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Corporate governance<br />
Our governance continued<br />
Vladimir Stolin<br />
Corporate Governance & Personnel Committee Chairman<br />
Q. How do you go about ensuring that management is effectively incentivised?<br />
A. Motivation and incentivisation largely come from the leadership provided<br />
by the senior executives and the Board. Of course the CEO is key in this.<br />
At EuroChem, it is this leadership combined with working in a fast-growing<br />
and changing business that is the key source of motivation.<br />
But objective-setting and financial rewards also have a role to play. Both<br />
management and the Corporate Governance & Personnel Committee<br />
invest a lot of time not only in setting clear objectives and targets but also<br />
in assessing performance against them. At both stages the Committee<br />
discusses the objectives and performance in detail, often directly with<br />
the senior manager concerned as well as with the CEO. We then make<br />
recommendations to the full Board, at times having made adjustments<br />
to self-assessment and the CEO’s evaluation to take account of the views<br />
of the Board.<br />
We have aimed for a well-balanced bonus structure which incentivises<br />
both short-term performance during the year and long-term performance<br />
on specific projects as approved by the Board. We are also very conscious<br />
of the need to flex the objectives in line with the development and needs<br />
of the business. For example, we are not only accountable to our<br />
shareholders, but also to our employees, our local communities, and the<br />
environment, and to reflect this we have revisited our remuneration system<br />
to target health and safety in the workplace.<br />
68 EuroChem Annual Report and Accounts <strong>2011</strong><br />
Keith Jackson<br />
Strategy Committee, Audit Committee<br />
Q. How do you make sure you are in a position to monitor performance,<br />
both across the business and on individual strategic initiatives such<br />
as the development of potash resources?<br />
A. Over the last four years the Board of Directors and the Executive Board<br />
have established a strong working relationship which is underpinned by<br />
a high degree of openness. One of our key priorities has always been to<br />
facilitate and accelerate information flows within the Company. We ensured<br />
that the EuroChem IT department developed and implemented tailor-made<br />
applications to meet our requirements, with some of these applications<br />
now recognised as amongst the most innovative in the software sector.<br />
This has given us the confidence that management are in a strong position<br />
to continually monitor the Company’s operational and financial performance.<br />
Having full access to management information systems at all times has<br />
also meant that performance indicators are available to the directors in<br />
a timely way.<br />
In addition we have been working on improving both the initial presentation<br />
and the ongoing <strong>report</strong>ing aspects of all our investment initiatives,<br />
providing us with the right tools to evaluate the investment ideas generated<br />
by the executive team and to keep an eye on progress. As a result we<br />
now have regular and clear updates on the capital investment portfolio.<br />
For example, on the VolgaKaliy potash project, we now receive regular<br />
investment bulletins and we will maintain this tight focus as the project<br />
proceeds. The necessity to sustain good shareholder returns drives our<br />
strategy but both the price and pace of growth, and the returns on our<br />
investment, must constantly be monitored in order not to erode shareholder<br />
value. For this reason we will continue to work with management to further<br />
strengthen our investment analysis and monitoring process.
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