Principles of Corporate Governance
The Company believes that adherence to high corporate standards is a key condition for ensuring transparent, responsible and trustworthy governance that contributes to the successful development of the Company and the achievement of consistently high financial performance.
The principles of corporate governance of the Company, the structure of governing bodies, governance practices and procedures are set in the Company’s Charter and the Corporate Governance Code . The current version of PJSC PhosAgro Corporate Governance Code has been developed in accordance with Russian legislation, the Charter and other internal documents of the Company, with due account for security market operators’ requirements and recommendations set by the Corporate Governance Code approved by the Board of Directors of the Bank of Russia. The provisions of the Corporate Governance Code of the Company are consistent with the Corporate Governance Code approved by the Board of Directors of the Bank of Russia and the UK Corporate Governance Code.
The core principles of the Corporate Governance Code of the Company:
The Board of Directors is accountable to the shareholders for the development and successful implementation of the long-term development strategy of the Company, as well as for the establishment of milestones for evaluating the management performance efficiency and, ultimately, for evaluating this efficiency. The executive bodies of the Company are accountable to the Board of Directors and the General Meeting of Shareholders of the Company.
The corporate governance system protects the rights of shareholders and ensures their equal treatment. The Board of Directors provides all shareholders with the opportunity to receive timely protection in the event of a breach of their rights. Moreover, the Company does not allow discrimination based on gender, skin colour, or religion. We strive to ensure equality within the Company, and our dedication is manifested in the fact that expertise, consistently high performance and displaying adherence to the Company’s values are a necessary and sufficient condition, as well as the only guarantee of career growth and promotion within the Company.
The Company ensures proper disclosure and free access for all interested parties to reliable information on the Company’s operations, including data on its financial position, social and environmental indicators, ownership and governance structure.
All material decisions made by the Company affect a large number of people: employees and their families, residents of the cities of operation, shareholders and investors, governmental and non-governmental organizations. We fully recognize the importance of the rights and interests of our employees and their family members, residents of the cities of operation, shareholders and investors, governmental and non-governmental organizations; we strive to respect these rights and interests to the fullest extent; we look for and develop ways of communication and cooperation with interested parties.
Corporate Governance Practice
Corporate governance structure
General Meeting of Shareholders
The General Meeting of Shareholders is the supreme governing body of PJSC PhosAgro. General Meetings of Shareholders provide shareholders with the opportunity to make decisions on the most important issues of the Company’s operation.
The scope of authority of the General Meeting of Shareholders, the procedural issues of preparing and holding General Meetings are set out in the Company’s Charter and in the Regulations on the General Meeting of Shareholders.
Information on holding General Meetings of Shareholders and materials for the Meetings are presented in the section “Meetings of Shareholders”.
Internal Audit Commission
In order to exercise control over the financial and economic operation of the Company, the General Meeting of Shareholders in accordance with the Charter elects an Internal Audit Commission of the Company. The operating procedure of the Internal Audit Commission is determined by the Regulation on the Internal Audit Commission, approved by the General Meeting of Shareholders.
Board of Directors
The Board of Directors carries out strategic management of the Company and controls the work of the executive body in the interests of shareholders. The goals of the Board of Directors are: sustainable and successful development of PJSC PhosAgro, long-term increase in the value of its assets, ensuring the protection of the rights and legitimate interests of shareholders, ensuring the completeness, reliability and objectivity of public information about the Company.
We strive to ensure that most members of the Board of Directors are independent — this approach helps to ensure that the decisions made are impartial and the interests of various groups of shareholders are balanced.
When electing members of the Board of Directors, the highest priority is given to whether the nominees possess the required balance of skills, experience, independence and knowledge. Members of the Board of Directors who are well acquainted with the Company’s business play an important role in ensuring properly qualified governance. Therefore, the Company’s Corporate Governance Code does not limit the number of re-elections for the members of the Board of Directors. However, membership of the Board for more than 7 years is regarded as a reason to analyze rotation opportunities.
The operating procedure of the Board is determined by the Regulation on the Board of Directors approved by the General Meeting of Shareholders.
