Corporate governance report

THE STRATEGIC ROLE

The Board’s mission has always been to ensure that the Company has a solid and consistent strategy, moves towards the implementation of its business goals and is able to deliver value in the long term. To achieve this we know that EuroChem’s activities and operations need to be in line with international standards and comply with best practice, so the Board regularly monitors the Company’s accounting, risk management, internal control, governance and sustainability frameworks. All these tasks set high standards in respect of the Board’s knowledge, skills and expertise, calling for synergy between competences and talents of individual Board members.

As a Board, we have had time to build a sound understanding of our business and industry, and develop relationships with – and access information from – management as they work on delivering our strategy. We monitor our risks and ensure that key material issues are assessed and managed. As a group of individuals with various sets of knowledge and expertise, we make sure that every director employs his or her specific approach to business solutions, and has an opportunity to voice his or her opinion.

In 2013, the Board welcomed Alexander Landia and Garth Moore, whose expertise we believe will strengthen the Board’s competence. Details of our Board members are available here.

TAKING INFORMED DECISIONS

The Board actively oversees all aspects of the Company’s activity, and is provided with the full range of relevant information necessary for informed decision making. The directors are kept informed – both on a regular basis and whenever necessary – of significant events and most recent developments. In addition to materials for every Board meeting, Board members are provided with periodic updates from management, including management accounts, flash reports, status updates on industrial health and safety, updates on the Group’s legal proceedings, media overviews, information on corporate events and reports on implementation of strategic projects. In case of a significant event or an emergency, the Board members are the first to obtain up-to-date information from management. The procedures for providing information to the Board members are set out in a policy and through established procedure.

To ensure a clear understanding of the Company’s operations throughout each production facility, Board members undertake yearly site visits at EuroChem assets. A tour of Usolskiy Potash is planned for 2014.

The agenda for Board activity is compiled one year in advance, taking into account the optimal cycle for reviewing recurring issues such as budgets, financial reporting and strategy. The timing, expectations and goals of these reviews are well understood by both the Board and management and include detailed updates on core operational areas, investment projects and strategy.

THOROUGH INDUCTION

EuroChem strives to provide every new director with a clear picture of its business and operations as soon as they join the Board, enabling them to begin actively participating in governing the Company according to actual priorities and current goals right from the start. On joining the Board, directors take part in a formal induction process, which includes obtaining background information on the Company, studying regulations pertaining to Board procedures, reading through background materials on certain standing items on the Board’s forward agenda and meeting with key managers. On request, new directors are also given the opportunity to have an individual tour of key EuroChem assets during their induction.

In addition to the general induction course, in 2014 the Company plans to develop an integrated training programme for Board members. This will enable them fully realise their professional potential in developing decisions that contribute to the sustainable and profitable long-term development of EuroChem.

INDEPENDENT JUDGEMENT

EuroChem employs the definition of independence as provided in the UK Corporate Governance Code and the Russian Code.

As of the date of this report, five of the Board’s eight directors were fully independent of the Company’s executives, affiliates and major counterparties that could potentially influence their objectivity. Their independent status is confirmed by the Board of Directors after each election or re-election to the Board, on a basis of their answers to a standard questionnaire of the declaration of interests. At all times, the Directors must inform the Company of any events which could lead to the loss of their independent status.

We expect our independent directors to help us have both a clear strategic direction and also oversee the strengthening of our internal operations.

LEADERSHIP BY EXAMPLE

The EuroChem board has a well established policy of leadership by example, putting EuroChem’s values into practice as well as by implementing sound international governance and standards. The role of the Board is to provide robust leadership for the Company as well as clear direction for management, to help ensure the long-term success of the Company and best serving the interests of our stakeholders.

The Chairman leads the Board and is responsible for ensuring its effectiveness by facilitating open communications, developing relations and creating a culture of mutual respect, fostering constructive debate.

Our Board sets the direction of EuroChem’s continuous development and monitors its progress against strategy. This ensures that it is well positioned to meet the expectations of its stakeholders, from local communities to global capital and debt markets. The strategy is implemented by the Chief Executive Officer and the Management Board, who are accountable for EuroChem’s performance.The Board of Directors appoints the CEO and the members of the Management Board and determines the length of their terms. Further information on our executive team is available on our website at www.eurochem.ru/who-we-are/board

IMPROVING DIVERSITY

In line with our HR Policy, we aim to attract the best people with the right talent to complement our skills, irrespective of gender or ethnicity.

EuroChem’s Board of Directors demonstrates diversity of experience, opinion, gender and nationality. The gender imbalance in our Group remains an issue, as it does for many other businesses within the science, mining and engineering sectors. Nevertheless, we continue actively looking to increase the number of women in senior roles.