Directors' remuneration report

Information not Subject to Audit

Remuneration Committee

The Remuneration Committee is chaired by Willy Strothotte and its other members are David Rough and Paul Hazen, all of whom are non-executive directors. The Board recognises that Willy Strothotte is not an independent non-executive director as defined by the Combined Code, but regards his membership as critical to the work of the Committee due to his extensive knowledge and experience of the global mining resources sector. The Remuneration Committee reviews the structure of remuneration for executive directors on an ongoing basis and has responsibility for the determination, within agreed terms of reference, of specific remuneration packages for executive directors and other members of the Executive Committee, including salaries, pension rights, bonuses, long-term incentives, benefits in kind and any compensation payments. It is also made aware of and advises on any major changes in employee remuneration and benefit structures throughout the Group.

The Committee met three times during 2004. The Chairman will continue to ensure that Xstrata plc ('the Group') maintains contact, as necessary, with its principal shareholders about remuneration. The purpose and function of the Committee in the future will not differ materially from this year and its terms of reference can be found on the Group's website (www.xstrata.com).

The remuneration of non-executive Directors, other than the Chairman, will be considered by the Chairman and the Chief Executive and will not be considered by the Remuneration Committee. The Chairman's remuneration will be determined by the Remuneration Committee while the Chairman is absent.

The Chief Executive attends the Remuneration Committee meetings by invitation and assists the Remuneration Committee in its considerations, except when issues relating to his own remuneration are discussed. The Remuneration Committee is provided with national and international pay data collected from external survey providers.

During the year, the Remuneration Committee appointed Hay Group as independent external advisors to conduct a review of executive remuneration arrangements. The Remuneration Committee is exclusively responsible for the appointment and instruction of its advisors. The Hay Group provided no other services to the Group during 2004.

Remuneration policy

Xstrata's remuneration policy is designed to attract, retain and motivate the highly talented individuals needed to deliver the business strategy and to maximise shareholder wealth creation.

The policy for 2004 and, so far as practicable, for subsequent years, will be framed around the following principles for the Executive Committee:

• Remuneration arrangements will be designed to support the business strategy and to align with the interests of Xstrata's shareholders;
• Total reward levels will be set at appropriate levels to reflect the competitive global market in which Xstrata operates with the intention of positioning within the top quartile for outstanding performance;
• A high proportion of the remuneration should be 'at risk' with performance related remuneration making up at least 50% of the total potential remuneration for Executive Committee members; and
• Performance-related payments will be subject to the satisfaction of demanding and stretching performance targets over the short and long-term. These performance targets will be set in the context of the prospects of the Group, the prevailing economic environment in which it operates, and the relative performance of comparator companies.

The Remuneration Committee considers that a successful remuneration policy needs to be sufficiently flexible to take account of future changes in the business environment and in remuneration practices. Consequently, the remuneration policy and the Remuneration Committee's terms of reference for subsequent years will be reviewed annually in the light of matters such as changes to corporate governance best practice or changes to accounting, legislation or business practices among peer group mining companies. This will help to ensure that the policy continues to provide Xstrata with a competitive reward strategy. In doing so the Committee will take into account the UK Listing Rules, the provisions of the Combined Code and associated guidance attached to it, as well as the guidance provided by a number of institutional investor representative bodies on the design of performance-related remuneration. Policies will be sensitive to pay and employment conditions elsewhere in the Group.

The Remuneration Committee is satisfied that Xstrata's pay and employment conditions for non-Board employees around the world are appropriate to the various markets in which it operates. The Remuneration Committee does not consider a ratio comparison between Executive Directors and non-Board employees to be a useful way of assessing the fairness and equitability of Xstrata's remuneration practices. The vastly different costs of living in the countries where Xstrata has operations and fluctuations in exchange rates mean any trend analysis would be meaningless.

Elements of remuneration

The total remuneration package for executive directors comprises the following principal elements:

• base salary;
• annual bonus plan including deferred element;
• participation in long-term incentive arrangements;
• subsisting rights under the Xstrata AG shares schemes and individual arrangements (as detailed below);
• pension; and
• other benefits including housing allowance (where essential for the performance of the duties), permanent health, life and private medical insurance.