At the Annual General Meeting of Shareholders of the Company held on 25 May 2021, a new Board of Directors was elected. It consists of 10 members, 7 of whom are independent, thus complying with the requirements of the Listing Rules and the recommendations of the Corporate Governance Code. The Board of Directors is balanced in terms of a set of knowledge, skills and experience, as well as independence, as established by the Board of Directors’ Remuneration and Human Resources Committee (the decision of the Remuneration and Human Resources Committee).
Board Committees
The Committees of the Board of Directors are consultative and advisory bodies and consist of current members of the Board who possess the necessary skills and expertise compliant with the functions of the Committees. In the course of operation, the Committees may also involve external experts and advisers. The primary objective of the Committees is to pre-consider the most important issues within the scope of authority of the Board of Directors.
The Board of Directors has six Committees, five of which are headed by independent directors:
The Audit Committee
The Audit Committee is vested with the following tasks, in particular:
analysis of financial accounting processes, including regular audits and drawing up recommendations for the Board of Directors;
preliminary assessment of potential auditors, drafting of recommendations for the auditor’s approval and ongoing interaction with the auditor on the job;
analysis and support of the internal audit system and risk management procedures, including making recommendations for improvement thereof;
ensuring that the practices and procedures adopted by the Company comply with applicable laws and corporate governance standards.
The Audit Committee consists of:
Markus J. Rhodes
Chairman of the Committee, Independent Director
Sven Ombudstvedt
Member of the Committee, independent director
J. James Beeland Rogers
Member of the Committee, independent director
Andrey Sharonov
Member of the Committee, independent director
The operating procedure of the committee is determined by the Regulation on the Audit Committee approved by the Board of Directors.
The Strategy Committee
The Strategy Committee is vested with the following tasks, in particular:
development, monitoring and adjustment of the medium- and long-term strategy of the Company, including consideration of management reports and assessment of its performance in terms of compliance with the approved strategy;
assessment of the development efficiency of subsidiaries, including the validity of their strategies and the extent to which they have achieved their goals;
drawing up opinions on draft merger and acquisition transactions;
review and preliminary assessment of potential strategic partnership projects.
The Strategy Committee consists of:
Sven Ombudstvedt
Chairman of the Committee, independent director
Mikhail Rybnikov
Member of the Committee
The operating procedure of the committee is determined by the Regulation on the Strategy Committee approved by the Board of Directors.
The Remuneration and Human Resources Committee
The Remuneration and Human Resources Committee is vested with the following tasks, in particular:
development of policies for the remuneration of members of the Board of Directors, executive bodies and other key executives, including the development of parameters for their short-term and long-term incentive programs;
supervision of the introduction and implementation of the Company’s remuneration policies and various incentive programs;
assessing the work of executive bodies and other key executives, including an assessment of achievement of their goals as part of a long-term incentive program;
assessing the Board of Directors in terms of areas of expertise, experience, independence and involvement in the work of the Board; determining the priority areas for enhancing the Board;
arranging for assessment and self-assessment of the operational efficiency of the Board;
planning staff appointments for members of executive bodies and other key executives.
The Remuneration and Human Resources Committee consists of:
J. James Beeland Rogers
Chairman of the Committee, Independent Director
Irina Bokova
Member of the Committee, independent director
Andrey Sharonov
Member of the Committee, independent director
The operating procedure of the committee is determined by the Regulation on the Remuneration and Human Resources Committee approved by the Board of Directors.
Environmental, Health and Safety Committee
The Committee is vested with the following tasks:
control over the compliance of the Company’s business with the requirements of law and regulatory bodies in the field of environmental protection, occupational health and safety;
development and monitoring of the implementation of the Company’s policies, practices and procedures aimed at protecting the environment, health and safety of employees of the enterprises within the PJSC PhosAgro Group;
assessing the efficiency of the use of natural resources and electricity, the introduction of resource-saving and energy-saving technologies in the business of the Company’s enterprises and drawing up recommendations for the future development of this policy area;
prevention of industrial accidents, including the development of action plans, programs and processes for assessing, managing and reducing the risks of industrial accidents;
improving labour conditions of employees, monitoring compliance with safety procedures and reducing workplace injuries, as well as improving the occupational health and safety policy to reduce and prevent workplace injuries.
