Board of Directors
In 2019, the Board of Directors held 8 meetings and reviewed 70 matters.
|Full name||Irina Bokova||Andrey A. Guryev||Andrey G. Guryev|| Sven ||Natalia Pashkevich||James Rogers||Marcus Rhodes|| Mikhail ||Xavier Rolet||Andrey Sharonov|
|Year of birth||1952||1982||1960||1966||1939||1942||1961||1975||1959||1964|
|Board of Directors||8/8||8/8||8/8||8/8||8/8||8/8||8/8||8/8||7/8||7/8|
|Remuneration and Human Resources Committee||4/4||4/4||3/4|
|Risk Management Committee||3/4||2/4||2/4||4/4|
|Environmental, Health and Safety Committee||2/3||2/3||3/3|
|Sustainable Development Committee||2/2||2/2||2/2|
|Finance and audit||✓||✓||✓||✓||✓||✓||✓|
|Chemistry and mining engineering||✓||✓||✓||✓||✓||✓|
|Environment, health and safety||✓||✓||✓|
|Law and corporate governance||✓||✓||✓||✓|
In May 2019, Sven Ombudstvedt stepped down as Chairman of the Board of Directors, a role he had held since 2011. Mr Ombudstvedt contributed greatly to the Company’s development, working tirelessly to drive the Company forward and deliver its strategy to 2020. Under his leadership, the Company was able to upgrade its production capacities and make them more efficient and environmentally friendly. Sven Ombudstvedt’s top priority as the Chairman of the Board of Directors was to ensure full compliance with the Board’s key operating principles, including accountability, transparency, responsibility and equality. It is thanks to his efforts that the Company has integrated sustainability principles and goals into its strategy and day-to-day operations.
He passed his chairman’s baton to Xavier Rolet, former CEO of the London Stock Exchange Group. Prior to his appointment Xavier Rolet had chaired the Risk Management Committee of the Board of Directors. Committed to the Company’s values, Xavier Rolet sets great store by improvements made by his predecessor. In his new role, he is going to focus on organic growth, diligent implementation of the investment programme, continued sustainable development and innovations, which are key to adding value to the Company.
Starting from 2011, when the Company established the Board of Directors, the number of independent directors and their authority have been steadily growing. Independent directors make a valuable contribution to the Board’s decision-making as their opinions rely solely on professional skills and expertise, as well as a comprehensive study of the matter. Their position is unbiased, independent and free from the influence of other members of the Board and the Company`s management, and they are primarily focused on improving the Company`s performance. At present, seven of the ten directors are independent, which is well above the average in Russia (38% according to Spenser Stuart research in 2019) and at par with the best global practices. Independent directors chair five of the six Board committees.
They are world-class experts with unique competencies and a track-record in investment and management of major businesses, financial and research organisations and government agencies. They are equipped with a full set of knowledge and skills needed to propel the Company and its Board of Directors forward and foster dialogue with stakeholders at various levels.
Board of Directors nominees and members are assessed against the independence criteria set out in the Regulation on the Board of Directors and the Moscow Exchanges rules. The assessment is performed twice a year by the Remuneration and Human Resources Committee. In 2019, the Board of Directors’ special resolution recognised the independence of two directors, Sven Ombudstvedt and Marcus Rhodes, even though they met the formal criterion of being affiliated with the Company (an 8-year tenure on the Board of Directors).
Despite the fact that there were no changes in the Board composition in 2019, the Remuneration and Human Resources Committee updated the Onboarding Programme for New Board Members. This is done annually to provide them with an effective tool to gain an insight into the Company’s operations. As part of the onboarding programme, newly appointed directors visit the Company’s production sites and meet with functional managers. In August 2019, for example, the members elected to the Board of Directors in 2018 visited PhosAgro sites in Kirovsk and Apatity (Murmansk region) where, apart from learning about the Company’s key asset, they took part in the celebrations of the Miner’s Day.
The Company views commitment to continuous professional growth as a cornerstone of good corporate governance. By expanding their knowledge and skills, directors add value to the Board of Directors and the Company on the whole. An annual performance assessment highlights the need for the qualification upgrade and training of the Board members, with a focus on the following areas:
- industry trends in Russia and abroad;
- risk management;
- current legislative and stock exchange requirements;
- Board operation trends in Russia and abroad.
The assessment held in 2019 identified another focus area for the Board of Directors, which is cyberrisks and cybersecurity. To meet this need, the Company engaged one of most reputable companies in this domain to conduct a training workshop for the Board of Directors and the top management in May 2019. On top of that, the Board of Directors regularly receives newsletters from the Company, including quarterly newsletters on corporate governance and weekly updates on the developments in the chemical and related industries.
An external assessment of the Board’s performance and an annual self-assessment show that its composition is fully balanced. In 2019, there were no changes in the Board of Directors composition. However, there were significant changes to its committees in May 2019, with a new Sustainable Development Committee set up by the Board of Directors. These measures gave a significant boost to the Board of Directors’ performance.
Information on Members of the Board of Directors
Directors and officers liability for damage caused to third parties by their duties is insured by SOGAZ (contract No. 18 DO 0028 in effect from 1 June 2018 to 31 May 2019, contract No. 19 DO 0020 in effect from 1 June 2019 to 31 May 2020) and is covered up to USD 75 mln (in rouble equivalent) and extended by USD 2 mln for independent directors. Apart from directors liability, the above contracts include the liability of the Company’s officers (since 2012).
According to Section 172 “Duty to promote the success of the company” of the UK Companies Act 2006, PhosAgro’s Board of Directors acts in good faith to promote the success of the Company for the benefit of all shareholders of PJSC PhosAgro, taking into account possible long-term consequences of its decisions for the society and the environment, as well as the interests of the Company’s employees and other stakeholders.