Base salary

The base salary of the executive directors is subject to annual review by the Remuneration Committee. The policy will generally aim to pay top quartile packages for outstanding performance when measured against a peer group of global mining companies and the FTSE100. The Remuneration Committee reviews external pay data to ensure that the levels of remuneration remain competitive and appropriate in the light of the Group's policy. The Remuneration Committee is also responsible for ensuring that the positioning of the Group's remuneration relative to its peers does not result in increases in remuneration without a corresponding increase in performance or responsibilities. When setting base salaries, the Committee also considers the impact on pension contributions and associated costs.

Santiago Zaldumbide has a professional services agreement with Asturiana (dated 29 January 1998) to act as Chairman and Chief Executive of Asturiana. The agreement is in force until 28 February 2007 and continues thereafter indefinitely unless terminated by Asturiana giving six months notice to that effect, provided that such notice may not be given to result in his employment terminating before 28 February 2007. Up until 31 December 2002, Santiago Zaldumbide was entitled to a total fee for the term of his agreement of EUR3,005,060 payable at a rate of EUR601,012 per annum less any fees received from certain specified external directorships. This fixed contract predates the acquisition of Asturiana. With effect from January 2003, the

Remuneration Committee concluded and agreed with Santiago Zaldumbide that his annual fee should be subject to review in line with the other executive directors. On termination of the agreement, other than on his voluntary termination or termination for gross negligence, Santiago Zaldumbide is entitled to receive a sum from the redemption of an insurance policy (acquired by Asturiana for a premium of EUR3,005,060), including any with-profits bonus payable under the policy less the compensation received by him during the term of the agreement. This part of the agreement is not affected by the review.

On termination of the agreement by expiry of the fixed term, Santiago Zaldumbide is entitled to receive the capital redemption value of the policy, including the with profit bonus element, minus the aforementioned amount of EUR3,005,060 which he will already have received. Mr Zaldumbide's entitlements under the insurance policy are in lieu of his receiving pension benefits.

Santiago Zaldumbide's appointment as a director of Xstrata is on an indefinite basis subject to the existence of the agreement between Santiago Zaldumbide and Asturiana. Santiago Zaldumbide will receive no additional remuneration for his position as director of Xstrata plc but is eligible to participate in the Bonus Plan and the Long Term Incentive Plan.

Bonus plan

Executive directors and the other members of the Executive Committee are eligible to participate in the Bonus Plan. The Bonus Plan focuses on the achievement of annual objectives, which align the short-term financial performance of the Group with the creation of shareholder value. The Remuneration Committee strongly believes that high levels of pay are appropriate for truly outstanding performance. In light of this, the annual bonus plan is to be revised from 2005 to provide for higher levels of payment if the Company's performance is exceptionally good.

The bonus will continue to be based on Xstrata's operational performance as measured by return on equity and net profit. Specific targets for return on equity and the proportion of net profits that will make up the bonus pool will be determined each year by the Remuneration Committee. Before the pool is finalised the Remuneration Committee will actively consider whether the pool is appropriate in light of the other key financial and non-financial drivers of future shareholder value. The Remuneration Committee will retain the discretion to vary the size of the bonus pool if warranted by special circumstances.

The payment of any bonus under the Bonus Plan is subject to a hurdle rate (for the financial years ending 31 December 2004 and 2005 it will be set such that the Group's return on equity will be at least equal to the Group's average cost of borrowing). If this hurdle is not reached, the bonus pool will be zero. The Remuneration Committee has the discretion to vary the basis of calculation and the performance targets for subsequent years.