The Environmental, Health and Safety Committee consists of:
Mikhail Rybnikov
Chairman of the Committee
Natalia Pashkevich
Member of the Committee, independent director
The operating procedure of the Committee is determined by the Regulation on the Environmental, Health and Safety Committee approved by the Board of Directors.
The Risk Management Committee
The Risk Management Committee is vested with the following tasks:
drawing up proposals to the Board of Directors on the risk management methodology, on the identification of the most significant risks for continuous monitoring and control, and recommendations for an integrated risk management system;
evaluating the efficiency of the risk management system within the Company and drafting of recommendations to improve it;
drawing up proposals to the Board of Directors on the justification of the risk appetite and risk tolerance.
The Risk Management Committee consists of:
Sven Ombudstvedt
Chairman of the Committee, Independent Director
The operating procedure of the Committee is determined by the Regulation on the Risk Management Committee approved by the Board of Directors.
The Sustainable Development Committee
The Sustainable Development Committee is vested with the following tasks:
establishment and periodic analysis of the Company’s system of internal regulatory documents in the field of sustainable development; control over the development of these documents, their relevance, effectiveness and quality;
ensuring continuous displaying and promotion of ethical, transparent and responsible behaviour;
involvement of key stakeholders, as well as contributing to the development and growth of healthy and sustainable communities in all regions of operation;
monitoring compliance with legal requirements and internal goals in the field of sustainable development; commitments to comply with the principles of the UN Global Compact on Sustainable Development;
arranging for staff training on best practices in sustainable development;
drafting of recommendations to the Board of Directors on determining strategic goals in the field of sustainable development;
consideration of reporting on sustainable development;
supervising the disclosure of the information on the Company’s sustainable development activities.
The Sustainable Development Committee consists of:
Irina Bokova
Chairman of the Committee, Independent Director
Andrey Sharonov
Member of the Committee, independent director
Mikhail Rybnikov
Member of the Committee
The operating procedure of the Committee is determined by the Regulation on the Sustainable Development Committee approved by the Board of Directors.
Management Board
The Management Board is the collegial executive body of the Company and reports to the Board of Directors and the General Meeting of Shareholders of the Company.
The scope of authority of the Management Board, in particular, includes:
approving annual and quarterly income and expenditure estimates (budgets) of the Company, making amendments thereto;
determining the investment policy and new business areas of the Company;
ensuring that reports on the financial and operating performance of the Company are prepared and submitted to the Board of Directors.
The members of the Company’s Management Board are approved by the Company’s Board of Directors for the term of one year.
The operating procedure of the Management Board is determined by the Regulation on the Management Board approved by the General Meeting of Shareholders.
Chief Executive Officer (CEO)
CEO is the Chairman of the Management Board of the Company, reports to the Board of Directors and the General Meeting of Shareholders.
The scope of authority of CEO includes all issues related to the management of the daily operations of the Company, with the exception of issues referred by the effective legislation of the Russian Federation and/or the Charter of the Company to the scope of authority of other governing bodies of the Company.
CEO of the Company is elected by the Board of Directors for a term of three years.
Corporate secretary
The Corporate Secretary ensures ongoing interaction with shareholders, coordination of the Company’s actions to protect the rights and interests of shareholders and support for the effective work of the Board of Directors.
The Corporate Secretary is appointed by the Board of Directors. The operating procedure of the Corporate Secretary is determined by the Regulation on the Corporate Secretary approved by the Board of Directors of the Company.
Samosyuk Sergey Alekseevich
Tel.:
e-mail: ks@phosagro.ru
Year of appointment: 2016
Year of birth: 1976
Education
St. Petersburg Academy of Engineering and Economics, degree “planning engineer”
St. Petersburg State University, degree “lawyer”
National Research University “Higher School of Economics”, Executive MBA
Work experience
Since 1996 he worked in the finance department of JSC “Ammophos”.
Since 2003, has held management positions in the economic departments of CJSC “PhosAgro AG”, CJSC “Metachem”, LLC “Mining and Chemical Engineering”; was a member of the internal audit commission of JSC “PhosAgro-Cherepovets”.
Was the head of Methodology and Economic Analysis Department at JSC “PhosAgro-Cherepovets”, since October 2014.
