Annual Report & Accounts 2013
Severstal Annual Report 2013 Home > Governance > Corporate governance statement > The Board Committees
 

The Board Committees

What are the Committees of our Board and what do they do?

Severstal’s Board of Directors includes the following committees:

  • Audit Committee,
  • Remuneration and Nomination Committee, and
  • Health, Safety and Environmental Committee.

The Board Committees serve as consultative and advisory bodies that deal with issues raised by the Board. Committees may not act on behalf of the Board and are not considered to be management bodies of the company. They have no powers in relation to managing the company.

Committee meetings are held as and when necessary, but at least three times a year. They are held apart from the Board meetings so that extra attention can be given to discussing issues, which require preliminary Board consideration prior to approval by the Board members, and determine the necessity of the Board’s approval for a specific issue.

Decisions of each Committee are taken by a majority vote of all Committee members taking part in the meeting. Each member has one vote and the Committee Chairman has no casting vote in the event of a tie.

Activity of Severstal Committees is regulated by the Regulations for the Board Committees. Please refer to www.severstal.com for more information.

The Audit Committee

«The Audit Committee has a key role in ensuring that the integrity of the Group’s financial statements and the effectiveness of its risk management processes and internal controls are safeguarded. During the year, its activities continued to be focussed on the integrity and quality of the Group’s financial reporting, the performance of the internal and external audit processes, the suitability of the Group’s system of internal governance including receiving reports from Internal Audit, and other compliance related matters. The Committee will continue to monitor its activities in the light of regulatory and best practice developments.»

Martin Angle,
Chairman of the Audit Committee

Who is on our Audit Committee?

The Audit Committee consists of three Independent Non-Executive Directors. Currently they are:

  1. Martin Angle (Chairman),
  2. Ronald Freeman, and
  3. Dr. Peter Kraljic.

Details of the above mentioned Audit Committee members can be found in their biographies.

In accordance with its terms, the Committee has sufficient recent relevant financial experience, and the overall skills required for financial statements, business risk analysis and financial management skills. No senior executive of the company is a member of the Audit Committee.

What is the role of the Audit Committee and what are its key responsibilities?

The Audit Committee assists the Board of Directors in monitoring the company’s risk management processes and control environment, and in reviewing the company’s annual and quarterly financial statements and audit.

In its work, the Audit Committee also:

  1. Evaluates candidates put forward as the company’s external auditors and makes recommendations to the Board regarding the selection of external auditors,
  2. Develops recommendations to the Board regarding external auditors’ fees,
  3. Reviews the scope and results of the auditors’ work and their opinion and its efficiency and objectivity. Monitors the independence of the external auditor, taking into account the applicable requirements of professional and regulatory bodies in Russia and the UK,
  4. Reviews the company’s quarterly and annual financial statements, changes in accounting policies and practices, as well as material adjustments, if any, arising from the Audit, before the financial statements are submitted to the Board for approval and publication,
  5. Reviews any other statements to be published which may relate to the financial performance of the company, prior to their recommendation to the Board for approval,
  6. Monitors the effectiveness of risk management processes, internal control and corporate governance systems,
  7. Monitors the internal audit function,
  8. Monitors and controls the compliance policy for auditors supplying non-audit services,
  9. Analyses material changes to applicable law that affect the company’s financial statements, and any findings of supervisory bodies and court proceedings.

The Audit Committee also prepares its own evaluation of the auditors’ opinion on financial statements and provides this evaluation to the company’s Board and the AGM.

To ensure that the company’s financial and business operations are monitored efficiently, external auditors with no interests in the company are employed to verify and approve the accounts. The Audit Committee monitors the auditor’s independence. The external auditor lead partner always participates in the meetings of the Audit Committee, reviewing the company’s quarterly and annual results. Audit Committee members meet the external auditor regularly, without management, to discuss matters arising from the audit and review process. There were four such meetings in 2013.

Severstal’s books and records are audited in compliance with the requirements of statutory law and International Standards on Auditing issued by the International Auditing and Assurance Standards Board (IAASB), with respect to financial statements prepared under International Financial Reporting Standards (IFRS).

Such audit takes place annually and, as of the first, second and third quarter of 2013, the company’s interim condensed financial statements, prepared in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting, are also reviewed in accordance with International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity.

What has the Audit Committee done during 2013?

The Audit Committee met four times in 2013. The Chairman of the Audit Committee is continually in touch with the Board Chairman, the external audit lead partner, the company’s CFO and Head of Internal Audit.

These are the key issues reviewed by the Audit Committee in 2013:

  • External Auditor’s Report to Severstal’s RAS financial statements for 2012.
  • Severstal’s RAS financial statements for 2012 and recommendation to the Board to approve it and to submit it for attention of the AGM.
  • Transactions with related parties approved by the Board in 2012.
  • Internal Audit Plan.
  • Severstal’s IFRS condensed interim financial statements for Q1, H1 and 9 M of 2013.
  • Internal Audit report for Q1, H1 and 9 M of 2013.
  • Internal control environment in Severstal Divisions: Severstal Russian Steel, Severstal Resources, Severstal International.
  • Severstal Business Standard project implementation.

Individual attendance of the Audit Committee meetings by its members is shown on the page The Board of Directors.