For the members of PhosAgro’s Board of Directors, these standards mean that the Company’s stakeholders should be interacted with responsibly and that their interests should be respected to the maximum extent possible. In 2019, under the guidance of the Board of Directors’ Sustainable Development Committee, stakeholders were identified and surveyed in order to define aspects of the Company’s activities that were significant to them. These aspects have since been given maximum attention, both in terms of information disclosure and intensifying work in the relevant areas. For detailed information on interaction with key stakeholders, recognition and consideration of their interests, see the Stakeholders section of this annual report.
The opinion of our employees is essential for us, which is reflected, in particular, in one of our strategic objectives – increasing the loyalty and satisfaction of our staff. Analysis of employee satisfaction and loyalty surveys is reviewed annually by the Remuneration and Human Resources Committee of PhosAgro’s Board of Directors. Analysis of hotline complaints and respective management response is reviewed by the Audit Committee of PhosAgro’s Board of Directors on a quarterly basis. The said committees are composed solely of independent directors.
Although at the moment we do not apply such practices as appointing directors from among the employees or appointing a non-executive director responsible for interaction with employees for considering their standpoint when managing the Company, we consider it effective and are actively involved in a dialogue on all major management issues with the trade union organisation (Minudobreniya Association), which has historically been an equal partner for the Company’s management and an authorised representative of employees in collective bargaining, review and resolution of labour disputes.
In addition, heads of each production site of the Company regularly (at least twice a year) visit all business units and hold meetings with employees, at which they inform the staff about the Company’s performance, implemented measures, and plans for production and social development. A key component of such meetings is face-to-face conversation between managers and teams. Everyone has an opportunity to ask questions or make a proposal aimed at improving the technology and personnel working conditions. Based on employees’ suggestions and comments, an action plan for improving organisational and technological processes is then developed and implemented.
In March 2019, the Board of Directors approved PhosAgro’s Strategy to 2025 taking into account recommendations of the Strategy Committee issued in late 2018 – early 2019. As part of the approval, it determined the metrics subject to monitoring, as well as the frequency and the procedure for such monitoring. This resolution formalised the management duty to submit, twice a year, strategy progress reports to be pre-reviewed by the Strategy Committee and finally reviewed by the Board of Directors.
In 2019, the Board of Directors placed a special emphasis on sustainability management, which was, first and foremost, incorporated into the Company’s Strategy to 2025 as a standalone section defining goals and initiatives in this domain. The Board of Directors also approved the updated Personnel Management Policy and transparency statement in accordance with the UK Modern Slavery Act 2015, along with the amended Environmental Policy. The said documents were developed by the Company’s management based on the analysis of local corporate documents and procedures needed to ensure PhosAgro’s compliance with the applicable EU laws on human rights in supply chains. Moreover, all Board meetings held following the setup of the Sustainable Development Committee included reports from its chairman on the results and plans in this area.
Strengthened role of committees
In 2019, the Board of Directors also focused on a more in-depth review of matters at committee meetings, followed by chairman reports to the Board summarising key statements, conclusions and proposals. As a result, the reporting year saw an improvement in the quality of materials provided to the
New dividend policy
An important milestone in the Board of Director’s work was the approval of the new dividend policy aimed at boosting the Company’s investment appeal.
Corporate governance assessment and development
In March 2019, the Board of Directors reviewed the report on the corporate governance quality taking into account MSCI and Sustainalytics ratings and the previous year’s self-assessment of compliance with the Corporate Governance Code approved by the Bank of Russia on 21 March 2014. Noting a high level of such compliance, the Board of Directors also analysed the governance quality criteria, which for certain reasons were not met fully or partially, and agreed on an improvement plan.
The early 2019 self-assessment and the subsequent recommendations of the Remuneration and Human Resources Committee were also subject
to review by the Board of Directors in the reporting year. The self-assessment was held in the form of a directors’ survey based on PwC’s methodology approved by the Board of Directors in 2017.
February 2020 saw KPMG conduct an external assessment of the Company’s Board of Directors. The independent consultant recognised the Board’s high efficiency and a strong engagement of its members.
KPMG also highlighted a balanced split between executive and independent directors and confirmed that they have the required skills, competencies and expertise. In terms of independence and the presence of foreign directors, PhosAgro is almost on a par with foreign industry leaders and ahead of the Russian players. The current Board’s composition is fully in line with the Company’s needs, which contributes to well-reasoned decision-making.
The efficiency of the Board’s key functions was also highly rated by the independent consultant. The Board of Directors discusses a wide range of matters to ensure the effective governance of the Company’s operations.
In 2019, the Board of Directors strengthened its dialogue with stakeholders. In addition to the participation in the Annual General Shareholders’ Meeting and the visit to the sites in Kirovsk and Apatity, the Board’s independent directors took part in the Investor Day held in September in London. As part of it, they presented PhosAgro’s new strategy and dividend policy to the investment community.
Apart from the above matters, the Board of Directors reviewed the Company’s amended budget for 2019 and the 2020 budget and approved the Internal Audit Department’s report for 2019 and the 2020 plan. On a quarterly basis, it also discussed a number of other matters such as the approval of the Company’s reports, the progress against the 2019 budget and the results of risk monitoring. Where necessary, the Board of Directors considered matters relating to the approval of significant transactions and interested-party transactions, convening of general shareholders’ meetings and other matters within its remit under the Charter.
In 2019, the Board of Directors continued to foster cooperation with the Company’s functional units by reviewing reports and issuing recommendation for such functions as procurement, project management, IT and global projects. On top of that, it reviewed and provided opinion on the external assessment of the internal audit, risk management and internal control functions.