Achievements
Holder of the National Award “Director of the Year — 2020” in the nomination “Director for Corporate Governance / Corporate Secretary”.
Corporate Governance Department
The main functions of the Corporate Governance Department are as follows:
to arrange and hold events as part of mergers and acquisitions (start-ups, reorganization, acquisition of shares and stakes in the authorized capital of other organizations, etc.);
to deal with legal issues arising in the process of preparing and conducting corporate procedures;
to develop (legal examination of) the Charter and by-laws submitted for consideration by the Board of Directors and the General Meeting of Shareholders of the Company.
Corporate Governance Director
Botnev Yuri Sergeevich
Tel.:
e-mail: kpu@phosagro.ru
Deputy Corporate Governance Director
Konovalova Ekaterina Spartakovna
Tel.:
e-mail: kpu@phosagro.ru
Internal audit
The Internal Audit Directorate of the Company assists the Board of Directors and executive management in improving the efficiency of business process management and the functioning of internal control and risk management systems.
The Internal Audit Directorate in its operation is guided by the Internal Audit Policy adheres to a risk-based approach and works closely with the risk management, internal control and economic security departments, as well as with members of the governing bodies of the Company.
The audit plan for the calendar year is reviewed, discussed and approved by the Audit Committee and the Board of Directors. Audits are held both in the Company itself and in its individual subsidiaries and their separate divisions.
Moreover, the Internal Audit Directorate monitors the effectiveness and efficiency of corrective actions by the executive bodies of the Company based on the audit findings, and reports quarterly to the Board of Directors.
Report on Compliance with the Principles and Recommendations of the Corporate Governance Code
A Report on Compliance with the Principles and Recommendations of the Corporate Governance Code recommended by the Central Bank of the Russian Federation is approved annually by the Board of Directors and submitted as an appendix to the annual report of the Company for consideration by the Annual General Meeting of Shareholders of the Company.
Ethical Practices
Values, principles, standards and codes of conduct
In order to ensure compliance of the enterprises of the PhosAgro Group with the rules of civilized business and generally recognized business practices, a set of organizational, legal, informational and explanatory measures has been developed and implemented.
They are aimed at enhancing the unified corporate culture based on high ethical standards, mutual respect and good faith, maintaining an atmosphere of trust in the team, at preventing and counteracting fraud and corruption, at identifying and resolving conflicts of interest in the activities of the Company’s employees and job applicants, as well as at minimizing the risks of involving employees in illegal activities.
PhosAgro Group makes every effort to enhance, strengthen and protect the business reputation of an honest, open and bona fide partner, thereby sustaining a positive brand image inside the mind of shareholders, potential investors, partners, employees and counterparties. Besides, the Company takes all measures to exclude corrupt practices that may lead to the application of measures of responsibility and sanctions against the Group’s legal entities and officers, as well as to decline of trust on the part of stakeholders.
The priority of the Company and its controlled entities is to exclude any possibility of occurring instances with the signs of corruption offenses and a possible conflict of interest and to maintain the commitment of PhosAgro Group employees to the highest ethical values.
All employees of the Company, including managers, are personally liable for non-compliance with the principles and requirements of ethical standards. Employees who violate the by-laws are subject to appropriate sanctions, including public reprimand, public censure by means of publication in the Company’s media, deprivation of bonuses either in part or in whole in accordance with PhosAgro by-laws, and if the actions (omission to act) of an employee have signs of a disciplinary offense, the disciplinary measures are also applied in accordance with the Labor Code of the Russian Federation.
The Company does not conduct animal testing except in cases required by law; during the examination of fertilizers, the main method of assessing information on the toxicity and danger of a multi-component substance to animals is the analysis of information from national and international databases, as well as information on previously registered fertilizers.