The Remuneration and Nomination Committee

«Attracting, retaining and developing top calibre executives is of utmost importance for the success of the company. The Committee, therefore, focuses on talent review, executive development and the need to have motivating, incentivising and competitive remuneration packages in place.»

Rolf Stomberg,
Chairman of the Remuneration and Nomination Committee

Who is on our Remuneration and Nomination Committee?

The Remuneration and Nomination Committee consists of three members. At least two members of the Remuneration and Nomination Committee, including the Chairman of the Committee, are Independent Non-Executive Directors. Currently the Remuneration and Nomination Committee comprises:

  1. Dr. Rolf Stomberg (Chairman)
  2. Christopher Clark, and
  3. Alexey Mordashov.

Details of the above mentioned Committee members can be found in their biographies.

What is the role of the Remuneration and Nomination Committee and what are its key responsibilities?

The Remuneration and Nomination Committee’s role is to help the company engage qualified professionals to manage the company, and create the incentives necessary to ensure their successful work for the company. It also reviews remuneration and compensation for the company’s senior managers and Independent Board members.

The Remuneration and Nomination Committee:

  • Develops general recommendations for the Board on selecting nominees to the Board, proposed by the Board,
  • Conducts preliminary evaluations of potential nominees to the Board and provides the Board with recommendations,
  • Informs the Board of any potential nominees to the Board it is aware of and recommends individual persons for nomination or election to the Board,
  • Issues an opinion as to whether a person nominated to the Board qualifies as an Independent Director,
  • Develops the system of remuneration and other payments made by the company or at the company’s expense (including life and health insurance, and pension plans) for Board members, based on members’ personal contributions to the company’s strategic objectives,
  • Prepares and submits the appointment and remuneration policy for senior executives of the company, including its Chief Executive, as well as providing recommendations on the terms of the contract signed with the Chief Executive,
  • Reviews the Board members’ performance, including the advisability of nominating respective Board members for another term in office,
  • Provides the Board with recommendations regarding the material terms of the General Director’s contract,
  • Reviews information furnished by the Board members – to be disclosed in accordance with applicable law or the Charter – for establishing whether such Board members have an interest in any decisions of the company, as well as information related to the circumstances preventing the aforementioned officers from efficiently discharging their duties as members of the Board, and any circumstances entailing their loss of independence as a member of the Board.

What has the Remuneration and Nomination Committee done during 2013?

The Remuneration and Nomination Committee met three times in 2013. The Chairman of the Remuneration and Nomination Committee is in regular contact with the company’s CEO and Senior Vice-President of Human Resources.

These are the key issues reviewed by the Remuneration and Nomination Committee in 2013:

  • The top ten company executives’ remuneration and compensation.
  • The company’s bonus scheme.
  • Long-term incentive plan practices.

Individual attendance of Remuneration and Nomination Committee meetings by its members is shown on the page The Board of Directors.

Health, Safety and Environmental Committee

«The Board reviews its performance in regular intervals and seeks out areas for improvement. In the light of grave safety incidents in our coal mines the Board resolved to sharpen the focus on the HSE performance of the entire Group. The Board, both Executive and Non-Executive directors and with strong support from the Group CEO, decided to set up a Board committee which is tasked to review the HSE performance of the company, discussing major incidents and lessons to be learned, and monitoring the implementation of measures and actions to improve the HSE performance. The Committee meets twice annually.»

Rolf Stomberg,
Chairman of the Health, Safety and Environmental Committee

Who is on our Health, Safety and Environmental Committee?

The Health, Safety and Environmental Committee has been formed by the Board in June 2013 and consists of:

  1. Rolf Stomberg (Chairman),
  2. Peter Kraljic,
  3. Alexey Mordashov,
  4. Vadim Larin,
  5. Vladimir Lukin.

Details of the above mentioned Committee members can be found in their biographies.

What is the role of the Health, Safety and Environmental Committee and what are its key responsibilities?

The Health, Safety and Environmental Committee shall assist the Board in obtaining assurance that appropriate systems are in place to deal with the management of health, safety and environmental risks.

The functions of the Health, Safety and Environmental Committee include:

  • To advise the Board of Directors on safety policy and the establishment of safety procedures including the reporting system to the Company’s executive body and through the executive body to the Board of Directors,
  • To review the safety performance of the Company and its constituent parts against targets as established either by the Company’s Board of Directors or its executive body,
  • To review major safety incidents and advise on lessons learnt and/or sanctions to be applied,
  • To initiate and review comparisons with best safety and environmental practice,
  • To advise the Board of Directors on environmental policies, the establishment of procedures and practices and the reporting system on environmental performance to the Company’s executive body and through the executive body to the Board of Directors,
  • To review the environmental performance of the Company and its constituent parts against targets as established by the Board of Directors or its executive body, as well as compliance with legal obligations or objectives and restrictions set by the authorities,
  • To review major environmental incidents or breaches of compliance and to advise on lessons learnt and/or sanctions to be applied.

What has the Health, Safety and Environmental Committee done during 2013?

The Health, Safety and Environmental Committee met twice in 2013.
These are the key issues reviewed by the Health, Safety and Environmental Committee in 2013:

  • The Health, Safety and Environmental legal framework.
  • The company’s Health, Safety and Environmental organization and processes.
  • Internal Health, Safety and Environmental issues.

Individual attendance at Health, Safety and Environmental Committee meetings by its members is shown on the page The Board of Directors.

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