Annual Report 2007 - Severstal

Governance
Board of Directors’ report
Introduction
Severstal closely monitors corporate governance best practice.
In October 2006, the company published its Corporate
Governance Code. This has been approved by the Board,
demonstrating its active participation in the corporate
governance of the company.
The Board
The Board has 10 members, comprising a Non-executive
Chairman, four other Non-executive Directors and five Executive
Directors. The proportion of Independent Directors is
unprecedented for Russian companies, as are the special rules
for voting on strategically important issues, which guarantee
equal concern for the interests of all the company shareholders.
The Board considers all the Non-executive Directors to be
independent for the purposes of the Combined Code.
Board meetings and attendance
The attendance by individual Directors at meetings of the Board
and its committees in 2007 was as follows:
Members of
Nomination and
the Board Board Audit Remuneration
of Directors Severstal Committee Committee
No. Severstal (8 meetings)** (5 meetings) (3 meetings)
1 Christopher Clark 8 5* 3
2 Ronald Freeman 8 5 3*
3 Peter Kraljic 8 5 3*
4 Martin Angle 8 5 3*
5 Rolf Stomberg 8 5* 3
6 Alexey Mordashov 8 5* 3
7 Vadim Shvetsov 6 – –
8 Mikhail Noskov 8 5* –
9 Vadim Makhov 8 1* –
10 Anatoly Kruchinin 8 2* –
*Means that the specified Director is not a member of that Committee, although
he attended the meetings at the invitation of the Chairman of the Committee.
**Two of the meetings were held via conference call with circulation of voting ballots
to express the written opinion of the Board members
Role of the Severstal Board
Severstal’s Board of Directors is responsible for general
management and performance of the company’s operations,
including approving its development strategy and monitoring its
financial and business operations. Our Board’s principal objective
is to run the company in such a manner as to ensure an increase
in value for shareholders in the medium and long term. The Board
bases its decisions on the need to act in the best interests of the
entire company and to be fair to all shareholders. It may not give
preference to the interests of any individual shareholder or group
of shareholders. The Board is also responsible for the proper
functioning of the system for disclosure and dissemination
of information about the company’s operations and for
implementing the company’s information policy.
The Board is authorised to take decisions concerning every
aspect of Severstal’s activity, with the exception of matters
referring to the jurisdiction of the General Shareholders’ Meeting.
Key duties:
1. Responsibility for the strategic direction of the company.
2. Review of the consolidated budget and providing appropriate
recommendations.
3. Reviewing the appointment and compensation policy
applicable to the company’s senior executives, including the
CEO, and making recommendations regarding such policy.
4. Dividend policy.
5. Approval of interested parties transactions (as this term is
defined in accordance with Russian Law) with value for each
such transaction not to exceed 2% of the book value of the
company assets at the date of decision to enter into such
transaction.
6. Approval of a transaction if its value exceeds 10% of the book
value of the company assets at the date of decision to enter into
such transaction.
7. Approval of a transaction to acquire (i) shares or participation
interests or rights to manage such shares or participation
interests or (ii) fixed or intangible assets if the amount of the
transaction specified in sub-clauses (i) or (ii) above exceeds the
equivalent of US$500 million.
A resolution on the matters set out in clauses 5 and 6 requires a 2/3
majority vote of the elected members of the Board of Directors.
Corporate Secretary
Oleg Tsvetkov
Oleg, 34, joined Severstal in 2000 and in 2004 he was appointed
Senior Manager of Legal Department, responsible for relations
with foreign subsidiaries of Severstal, international commercial
projects, joint ventures projects and project financing. In 2006
Oleg was appointed the Corporate Secretary of Severstal.
Graduated from the Moscow State Law Academy, holds a PhD
in linguistics and holds an MBA degree from Newcastle Business
School of Northumbria University (Newcastle, UK).
The scope of activities of the Company Secretary Office
includes: Board of Directors activities, preparation and holding of
General Shareholders Meetings and meetings of the Board of
Directors, disclosure of information, corporate governance
advising, shareholders and GDR holders communications as
well as Russian and foreign stock market regulators relations.
The Company Secretary is responsible for ensuring the
company, its management and officers comply with the
applicable law, the Company’s Charter and internal documents.
Board effectiveness
The roles of Chairman and Chief Executive Officer are separate
and their responsibilities are clearly defined in writing and
approved by the Board. The role of the Chairman is to organise,
lead and manage the Board and to convene and preside over
Board meetings. The Chief Executive Officer carries out the
day-to-day management of the company and ensures its efficient
operation by carrying out the tasks set by the Board of Directors.
The Chief Executive co-operates with trade unions to protect the
interests of company employees and deals with government and
municipal authorities. The Chief Executive is also responsible for
the organisation, status and accuracy of the company’s
accounting practices, timely provision of financial reports to
appropriate authorities, and timely provision of information
regarding the company’s operations to shareholders, creditors
and the media.
66 Severstal Annual Report 2007