Corporate governance structure
Structure of corporate governance and sustainability management
Corporate governance assessment
To assess corporate governance, the Company relies on the Corporate Governance Code recommended by the Bank of Russia, the UK Corporate Governance Code (UK CGC, FRC, 2018), and criteria from key corporate governance and ESG ratings as best practice benchmarks. The actual compliance with the CGC is evaluated on an annual basis and disclosed in a dedicated report, which is subject to review by the Audit Committee of the Board of Directors and approval by the Board of Directors, and forms a part of the Company’s annual report.
In February 2024, the Board of Directors reviewed the performance of the 2023 improvement plan. The Board scrutinised the evolution of compliance with the Code’s principles and trends in the quality of explanations for non‑compliance or partial compliance. Post‑review, the Board of Directors approved the 2023 CGC Report, and issued a positive assessment of compliance with the CGC recommendations. Furthermore, the Board of Directors praised progress against the 2023 Corporate Governance Practice Improvement Plan, and approved the improvement plan for 2024.
Over the past three years, PhosAgro has demonstrated a high level of compliance with the CGC recommendations.
For every case of partial compliance or non‑compliance, PhosAgro specifies the measures taken to mitigate the associated risks in the CGC Report. In 2023, the quality of PhosAgro’s disclosure to explain the non‑compliance (partial non‑compliance) with the recommendations of the Code, according to the Bank of Russia, improved from 76 to 77%, while the average level in the Russian Federation grew from 59% to 64%.
Results of implementing the CG improvement plan developed and approved by the Board of Directors in the analysis of the 2022 CGC Report
Upon the re‑election of the Remuneration and Human Resources Committee in 2023, the Board of Directors will seek to elect an independent director as the Chairman of the Remuneration and Human Resources Committee.
Once the General Meeting of Shareholders elects new members of PhosAgro’s Board of Directors in 2023, the Board will seek to staff the Remuneration and Human Resources Committee with independent directors only.
Despite these intentions, the Committee continued under the leadership of a non‑independent member of the Board (Committee Chairman). The Committee’s composition was drawn from the post‑election Board, considering attributes most conducive to achieving the Committee’s objectives, such as relevant experience, education, and expertise.
As part of the next amendments made to the Regulations on the Remuneration and Human Resources Committee or upon approval of a new version of the Regulations (presumably in 2023), a clause on conditions (events) for reviewing the compensation policies will be introduced.
The Company proceeded from the fact that the responsibility to regularly revise the policy, which is specified in the Regulations on the Remuneration and Human Resources Committee of the Board of Directors, implies ensuring that it is updated from time to time and meets the current needs of the Company; thus, stipulating special conditions (trigger events) for reviewing the policy is not a critical element of the Regulations. Since there were no other compelling reasons to revise the Regulations in 2023, its updating was postponed.
In 2023, the Company will resume the practice of assessing each Board member individually, as part of the Board’s overall performance assessment exercise.
The Board of Directors resolved to skip individual assessment, as 70% of its members are newcomers since July 2022. In this context, the Board identified no significant risks associated with not proceeding with an individual assessment. In 2024, the Company may resume the practice of assessing each Board member individually, as part of the Board’s overall performance assessment exercise.
after the Annual General Meeting of Shareholders and election of a new Board, staffing the Remuneration and Human Resources Committee exclusively with independent directors and seeking to elect an independent director as its Chairman;
engaging external experts in relevant topics;
in 2024, the Company resuming the practice of assessing each Board member individually, as part of the Board’s overall performance assessment exercise;
increasing the number of independent directors in the Strategy and Sustainable Development Committee and electing an independent director to chair it;
early notifying shareholders of the Board’s or Remuneration and Human Resources Committee’s assessment of professional qualifications, experience, and skills of Board candidates against the Company’s present and future needs.