Download PDF - Severstal

Board of Directors’reportIntroductionSeverstal strongly believes in best practice incorporate governance. The company publishedits Corporate Governance Code in October 2006.This was approved by the Board, and the Boardcontinues to participate actively in the corporategovernance of the company. This report has beenprepared following the recommendations of theCode of Best Practice set out in section 1 of theFinancial Reporting Council’s Code on CorporateGovernance.The BoardThe Board represents a balance betweenIndependent Directors, Non-Executive Directorsand Executives, and is comprised of ten members,five of whom are Independent Directors.Severstal’s Board comprises an Independent Chairman,Christopher Clark; four Independent Directors, RonaldFreeman, Peter Kraljic, Martin Angle, and Doctor RolfStromberg; two Non-Executive Directors, MikhailNoskov and Vadim Makhov, and three ExecutiveDirectors, Alexey Mordashov, Anatoly Kruchinin andGregory Mason.The proportion of Independent to Executive Directors– unprecedented for a Russian company – as well asspecial voting rules on strategically important issuesguarantee equal concern for the interests of all thecompany shareholders. The Board considers all ofits Independent and Non-Executive Directors to beindependent for the purposes of the Combined Code.Board meetings andattendanceAttendance by individual directors at meetings of theBoard and its committees in 2008 was as follows:Members of theBoard of directors JSC“Severstal”Number of Boardmeetings forattendance **Number ofattended BoardmeetingsAudit Committee(5 meetings)***Remunerationand NominationCommitteeStrategyCommittee(3 meetings)(3 meetings)Christopher Clark 12 12 4* 3 -Ronald Freeman 12 12 5 3* 1*Peter Kraljic 12 12 5 3* 3Martin Angle 12 12 5 3* 1*Rolf Stomberg 12 12 5* 3 2*Alexey Mordashov 12 12 2* 3 -Vadim Shvetsov 7 0 - - -Mikhail Noskov 12 12 5* - -Vadim Makhov 12 12 1* - 3Anatoly Kruchinin 12 12 2* - -Gregory Mason 5 5 0 - 3* 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.** eight of the meetings were held via conference call with circulation of voting ballots to express the written opinion of the Board members*** one of the meetings was held via conference callBoard and Committee members now have directand constant access to review Board and Committeematerials via a dedicated electronic system introducedin 2008. The system was also introduced to enableelectronic voting for agenda items and for Boardmeetings correspondence. We will also be able toestablish an electronic archive of Board and Committeematerials for convenient reference by Board membersin future.Role of the Severstal BoardSeverstal’s Board of Directors is responsible forthe general management and performance of thecompany’s operations, including approval of itsstrategy and monitoring its financial and businessoperations. The Board’s principal objective is to run thecompany in such a manner as to increase shareholdervalue in the medium and long term.The Board bases its decisions on the need to act in thebest interests of the entire company and to be fair to allshareholders. It may not give preference to the interestsof any individual shareholder or group of shareholders.The Board is also responsible for the proper functioningof the system for disclosure and dissemination ofinformation about the company’s operations and forimplementing the company’s information policy.The Board is authorised to take decisions concerningevery aspect of Severstal’s activity, with the exceptionof matters referring to the jurisdiction of the GeneralShareholders’ Meeting.Key duties:. Responsibility for the strategic direction of thecompany. Review of the consolidated budget and theProvision of appropriate recommendations. Reviewing the appointment and compensationpolicy applicable to the company’s seniorexecutives, including the CEO, and makingrecommendations regarding such a policy4. Dividend policy5. Approval of interested parties’ transactions (asthis term is defined in accordance with RussianLaw) with the value for each such transaction notto exceed 2% of the book value of Severstal’sassets at the date of decision to enter into suchtransaction6. Approval of a transaction if its value exceeds 10%of the book value of Severstal’s assets at the dateof the date to enter into such a transaction7. Approval of a transaction to acquire (i) shares orparticipation interests or rights to manage suchshares or participation interests or (ii) fixed orintangible assets if the amount of the transactionspecified in sub-clauses (i) or (ii) above exceedsthe equivalent of US$500 million.A resolution on the matters set out in clauses 6 and 7requires a 2/3 majority vote of the elected members ofthe Board of Directors.94 95