessary considering the Company’s contacts within Mexico.

Board Diversity Policy Statement

The Board consists of independent and non-independent Directors who, since the Company’s listing in 2008, have developed a collegiate approach to overseeing the development of the Fresnillo Group in the interests of all shareholders. The collective experience of the team is of equal importance to the individual experience and perspectives that different Directors bring.

All Board appointments are made on merit, in the context of the skills and experience the Board as a whole requires for it to be effective. This is the fundamental principle upon which Board appointments are and will be made. In support of this, the Board recognises and embraces the benefits of having a diverse board; particularly the value that different perspectives and experience bring to the quality of board debate and decision-making. The Board believes that setting targets for the number of people from a particular background or gender is not the most effective approach to take. The Board will therefore look to follow the principles of this policy rather than specified quotas or targets.

The Board recognises that very few women are attracted to mining engineering and geology academic programmes in Mexico and, in view of the stage of development of Mexico, the participation of women in the labour force as a whole is still relatively low. This will take time to rectify but has been changing, particularly in relation to unionised workers, and the Company in committed to hiring and developing women with educational training in mining engineering, geology, finance and accounting. In the meantime, the Board has reviewed the organisational culture programme which, among other things, seeks to build a cultural environment where employees can flourish, irrespective of gender.

In view of the Fresnillo Group’s status as the world’s leading silver mining company and Mexico’s second largest gold mining company, with shares traded on the London and Mexico Stock Exchanges, there are certain ‘diversity considerations’ which need to be incorporated into the composition of the Board and which will, if the right balance is achieved, ensure that the Board is a diverse Board.

These emphases are summarised as follows:

In view of the Fresnillo Group’s status as the world’s leading silver mining company and one of Mexico’s largest gold producers, with shares traded on the London and Mexican Stock Exchanges, there are certain ‘diversity considerations’ which need to be incorporated into the composition of the Board and which will, if the right balance is achieved, ensure that the Board is a diverse Board.

These emphases are summarised as follows:

Background and experience: As a mining company; there needs to be sufficient experience on mining and engineering on the Board. There also needs to be experience of the markets, politics and commercial environment in Mexico and Central/Southern America. However, as a UK-listed company, there also needs to be international experience of capital markets, accounting and regulation represented on the Board.

Age: As a group which takes a long-term perspective, the age profile of the Board needs to recognise the value that older Directors bring through their experience and knowledge accumulated over the years; and the value that younger Directors bring through their understanding of new ideas and energy for change which encourages innovation.

Gender: Despite the traditional male-dominance of the mining sector, the Board recognises the increasing profile that women are being encouraged to take within the industry. This will be reflected in the composition of the Board in the Group's training and development programmes.

Shareholders: The Relationship Agreement requires that there is a balance between shareholder nominated Directors and independent Directors who are able to present the independent investor perspective in Board discussions.