Applicable regulatory documents governing the activities of the PhosAgro Group in the area of compliance with the basic principles and standards of ethics of conduct
Discloses the basic principles and standards of ethical business practices underlying the corporate culture of the enterprises of PhosAgro Group
Determines the goals, objectives, has a record the basic principles of the Company and the duties of employees in the field of combating fraud and corruption
Establishes the procedure for identifying and resolving conflicts of interest arising among employees during fulfilling their job duties
Examines and regulates the issues related to employee compliance with the requirements of regulatory acts in the field of anticorruption policy
The above documents regulate the implementation of a set of inspection activities in order to identify the facts, circumstances, reasons and conditions of the disciplinary offenses, incidents and other violations of the requirements established by the by-laws of the Company
Establish the main goals and objectives of the procedure for employees’ complaints on combating fraud, corruption, theft and identifying the facts of conflict of interest
Regulatory documents are organizational and legal instruments that shall be followed by all managers, officers and employees of the Company.
Countering Bribery and Corruption
Professional integrity and full compliance with applicable laws and regulations is a general requirement for all employees of PhosAgro enterprises. On 29 January 2018, Apatit JSC, the largest manufacturing plant of PhosAgro, was included in the register of the Anti-Corruption Charter of the Russian Business.
The Company attaches great importance to doing business in accordance with generally recognized ethical standards and considers any cases of bribery and corruption by its employees unacceptable.
In accordance with the anti-corruption laws, all PhosAgro Group enterprises:
have adopted standards aimed at the prevention of corruption and other offenses in the Company;
have concluded and are concluding agreements with employees on compliance with the requirements established by local regulations aimed at combating corruption and fraud;
have set out in the employees’ job descriptions duties on compliance with anti-corruption requirements;
have introduced restrictions in respect of certain categories of employees regarding part-time work in business entities;
include a universal Anti-Corruption Clause section in all agreements being concluded.
In 2016, the Company launched a single Hotline for all Group organizations, which helps the Company’s management to respond quickly to reports of a wide variety of problems, including corruption-related issues, violations of the Company’s internal regulations, potential and/or actual conflicts of interest, violations of human rights, labour protection and industrial safety requirements, environmental violations, as well as any other violations.
by phone
+7 (8202) 59-32-32, to e-mail help@phosagro.ru and
to the postal address: 162622, Vologda Region, Cherepovets, Severnoye Highway, 75, Economic Security Directorate.
The Economic Security Directorate is responsible for conducting internal investigations of all messages received by the Hotline, as well as for reporting all incidents requiring additional investigation or corrective action.
The Audit Committee of the Board of Directors of the Company quarterly reviews a report containing an analysis of Hotline calls and management responses to such calls. The report contains information on the number of messages, types of illegal actions and the measures taken. Considering that the members of the said Committee are exclusively independent directors, the Company thus provides the most effective and unbiased system of reporting on inappropriate behaviour and feedback on such calls.
Anti-Corruption Training
The company continuously upgrades the qualifications of employees in anti-corruption programs to minimize the risks of staff involvement in corrupt practices. A system of effective training has been created, aimed at preventing corruption manifestations of all forms and types, at eliminating possible harm and mitigating the consequences of corruption intervention. Our training program contains information on compliance risks associated with certain duties of employees, as well as the instructions on how to behave in situations of concern, including giving and receiving gifts, entertainment, and hospitality expenses.
One of the primary target audiences for this type of training are employees dealing with third parties.
In order to inform employees and counterparties about the anti-corruption standards adopted by the Company, the relevant documents are posted:
on the internal portal in the Combating Fraud, Corruption and Conflicts of Interest section;
on the official PhosAgro website in the Anti-Corruption section.
The annual training of employees of the Economic Security Directorate is carried out in specialized training centers with the involvement of third party consultants.
The issue of including trade representatives in the annual training program is under consideration: it is planned to conduct training sessions on anti-corruption standards in production department with the aim of 100 % coverage of the entire personnel of the Company.
Conflict of Interest
The Board of Directors pays significant attention to management of conflicts of interest. Independent directors play a key role in preventing internal conflicts.
The Economic Security Directorate of the Company is responsible for identifying the facts of conflicts of interest and taking appropriate corrective actions. The quarterly report of the Internal Audit Directorate to the Audit Committee of the Board of Directors includes information on all calls to the PhosAgro hotline and the results of relevant investigations.
Incentive and reward system
We encourage personnel to strive to reach the highest performance indicators and to improve the quality of work in order to attain the business goals by creating a unified efficient reward system.