The amount of the bonus pool that is distributed in any one year, and the relative proportions payable to each participant (or, at the discretion of the Remuneration Committee, to a trust for his/her benefit) will be at the discretion of the Remuneration Committee. Individual performance criteria have been agreed with each participant, which will be evaluated by the Committee in determining individual allocations from the bonus pool. Any amount of bonus payable for 2004 in excess of 100% of basic salary is deferred in shares for a period of one year except in the case of Mick Davis where the Committee and Mr Davis have agreed that his deferral shall be for two years. From 2005, the maximum bonus for executive directors will be 300% of salary. The highest level of bonus will only be available for truly outstanding performance. Bonuses will be payable in up to three tranches, as follows.

• The maximum bonus, which any one participant is eligible to receive in cash, will be limited to 100% of the individual's base salary;
• Any additional bonus up to a further 100% of base salary will be deferred for a period of one year; and
• Any remaining bonus will be deferred for a period of two years.

The deferred elements will take the form of awards of Xstrata shares conditional on the participant remaining in employment throughout the deferral period. The number of shares awarded will be determined by reference to the market value of the shares at the date the bonus payment is determined.

There is no intention to use newly issued ordinary shares for the Bonus Plan and any shares required for the satisfaction of deferred bonuses will be acquired by market purchase.

In line with best practice, the Remuneration Committee believes that it is not appropriate to give special awards for completing transactions. However, the Committee recognises the outstanding contribution of Mick Davis and Trevor Reid in the development and execution of an over-arching strategy to achieve superior growth and value creation. This is reflected in the significant out performance of the company in the almost three years since its initial public offering on the London Stock Exchange.

This performance is reflected not only in the appreciation of its share price and the growth in earnings, but also in the cost improvements the company has extracted from its operations. Equally significant is the positioning of the company to benefit from buoyant commodity markets. In this context, the successful integration of the MIM into the Group facilitated value (quantify) being successfully extracted from the merger for shareholders. The Committee therefore, after an appropriate period of monitoring progress, recommended to the Board that a special bonus award of £1,800,000 and £415,000 be made to Mr Davis and Mr Reid respectively in recognition of the one-off transformation of Xstrata's portfolio and repositioning within the global mining sector. In the case of Mr Davis 50% of this award shall be deferred in shares for a two year period and in the case of Mr Reid 50% will deferred in shares for a year. This proposal was approved unanimously by the Board. These special bonuses have been funded from the 2004 bonus pool.

Long Term Incentive Plans

Executive directors are eligible to participate in the Long Term Incentive Plan, (the 'LTIP'). The LTIP aims to focus management's attention on continuous and sustainable improvements in the underlying financial performance of the Group and on the delivery of superior long-term returns to Xstrata's shareholders by providing executives with the opportunity to earn superior levels of reward for outstanding performance. In addition, the LTIP further aligns the interests of shareholders and management by encouraging executives to build a shareholding in the Group.

The LTIP provides for the grant of both contingent awards of free shares ('Free Share Awards') and share options on the same occasion to the same individual. The two elements are complementary and ensure that the cyclical nature of the industry does not have an excessively adverse effect on employee remuneration in circumstances where the performance of the Group has otherwise been good, relative to that of competitors.

The Free Share Awards will ensure that where the Group has performed well over a specified performance period, participants will be rewarded even if there is no substantial share price growth due to external factors, such as commodity prices or general economic conditions. The option element will only allow participants to benefit provided shareholders also benefit from future share price growth. The options will also be subject to stretching performance targets to ensure that windfall growth in the share price as a result of external factors does not deliver rewards which are not justified by the performance of the Group relative to its peer group. The policy regarding performance targets is discussed in more detail below.

The number of ordinary shares over which options will be granted will be calculated using a Black Scholes valuation of the option (or a similar approach) which the Remuneration Committee considers represents both the cost to Xstrata of providing the benefit and the value of the option itself as a component of the total remuneration package. The option value at grant will not be less than 25% of the value of the underlying shares. In determining the value of Free Share Awards the value of the underlying shares will be used.

Using the method above, the value ratio of Free Share Awards to share options for awards made during 2004 was in general 1:1, based on the value at the time of grant. The Remuneration Committee may change the ratio for future awards if it is thought appropriate.

