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Board effectivenessIn 2008, the Board commissioned its first independentSenior Independent DirectorDuring the year under review, the Board resolved toaudit of its effectiveness by the respected internationalRolf Stomberg is Severstal’s Senior Independentestablish a new Committee of the Board, the StrategyThe roles of Chairman and Chief Executive Officer areexecutive search firm Heidrick & Struggles. TheDirector and is also Chairman of the Remuneration andCommittee. Its purpose, composition and functionsseparate and their responsibilities are clearly definedfindings were encouraging and demonstrated, amongNomination Committee. His responsibilities includeare set out below. To formalise the new Strategyin the company’s statutory documents and regulatedother things, the wealth of experience available tomeeting major shareholders and chairing meetings ofCommittee the relevant changes have been introducedby Russian law. The role of the Chairman is to organise,the company from the Independent Directors andthe Independent and Non-Executive Directors when theto Severstal’s Corporate Governance Code and thelead and manage the Board and to convene and presidethe fact that the company is keen to benefit from thisChairman is not present.Regulations on Committees of the Board of Directors.over Board meetings. Directors new to the Board aregiven background information on the company whenexperience.Dr. Stomberg’s individual contribution to theThe Audit Committeethey join. This includes details of its operations andprocedures, as well as information on what is requiredCompany Secretarydevelopment corporate governance and his promotionof high standards and best practice in corporateThe Audit Committee supervises the financialperformance and business operations of the company.from them in their role according to the company’sgovernance in Russia was acknowledged recently byThe objective of the Audit Committee is to assist thestatutory documents. This includes Severstal’sOleg Tsvetkov became Company Secretary of SeverstalThe ‘Director of the Year’ National Awards in Russia.Board of Directors in:Corporate Governance Code, and applicable corporatein 2006. In 2008, Mr. Tsvetkov was awarded theDr. Stomberg was named laureate of the ‘Independent• Monitoring the timeliness, completeness andgovernance law, best practice to help ensure their earlyprestigious ‘Corporate Governance Director – CorporateDirector’ nomination.reliability of financial and other reporting, itseffective contribution to the company.Secretary’ award by the Independent DirectorsAssociation and PricewaterhouseCoopers.Terms of appointmentpreparation and submission process• The operation of risk management, internal controlThe Chief Executive Officer carries out the day-to-dayMembers of the Company’s Board of Directors areand corporate governance systems.management of the company and ensures its efficientThe scope of activities of the Company Secretary’selected by the shareholders at their General MeetingThe Audit Committee consists of three Independentoperation by discharging the tasks set by the Boardoffice includes: Board of Directors activities,and remain members for the period until the nextDirectors and currently comprises Martin Angle,of Directors. The Chief Executive is responsible for thepreparation and holding of the General Meetingsannual General Meeting. Those elected to theChairman of the Audit Committee, Ronald Freemanorganisation, status and accuracy of the company’sand meetings of the Board of Directors, disclosureCompany’s Board of Directors may be re-elected anand Dr. Peter Kraljic. In accordance with its terms,accounting practices, timely provision of financialof information, corporate governance advice,unlimited number of times.the Committee has sufficient recent relevant financialreports to appropriate authorities, and timely provisionof information regarding the company’s operationscommunications with shareholders and GDR holders aswell as relations with Russian and foreign stock marketMeetings of Non-Executive Directorsexperience, and the overall skills required for financialstatements, business risk analysis and financialto shareholders, creditors and the media. The Chiefregulators. The Company Secretary is responsibleThe Independent and Non-Executive Directors meetmanagement skills. No senior executive of the companyExecutive also cooperates with trade unions to protectfor ensuring that the company, its management andseparately during the year. In 2008, they held four suchis a member of the Audit Committee. During 2008 thethe interests of company employees and communicatesofficers comply with the applicable law, the company’smeetings.Audit Committee met five times.with government and municipal authorities.charter and internal documents.During 2008 the company was restructured into threebusinesses. These are Severstal Russian Steel headedNon-Executive DirectorsKey CommitteesThe Audit Committee carries out the followingfunctions:• The evaluation of candidates proposed asby Anatoly Kruchinin, Severstal Resources headed byThe Key Committees of the Board are consultative andthe company’s external auditors, developingRoman Denisken, and Severstal International headed byThe Board reviews the independence of all Independentadvisory bodies intended for dealing with issues raisedrecommendations for the Board regarding theGregory Mason. Severstal carried out the restructuringand Non-Executive Directors on an annual basis andby the Board. Committees may not act on behalf ofselection of the external auditors.exercise in order to reduce the number of reporting lineshas determined that all such directors are independentthe Board of Directors; neither are they management• The development of recommendations for the Boardbetween individual operations and the Board, ensuringand have no cross-directorships or significant linksbodies of the company, having no powers in relation toof Directors regarding the amount of the externala clear line of sight to the operating businesses andwhich could materially interfere with them exercisingmanaging the company.auditors’ fees.greater operating efficiency. The move streamlinestheir independent judgment. The IndependentCommittee meetings are held as and when necessary• Supervision of the scope and results of thethe reporting structure between individual operationsand Non-Executive Directors play a leading role inbut in any case are held at least three times a year.auditors’ work (including the evaluation ofand the Board and provides a simplified structure tocorporate accountability and governance through theirCommittee decisions are made by a majority vote of allthe auditors’ opinion) and its efficiency andincrease competitiveness, cut costs and maximisemembership of the Remuneration and Nomination,Committee members taking part in the meeting. Eachobjectivity; monitoring the independence of theshareholder returns.Strategy and Audit Committees.member has one vote and the Committee Chairman hasexternal auditor, taking into account the applicableno casting vote in the event of a vote tie.requirements of professional and regulatory bodiesin Russia and the UK.96 97