Our reward system is aimed at:
maintaining a decent rate of remuneration;
implementing the incentive programs for managers — the use of a transparent system of key performance indicators (KPI) to determine the amount of remuneration;
implementing the incentive programs for employees aimed at achieving target indicators;
providing the employee with remuneration in both tangible and intangible form;
improving the quality of life and increasing the creative potential of PhosAgro employees, developing the cities of Company operation;
application of a system of compensation and benefits for certain categories of employees;
creating a package of compensations and benefits in accordance with the best world practices.
Members of the Board of Directors of the Company receive remuneration. Its amount is established on the basis of the decision of the General Meeting of Shareholders and is adjusted in such a way as to attract highly skilled specialists to work, to motivate them for honest and effective activity.
Further details of the remuneration report can be found in our Integrated Reports.
Supply chain
The procurement system plays an important role in the work of PhosAgro. Due to the scale of the Company’s activities, a large number of economic entities and many socially significant aspects are involved in these forms of economic relations. The procurement activity of the Company contributes to the development of innovative solutions, improving the quality level and system of control, and stimulating the economic activity.
According to the approved Procurement Policy of JSC Apatit, the main purpose of the procurement activity is to timely meet the Company’s needs for inventories, work, services (hereinafter — the Need) of proper quality, in full and at best possible prices, which is ensured based on the following principles:
Interaction with suppliers is implemented on the basis of the principles of complete transparency of decisions made, market and formula pricing, and long-term relationships.
Purchases are carried out in a competitive manner. The petroleum products, materials and equipment, works and services are procured in the course of the tendering procedure with the participation of PhosAgro tender committee on the basis of competitive bids received from suppliers on the electronic trading platform.
The basic objectives for arranging and holding the tender are the enhancement of efficiency and transparency of procurement procedures, provision of equal conditions for all prospective suppliers, uniformity of requirements and fairness of the process of assessment of bids made by tender participants.
The Company has established documented procedures governing the procedure for evaluating and selecting a supplier.
Procurement activity is one of the links in the sequence of processes by which resources are collected into finished products that meet the Customer’s needs. It is aimed at ensuring that the Company receives the necessary quality and quantity of raw and other materials, equipment and services at the right time, in the right place, from a reliable supplier who fulfills its obligations on time, with good service and at a favorable price.
For more information on Ecologically responsible purchasing policy, see the section “The environment”.
Modern solutions make it possible to build optimal purchasing models, compare prices with offers from other suppliers in the system and in the market as a whole. The latest and accurate information at hand facilitates making decisions and evaluating the results of the efforts.
The main solutions used in procurement:
Development and Implementation of Category Strategies. The aim of the approach applied to the purchase is to improve the quality, reliability and Customer satisfaction. In 2020, category strategies cover 16 categories of raw materials, 14 categories of materials and equipment, 2 categories of works and services.
IT-solutions. Procurement activity management is carried out using IT solutions. The more tools we create/find for ourselves, the more transparent and efficient the supply chain is. One of the solutions is the implementation of SAP Process Mining by Celonis, the main goal of which is to analyze and improve the procurement processes from the Planning stage on the Customer’s side to data analysis after writing off to production, identifying bottlenecks and deviations from regulations.
Robotization. Reducing the time spent on daily and routine tasks, as well as eliminating the duplicating operations by the use of robotic solutions.
The company is committed to the anti-corruption policy and is guided by the principles of the Anti-Corruption Party of Russian Business when dealing with counterparties in order to reduce the risk of both parties being involved in fraudulent actions and/or corruption activities.
During procurement activities carrying out, the requirements of the current procedures and methods of the Company, based on successful business experience, are taken into account.
Basic requirements for purchased products
When purchasing raw materials, components, packaging, the Company assesses the possibility of delivery based on verification tests carried out by the quality control department of the Company, and the conclusion (approval) defining complete information on the characteristics of the goods.
The assessment and selection of suppliers is carried out in accordance with the organization standard STO
Following the principles of corporate responsibility, the Company reviews potential suppliers for compliance with environmental and social responsibility.
According to the Code of Ethics of PJSC PhosAgro, the Company declares its possible refusal to cooperate with counterparties of business partners that practise discrimination and compulsory labor of their employees and contractors’ employees.
PhosAgro supply chain description
The main processes of the procurement system are: