Remuneration report

GRI 2‑19, 2‑20

Board of Directors remuneration

When deciding on the Board composition, the General Meeting of Shareholders approves the amount and the rules for determining and paying remuneration and compensation to the Board members. The Board remuneration shall be in line with current market conditions and shall be sufficient to enable the Company to attract, motivate and retain highly skilled professionals to help drive the future growth and performance.

At the same time, the Company avoids higher‑than‑necessary remuneration. The existing amounts and rules for determining and paying remuneration and compensation to the Board members were approved by the General Meeting of Shareholders on 24 March 2023.

Board of Directors’ remuneration, RUB
Full name of the member of the Board of Directors: 2021 2022 2023
Sven Ombudstvedt 26,561,520.00 12,171,879.00
James Rogers 22,134,600.00 10,143,232.50
Marcus Rhodes 22,134,600.00 10,143,232.50
Xavier Rolet 26,561,520.00 5,717,786.80
Irina Bokova 22,134,600.00 5,115,232.97
Andrey Sharonov 13,280,760.00 14,418,297.00 15,805,053.00
Ivan Rodionov 9,581,287.50 5,781,472.50
Victor Cherepov 12,746,475.00 42,146,808.00
Victor Ivanov 5,748,772.50 15,805,053.00
Vladimir Trukhachev 12,336,169.50
Total 132,807,600.00 85,786,195.77 91,874,556.00

Remuneration of the management

Remuneration principles

The Company’s remuneration policy for executive bodies and other key employees is determined by the Board of Directors based on the recommendations of the Remuneration and Human Resources Committee.

The Remuneration and Human Resources Committee conducts a detailed bi‑annual review of the incentive system, evaluating its effectiveness and, if necessary, making recommendations for its improvement.

The remuneration due to the Company’s senior executives consists of a monthly base salary plus additional compensation payable twice a year. Additional remuneration is linked to achieving the Company’s KPIs and completeness and quality of accomplishment of additional tasks, as determined by the Board of Directors and the CEO for the reporting period, as well as the Company’s achievement of the EBITDA target.

All KPIs are aligned with the Company’s strategic goals defined in its Strategy to 2025 and oriented towards their achievement.

The amount of additional remuneration ranges from 30% to 150% of the annual base salary and depends on the level of the position held and the functional area of the manager. The Remuneration and Human Resources Committee of the Board of Directors, during its annual evaluation of the incentive system, ensures an effective proportion of fixed and variable components of remuneration.

KPIs for each senior manager are set annually and take into account metrics related to operational efficiency and individual contribution to the corporate growth and strategic performance.

To assess the performance of the Company’s CEO, a number of indicators are used, which aim to improve the efficiency of investments and sales, control costs, and reduce employee injury rates for the Company and its contractors.

Values of the CEO KPIs in the range of base case / target / challenge, as well as their actual values at the end of the reporting period are approved by the Chairman of the Board of Directors. Taken together, these indicators contribute to the achievement of the Company’s strategic goals and serve the interests of shareholders both in terms of the Company’s development and in terms of minimising the risks arising from incentivising excessively risky management decisions.

KPIs of the CEO and N‑1 level managers, including sustainable development indicators, are cascaded down and decomposed into KPI scorecards of lower‑level management. The indicators themselves and their weights are modified depending on the nature of a particular manager’s focus area with due regard to their strategic fit. Specific KPI wordings and their weights are established by the Company’s KPI Committee, taking into account the opinion of the KPI holder and their immediate supervisor.

KPIs of N‑1 level managers include indicators that help benchmark the Company’s performance against industry peers:

Change in spread between average EV/EBITDA of public phosphate fertilizer manufacturers and PhosAgro’s EV/EBITDA.

E V/EBITDA reflects investors’ estimate of the Company’s fair market value and its investment case. The goal is to increase the spread;

Excess of PhosAgro’s ROIC – WACC spread over the average ROIC – WACC spread of public peers.

The indicator reflects how much higher the Company’s return on investment is than the cost of capital (equity and debt), and how efficient the Company’s investments are compared to other companies in the industry. The goal is to increase the indicator.

Number of officers holding KPIs by year:

As can be seen from the statistics, PhosAgro Group is focused on sustainable development, and the KPI framework includes the following indicators:

reduction of unit emissions to the atmosphere;

share of waste recycling, neutralisation, and processing;

implementation of key social projects;

% of completion of the programme to improve social and working conditions;

zero accidents;

zero occupational injuries among the Company and contractor employees.

When determining the amount of additional annual remuneration for the top management, we look at the achievement of the EBITDA target as an integral indicator of the Company’s performance. The managers’ performance is adjusted by the percentage of delivering on the EBITDA target. The Company does not provide for any compensation payable to managers in case of their dismissal or voluntary resignation or the Company’s takeover or the change of its owner (golden parachutes). Neither does it use options, pre‑determined unconditional bonuses or a clawback mechanism.

Remuneration of members of executive bodies

The amount of remuneration and additional compensation due to PhosAgro’s CEO is regulated by a contract between them and the Company, which is signed by the Chairman of the Board of Directors. The total remuneration reflects the CEO’s qualifications and their personal contribution to the Company’s financial results.

No loans were extended to members of the Board of Directors or the Management Board as at 31 December 2023.

External auditor’s remuneration

PhosAgro engaged independent auditor JSC Technologies of Trust – Audit to audit its IFRS consolidated financial statements for 2022 and 2023. The actual remuneration paid to the auditor for the audit of the IFRS consolidated financial statements of PJSC PhosAgro and the RAS accounting statements of the entities controlled by PJSC PhosAgro amounted to RUB 24.9 mln for 2023 (vs RUB 22.4 mlnIn 2023, the Group changed its approach to disclosing the external auditor’s remuneration: remuneration paid to the auditor includes remuneration for the audit of the IFRS consolidated financial statements of PJSC PhosAgro and the RAS accounting statements of the entities controlled by PJSC PhosAgro. The remuneration for services other than auditing accounting statements includes remuneration for the review of the IFRS consolidated financial statements of PJSC PhosAgro and other services that are not related to audit and are provided by the external auditor to PJSC PhosAgro and the entities controlled by it. Comparable data have been restated to align indicators of the previous reporting period with those of the current reporting period. for 2022), net of VAT and overhead costs.

In addition to that, in 2023 JSC Technologies of Trust – Audit and its affiliated companies performed review of the IFRS consolidated financial statements of PJSC PhosAgro and the entities controlled by it and provided other services for the total amount of RUB 21.4 mln (vs RUB 21.4 mln in 2022), net of VAT. All additional services provided by the external auditor were duly approved by the Chairman of the Audit Committee of PhosAgro’s Board of Directors in line with the applicable independence requirements.

The actual remuneration of JSC Unicon to audit PhosAgro’s RAS financial statements for 2023 was RUB 752,100 (vs RUB 683,700 in 2022), net of VAT. Additionally, in 2023 JSC Unicon provided tax consulting services to PJSC PhosAgro and the entities controlled by it for the total amount of RUB 200,000 net of VAT.