The Remuneration Committee has determined that annual awards will be made under the LTIP to minimise the impact of share price volatility and to reflect existing best practice. The rules of the LTIP provide that the aggregate value of options and Free Share Awards made to an individual in any one year may not exceed an amount equal to two times base salary in normal circumstances (although in exceptional circumstances the limit may be up to, but not exceed, four times base salary).

Following the Hay Group's independent review in 2004, the Committee has determined that a separate incentive for the Chief Executive would be appropriate and the Board will therefore ask shareholders to approve a new long-term incentive at the 2005 AGM. The Chief Executive will no longer be eligible for awards under the existing LTIP in any year when an award is made under the new plan.

The new plan is intended to incentivise the Chief Executive by providing a share of the long-term value he creates for shareholders over and above the value created by Xstrata's peer companies and to create alignment with shareholders by means of share ownership.

Full details of the new plan are set out in the circular to shareholders.

Summary of performance conditions

2004 LTIP award

During 2004, executive directors were granted market value options and Free Share Awards under the LTIP. The vesting of both the options and Free Share Awards is subject to the satisfaction of stretching performance conditions over a three-year performance period. Half of the options and Free Share Awards are conditional on Total Shareholder Return ('TSR') relative to a peer group and half are conditional on the Group's real cost savings relative to targets set on a stretching scale over the three-year period, as follows.

For the awards conditional on TSR, 25% of the combined award will vest if TSR growth is at the median of the specified peer group, the full 50% of the combined award will vest for performance at or above the second decile with straight line vesting between these points. No vesting will occur for below median performance.

For the remaining award, vesting is conditional on the Group's real cost savings relative to targets set on a stretching scale: 5% of the combined award will vest for 1% cost savings, 35% for 2% cost savings and 50% for 3% or more cost savings, with straight line vesting between these points. No vesting will occur if cost savings are less than 1%. Real cost savings will be measured in relation to operating costs after adjusting for the effects of inflation, excluding depreciation, commodity price linked costs, effects of currencies on translation of local currency costs and planned life of mine adjustments.

Since the Group's share price and that of its peers are significantly influenced by the cycle in commodity prices, the Remuneration Committee considers TSR relative to a peer group to be an appropriate performance measure as it rewards relative success in growing shareholder value through the development and execution of the corporate strategy. The Remuneration Committee is also satisfied that TSR will be a genuine reflection of the Group's underlying financial

performance. The use of the second measure, Group real cost savings relative to targets, reflects the Group's strategic initiative to add shareholder value through productivity and cost efficiencies. Furthermore, the use of a financial performance measure alongside a relative TSR measure is aligned with current corporate governance best practice.

The performance targets are not capable of being retested at the end of the performance period, so that any proportion of a Free Share Award or option which does not vest after three years will lapse, although vested options will remain exercisable for a maximum of seven years or such shorter period as the Remuneration Committee may specify (after which they will lapse).

The peer group of global mining companies used to determine the vesting of the options and Free Share Awards that are conditional on TSR in the 2004 LTIP is the same as that used to determine the vesting of the 2003 LTIP award, and consists of key competitors for both financial and human capital: Alcoa Inc; Alcan Inc, Anglo American plc; Arch Coal Inc, BHP Billiton plc, Coal & Allied Industries Ltd, Elkem ASA, Eramet SA, Grupo Mexico SA de CV, Inco Ltd, Korea Zinc Inc, Lonmin plc, Noranda Inc, Norddeutsche Affinerie AG, Peabody Energy Corp, Phelps Dodge Corp, Rio Tinto plc, Teck Cominco Ltd, Umicore SA and WMC Resources Ltd. It is envisaged that this peer group will be used to determine the vesting of any options and Free Share Awards that are granted in 2005, although the Remuneration Committee may, at its absolute discretion, vary, add, remove or alter the companies making up the peer group where events happen which cause the Remuneration Committee to consider that such a change is appropriate to ensure that the performance condition continues to represent a fair measure of performance. This is provided that the Remuneration Committee reasonably considers such a varied or amended performance condition is not materially easier or more difficult to satisfy.

In calculating the TSR, the share price of a notional parcel of shares of the Group and the companies in the specified peer group will be averaged over a period preceding both the start and end of the relevant performance period. The Remuneration Committee has resolved that averaging over a three month period eliminates the volatility in spot share prices that could otherwise distort the assessment of whether the target has been met.

The TSR of the Group and each member of the peer group over any performance period is calculated by taking the growth between the closing value and the base value of 100 shares expressed as a percentage of the base value, on the assumption that any net dividend per share paid by any company during the relevant performance period is reinvested in shares on the last day of the month during which the relevant shares go ex-dividend. This calculation is subject to such adjustments to closing value and base value as the Remuneration Committee considers appropriate to reflect any variation of share capital or any merger, take-over, reconstruction, demerger or change in listing status by any member of the peer group or upon any other events which the Remuneration Committee considers may materially distort the calculation.

At 31 December 2004, the Group was ranked 5th out of the peer group of 21 companies in terms of TSR. If this is the outcome at the end of the three-year performance period then 47.5 percent of the combined award will vest.

2003 LTIP award

Awards of market value options and Free Share Awards granted under the LTIP to executive directors in 2003 were subject to a TSR performance condition only. Both the options and Free Share Awards vest in full at the expiry of a three year performance period to the extent that the Group's TSR ranks at or above the 2nd decile of the peer group specified above, and 50% will vest if it ranks at the median of the peer group. In between these two points straight line vesting will apply. No options or Free Share Awards will vest for below median performance.

At 31st December 2004, the Group was ranked 5th out of the peer group of 21 companies in terms of TSR. If this is the outcome at the end of the three-year performance period then 95 percent of each executive director's 2003 award will vest. It should be noted that these amounts are based on the Group's results at this provisional stage and do not necessarily reflect the eventual outcome.

Subsisting rights under Xstrata AG share schemes

Subsisting options held by Mick Davis and Trevor Reid pursuant to terms on which they were recruited and the subsisting options of Santiago Zaldumbide and Frederick Roux (non-executive director) under certain share schemes previously operated by Xstrata AG were converted into equivalent options over ordinary shares in the Group at the time of the listing of the Group's shares on the London Stock Exchange ('the Listing') but otherwise continue to be subject to the terms and conditions of the relevant Xstrata AG share schemes. It is intended that the replacement options will as far as possible be satisfied by the transfer of ordinary shares in the Group held by the trustees of the Xstrata Employee Share Ownership Trust and the Xstrata Employee and Directors Share Ownership Trust. Whilst subsisting options continue to vest under these schemes, no future grants will be made.

Similarly, subsisting options, which had been previously granted to Mick Davis over shares in Xstrata AG owned by Glencore International, were also converted into equivalent options over ordinary shares in the Group on the Listing but otherwise continue to be subject to the same terms and conditions as applied originally.

Subsisting rights to share options previously granted under the Xstrata AG Share Schemes described above and the option over shares in the Group held by Glencore granted to Mick Davis are not subject to performance conditions because they were originally granted under arrangements (which did not provide for awards to be subject to performance) which related to Xstrata AG prior to the Group becoming a UK listed company.

International Financial Reporting Standard 2 (IFRS2) - Accounting for Share-based Payments

A high-level Steering Committee oversaw the preparation of a Group-wide review of the potential impact of IFRS both on the Group's results and on the procedures and systems currently in place. Xstrata has prepared IFRS accounting policies and Treasury policies and procedures in accordance with IFRS principles. The Group's conversion to IFRS is now substantially complete.

In preparation for the transition, preliminary fair value estimates were conducted during the year for the Group's share-based payments made from 7 November 2002. The plans included in the valuation exercise were the Xstrata plc Long Term Incentive Plan, the Xstrata plc Directors' Incentive Scheme (formerly the Xstrata AG Directors' Incentive Scheme) and the Xstrata Group Management and Employee Share Incentive Scheme (formerly the Xstrata AG Management and Employee Share Incentive Scheme).

