The Corporate Governance & Personnel Committee

The Corporate Governance & Personnel Committee focuses on issues including remuneration and incentives, staffing requirements at ongoing investmentprojects and the introduction of health and safety performance indicatorswithin the management incentive programme.

The Committee pays close attention to the remuneration of key managers,which is tied to the implementation of individual plans and the Company’soperational results.

The Committee’s activities are cyclical, since the incentives system and topmanagement’s targets for the coming year are set at the end of the year duringthe budgeting process and after adjustments have been made to businessstrategies. Individual targets are assessed from February to April once theresults have been reported. The Committee therefore uses a systemicapproach to assure the Board that management remuneration is adequateand appropriately incentivised.

The Corporate Governance & Personnel Committee currently hasthree members: the independent Chairman Vladimir Stolin, independentdirector Andrea Wine and non-executive director Nikolay Pilipenko. Every year, the Committee organises the Board’s performance appraisalexercise. The method used for the appraisal involves a survey, and detailedanswers provided by the directors form the basis for Board discussion anddecisions made based on the conclusions

CORPORATE GOVERNANCE& PERSONNEL COMMITTEE MEETINGS AND ATTENDANCE

In 2013, the Committee held six meetings in person and one meetingin the form of a conference call. Attendance details are available on page 67in the Board table. Throughout the year, the Committee held working meetingswith key executives and managers, including reviews of work performed in theprevious year as well as setting objectives and targets for the current andupcoming periods.

OVERVIEW OF CORPORATE GOVERNANCE AND PERSONNEL COMMITTEE ACTIVITY DURING 2013

HSE policy
  • Regular HSE status updates from EuroChem companies, analysis of the management actions to prevent emergency situations
  • Development of the HSE function, including action plan, draft HSE Policy, terms of reference for implementation of the company-wide HSE project and key appointments
  • Review of methodology for establishing unified HSE target indicators
Remuneration and incentives
  • Approval of the project-based incentives programmes for key investment projects
  • Goal-setting for top management: correction of 2013 individual targets, evaluation of top management target achievement, setting new targets for 2014, including methodological issues pertaining to the evaluation of target achievement
  • Developing long-term incentives linked to project implementation
  • Consideration of issues pertaining to top management remuneration and benefits at EuroChem and its subsidiaries
  • Review of the Board of Directors’ remuneration level
Appointments and staffing
  • Updating the list of positions requiring the Board’s approval
    Review and approval of the following key appointments
    Head of HSE, divisional managers for the mineral fertilizers and mining divisions
  • Development of the management succession pool
  • Search for new independent directors
HR-related matters
  • Approval of 2014 HR budget, assessment of current management and personnel on-site development and continuous education programmes.
Appraisal of the Board’s performance
  • Assessment of the Board’s performance, including review of proposal to change assessment format.
Contemplated Reorganisation
of the Company
  • Developing the management structure to a new divisional model
  • Approve the formation of a project group to oversee the development of the Company’s management system
  • Considered the potential distribution of authority and responsibility at various management levels within a divisional structure, as well as the development of staffing plans and incentive system
  • Considered the potential distribution of authority and responsibility at various management levels within a divisional structure, as well as the development of staffing plans and incentive system
  • Refined core architecture of business processes and plans
  • Reorganising the Company’s functional management and business support units

PRIORITIES FOR 2014

HSE
  • Regular monitoring of HSE status within the Group;
  • Development of the Company’s HSE function and culture of industrial safety
Remuneration and incentives
  • Approval of project-based incentives programmes for key investment projects planned for the year
  • Setting annual targets for top management and review of target achievements
  • Approval of the incentives programme for the completion of the project to develop the Company’s management system
  • Updating incentives systems for senior management
Contemplated Reorganisation of the Company
  • Regular monitoring of the project to develop the Company’s management system
  • Review targets and plans with regards to reorganising the sales, logistics, and purchasing functions
HR-related matters and succession pool planning
  • Development of personnel and approaches to building business careers, including data on the current status of the succession pool for positions on the Board’s required-approval list
  • Review of 2015 HR budget
  • Approval of the Company’s three year programme to develop managerial staff at various management levels
  • Board performance review
Planned improvements to our corporate governance practices
  • Standardise induction procedures for new Board members
  • Develop a comprehensive training programme for the members of the Board of Directors
  • Defining targets for the Corporate Secretary
  • Development of a new methodology for assessing the activities of the Board of Directors
  • Update insider information guidelines within the context of the Company’s reorganisation
  • Audit of statutory documents on the distribution of control within the Company
  • Analysis of effective shareholder communication mechanisms
  • Analysis of the scope of disclosure of information on the activities of the Board of Directors on the company’s website, including decisions of the Board of Directors.