Annual Report 2007 - Severstal

When joining the Board, Directors are given background
information on the company and its operations and procedures, as
well as information on what is required from them in their role.
Non-executive Directors
The Board reviews the independence of all Non-executive
Directors on an annual basis and has determined that all such
Directors are independent and have no cross-directorships or
significant links which could materially interfere with them
exercising their independent judgement. The Non-executive
Directors play a leading role in corporate accountability and
governance through their membership of the Remuneration
Committee and the Audit Committee.
– Senior Independent Director
Rolf Stomberg is Severstal’s Senior Independent Director
and is also Chairman of the Remuneration Committee. His
responsibilities include meeting major shareholders and chairing
meetings of the Non-executive Directors when the Chairman is
not present.
– Terms of appointment
Members of the company’s Board of Directors are elected by
the shareholders in an Annual General Meeting and remain
members for the period until the next AGM. The persons elected
to the company’s Board of Directors may be re-elected an
unlimited number of times.
– Meetings of Non-executive Directors
The Non-executive Directors meet separately during the year.
In 2007, they held two such meetings.
Key committees
– Audit Committee
The Audit Committee prepares its own evaluation of the
auditor’s opinion on financial statements and provides this
evaluation to the Board of Directors and to the AGM.
The Audit Committee currently comprises Martin Angle
(Chairman of the Audit Committee), Ronald Freeman
and Peter Kraljic.
The functions of the Audit Committee include:
– Reviewing the provision and scope of audit and non-audit work
by the company’s external auditor and the fees charged
– Reviewing the company’s financial statements, changes in the
company’s policy and accounting practices, and monitoring the
internal audit system
– Reviewing the effectiveness of the company’s risk
management, internal control and corporate governance
systems.
The Audit Committee is composed exclusively of Independent
Directors, which guarantees absolute independence of the
Committee’s judgements with respect to the company’s
financial affairs.
During 2007, the Audit Committee met five times.
In order that the company’s financial and business operations
are monitored efficiently, it employs external auditors that have
no interests in the company for annual verification and approval of
the accounts.
The company’s books and records are audited in compliance
with the requirements of Russian law and International Standards
on Auditing. These are issued by the International Federation of
Accountants (IFAC) with respect to financial statements prepared
under the International Financial Reporting Standards (IFRS).
Such an audit takes place annually and, as of the first quarter
of 2007, our quarterly reports are also reviewed under the IFRS, in
accordance with the International Standard on Review
Engagements 2410.
– Nomination and Remuneration Committee
The Nomination and Remuneration Committee focuses on
appointing our Board Directors, the CEO and other top executives.
The Nomination and Remuneration Committee comprises: Rolf
Stomberg (Chairman of the Committee), Christopher Clark and
Alexey Mordashov.
Functions of the Nomination and Remuneration committee
include:
– Reviewing the work of the Board, making general
recommendations on the selection of candidates for the
Board and preliminary evaluation of potential candidates
– Ascertaining whether Board nominees comply with the status
of an Independent Director, analysing information to detect
possible bias on the part of the Board in making decisions,
as well as circumstances precluding efficient work and
circumstances leading to loss of independence by a
member of the Board
– Developing a remuneration system for Board members based
on the personal contribution of each Director in implementing
the company’s strategic objectives
– Preparing and submitting to the Board the policy for appointing
and remunerating the company’s senior executives, including
the CEO, as well as providing recommendations on the terms of
the contract signed with the company’s CEO.
The committee strives to maintain the optimum balance,
recruiting the best-qualified professionals to manage the
company, and offering sufficiently attractive levels of
remuneration to interest these professionals in working for
the company.
Most of the committee members, including the Chairman,
should be Independent Directors.
The Nomination and Remuneration Committee met three
times in 2007.
Severstal Annual Report 2007 67