The fair value of all grants/awards within the scope of IFRS 2 will be reported and charged to the Group's income statement from 1 January 2005.

The performance graph set out above shows the TSR for a holding of shares of the Group for the year ended 31 December 2004 compared with the TSR for a hypothetical holding of shares of the same kinds and number as those by reference to which the FTSE100 index is calculated. The Board considers that the FTSE 100 currently represents the most appropriate of the published indices for these purposes.

TSR has been calculated on a spot basis with effect from 20 March 2002, the date conditional dealings in the shares commenced on the London Stock Exchange, assuming that an equivalent sum was invested on that day in shares of the Group and in the FTSE 100 index.

Dividends are invested in additional shares and benefits receivable in the form of shares are also added to the relevant holding.v

The TSR calculation also assumes that immediately before any liability to the Group in respect of the shares is due to be satisfied sufficient shares are sold from the holding to raise funds to meet the liability; for example, in the case of a rights issue sufficient rights are deemed to be sold to enable the proceeds to be invested in taking up as many rights as possible without injecting fresh funds.

Pensions

Mick Davis and Trevor Reid have participated in money purchase retirement plans from their respective dates of joining the Group. The plans are designed so as to optimise taxation implications, having regard to the taxation and employment status of each executive.

Group contributions will be calculated on actuarial advice with the objective of accumulating sufficient funds over the working lifetime of each executive to provide an overall target pension which is currently intended to be equivalent to approximately 60% of final salary at normal retirement age for executives who begin participating in the plans at the age of 40. The actual benefits payable will, however, be based on the amount which has accumulated in that member's money purchase account.

Such contributions are inclusive of any contributions from the relevant individuals. No employee contributions are currently payable for Mick Davis and Trevor Reid.

As noted above, Santiago Zaldumbide receives no pension benefits under the terms of his fixed cost remuneration arrangement.

Directors' service contracts

It is the Group's general policy that the period of notice required should not exceed 12 months. If it became necessary to offer a longer notice period to a new director, such period would reduce after the initial period. Where specific terms apply to individual executive directors, these are set out in the section of this report headed Entitlements under Service Contracts see below.

External appointments

Executive directors are not permitted to hold external directorships or offices without the approval of the Board. Santiago Zaldumbide, having gained the approval of the Board, holds directorships with the following companies: Asturiana de Zinc SA; Carburos Metalicos SA; Fertiberia SA and ThyssenKrupp SA.

Non-executive directors

The level of fees for non-executive directors will be set at the level considered necessary to obtain the services of individuals with the relevant skills and experience to bring added depth and breadth to the composition of the Board.

Non-executive directors' fees are reviewed annually by the Chairman and the Chief Executive in the light of fees payable to non-executive directors of comparable companies and the importance attached to the retention and attraction of high calibre individuals as non-executive directors.

Non-executive directors are eligible to forgo all or part of their directors' fees to acquire shares in the Group, after deduction of applicable income tax and social security contributions.

The non-executive directors do not, and will not in the future, participate in the Bonus Plan or LTIP or any other performance-related incentive arrangements which may be introduced from time to time.

Entitlements under service contracts

Executive Directors

Mick Davis and Trevor Reid have employment agreements with Xstrata Services (UK) Limited ('XSL') effective from 1 February 2002 which are for fixed terms of one year. However, their services as Chief Executive and Chief Financial Officer respectively are provided to the Group under a secondment agreement entered into between the Group and XSL on 19 March 2002. Each of Mick Davis and Trevor Reid is seconded to the Group for a fixed term of two years thereafter renewable by either party for further periods of two years.

The employment of Mick Davis and Trevor Reid may be terminated by not less than 12 months' notice by XSL or the director concerned or by a payment in lieu of notice by XSL. Mr Davis and Mr Reid have agreed to alter their contracts so that on termination of employment by XSL in breach, or if Mr Davis or Mr Reid resigns in circumstances where they cannot in good faith be expected to continue in employment, each director is entitled to be paid a sum equal to 100% (instead of the original 150%) of his annual salary and his previous year's bonus (plus any accrued basic salary and expenses) and to have all entitlements under his retirement benefit plans paid in accordance with the plan rules. As both Mr Davis and Mr Reid participate in defined contribution arrangements it is not expected that any significant additional liability would arise in respect of retirement plan entitlements beyond that already accrued in the accounts. For the purposes of calculating termination payments, annual bonus will be capped at 200% of annual salary.

In addition, each of the executive directors is eligible to participate in the Bonus Plan which provides that deferred amounts up to an aggregate ceiling of 100% of salary remain payable notwithstanding cessation of employment after the date a bonus is awarded other than in the event of dismissal for cause. In the case of termination by reason of death, injury, ill health or disability before the date the bonus is awarded for a financial year, or if the Remuneration Committee in its discretion so resolves, a proportion of the annual bonus pool may still be awarded subject to the normal discretion of the Remuneration Committee.

Trevor Reid received a bonus payment as the final part of his compensation for bonus and share option benefits he lost when he left his previous employment to join XSL of US$221,000 which he became entitled to on 2 January 2004 having satisfied the condition that he should be in employment on that date.

On termination of the agreement under which Santiago Zaldumbide receives a fixed fee for acting as Chairman of Asturiana, other than on his voluntary termination or termination for gross negligence, Santiago Zaldumbide is entitled to receive a sum from the redemption of an insurance policy acquired by Asturiana as described above. Santiago Zaldumbide is engaged as a director of Xstrata Plc on the terms of a letter of appointment dated 18 March 2002. The appointment is on an indefinite basis subject to the existence of the agreement between Santiago Zaldumbide and Asturiana, the terms and conditions of which are detailed above. Santiago Zaldumbide will receive no additional remuneration for his position as director of Xstrata Plc and is not entitled to any compensation in respect of the termination of his office as a director of Xstrata Plc.

Non-executive directors

Willy Strothotte is engaged by the Group as a non-executive director and Chairman on the terms of a letter of appointment. The appointment is for an initial fixed term of 36 months commencing on 25 February 2002 and terminable thereafter by six months notice by Willy Strothotte.

The Group may terminate Willy Strothotte's appointment at any time and on such termination Willy Strothotte will not be entitled to any compensation for loss of office. The term may be renewed by the Board.

David Rough is engaged by the Group as the senior independent non-executive director and Deputy Chairman on the terms of a letter of appointment. The appointment is for an initial fixed term of 36 months commencing on 1 April 2002 and terminable thereafter by six months notice by David Rough.

The Group may terminate David Rough's appointment at any time and on such termination David Rough will not be entitled to any compensation for loss of office. The term may be renewed by the Board.

David Issroff, Ivan Glasenberg, Paul Hazen, Robert MacDonnell, Frederik Roux, Sir Steve Robson and Ian Strachan are each engaged by the Group as a non-executive director on the terms of a letter of appointment. Each appointment is for an initial fixed term of 36 months commencing on 25 February 2002 (or on 8 May 2003 in the case of Ian Strachan) and terminable thereafter by six months notice by the non-executive director.

The Group may terminate each non-executive director's appointment at any time and on such termination the non-executive director will not be entitled to any compensation for loss of office. Each term may be renewed by the Board.

There is no arrangement under which a director has agreed to waive future emoluments nor have there been any such waivers during the financial year.

There are no outstanding loans or guarantees granted or provided by any member of the Group to or for the benefit of any of the directors.

No significant awards have been made in the financial year to any past directors.

Information subject to audit

Emoluments and compensation

The emoluments and compensation in respect of qualifying services of each person who served as director during the year were as follows:

Share options

Details of share options of those directors who served during the year are as follows:

Shares

Details of the Company's ordinary shares over which those directors who served during the year have conditional rights under the LTIP are as follows:

Pensions

Mick Davis and Trevor Reid have participated in defined contribution retirement benefit plans. During the year pension related payments were made as follows:

This report has been approved by the Board

Signed by Trevor Reid, Chief Financial Officer, on behalf of the Board

1 March 2005