UC RUSAL Sustainability report 2015


Corporate governance

Principles

UC RUSAL’s corporate governance system is based on the accepted principles of corporate governance, among which transparency and responsibility of the decisions adopted by management bodies, effective protection of shareholders’ rights and interaction with other stakeholders.

The Company continually improves its corporate governance system, implementing the best global practices whilst also ensuring that the management bodies activities comply with the laws, international standards and listing requirements.

The approaches and principles of organising the corporate governance system are regulated by the Charter of the Company, the Code of Corporate Governance, the Corporate Code of Ethics, and by internal policies and regulations that govern the activities of management and control bodies.

For more information on the corporate governance system, please see Annual Report 2015 (Corporate Governance Report).

Management Bodies G4-34

General Meeting of Shareholders

The General Meeting of Shareholders is the highest management body, giving shareholders the opportunity to participate in the management of the Company and to make decisions on all key matters relating to its activity.

Board of Directors

The Board of Directors is collectively responsible for the management of the Company’s activity. Key functions of this management body include approval and supervising development strategies, annual budgets, business plans, reporting to stakeholders, supervising all assessment and management activities, as well as the compliance with the principles of corporate governance. G4-42

Functions of the Chairman of the Board of Directors and the Chief Executive Officer (CEO) of UC RUSAL are split and independent from each other. The Chairman is responsible for effective operations of the Board of Directors and for compliance with the corporate governance procedures. The Chief Executive Officer is responsible for the everyday management of the Company and the execution of the decisions adopted by the Board of Directors. G4-39

President

The President is the managing body responsible for strategic and corporate development, external communications, supervising investments in GMK Norilsk Nickel, investor relations and developing initiatives on the domestic market.

Executive bodies and senior management

The Board of Directors has delegated day-to-day operations of the RUSAL Group to executive directors and the Management Board. The Management Board’s key functions include assisting the CEO and the senior management of the Company in operative management, as well as assisting the Board of Directors in development and implementation of the strategy and control over the results of activities. The CEO informs the decisions and actions of the Management Board to the Board of Directors at meetings.

Board of Directors

As of 31 December 2015 the Board of Directors of the Company consisted of 18 directors: three executive, nine non-executive and six independent non-executive directors. In accordance with the Listing Rules of the Stock Exchange of Hong Kong, the number of independent non-executive directors is more than one third part of all directors. G4-38

 

Composition of the Board of Directors

Presence of Independent Directors contributes to more effective activities of the Board of Directors.

The main committees such as the Audit Committee, the Corporate Governance and Nominations Committee, the Occupational Health, Safety and Environmental Committee andthe Investments Committee (Norilsk Nickel) are headed by independent directors. The Board of Directors considers that independent directors are duly qualified and experienced in industry and finance in order to perform their duties.

Due to the fact that the principle shareholders are the companies which compete or may compete with UC RUSAL, as well as have right to initiate nomination of their representatives to the Board of Directors, the Company conducts an analysis of independence of the members of the Board of Directors and senior management of the Group from the senior management of principle shareholders. This is in order to confirm that the Group can carry out its business activities independently and commercially impartially from the principle shareholders. G4-41

The Company applies the principles of equality and diversity in forming the Board of Directors. A wide range of experiences and opinions, regardless of gender, age and ethnicity is considered by the Company as a significant factor for the adoption of balanced solutions. Following the results of the reporting year the Board of Directors included 4 women and 15 men. The Corporate Governance and Nominations Committee conducts an analysis and assessment of practical implementation of the principle of diversity. G4-LA12 G4-40

Committees of the Board of Directors G4-34

The following committees are subordinated to the Board of Directors: the Audit Committee, the Corporate Governance and Nominations Committee, the Remunerations Committee, the Norilsk Nickel Committee, as well as the Marketing Committee and the Occupational Health, Safety and Environmental Committee.

The committees are responsible for preliminary consideration of the issues subject to the Board of Directors consideration and, in conformity with their competence, making the respective recommendations.

The tasks of the Occupational Health, Safety and Environmental Committee in particular include reviewing the Company policy in these areas, assessing compliance with regulatory requirements and the undertaken obligations, risk assessment, and overall Company performance in these areas.

The Corporate Governance and Nominations Committee’s functions include, apart from other issues, daily analysis of corporate governance system, development of recommendations and suggestions for its improvement, control over the compliance with the Corporate Code of Ethics, as well as providing recommendations to the Board of Directors, including related to appointment and dismissal of directors.

The Committee determines the criteria for assessment of candidates to the Board of Directors, which include independence (in case of election of independent non-executive directors), diversity, age, skills, experience and knowledge related to the business of the Company and the industry in which the Company operates, as well as a readiness to devote enough time and efforts to perform duties of a member of the Board of Directors.

The Audit Committee is responsible for submitting to the Board of Directors an independent assessment of effectiveness of the Company’s financial reporting, the internal control system and risk management, as well as the auditing processes.

Performance assessment and training

The Board of Directors carries out a self-assessment of its performance on an annual basis. The results are considered by the Corporate Governance and Nominations Committee. This allows to identify positive changes and areas for further improvement. G4-44

In accordance with the Code of Corporate Governance, all directors are obliged to improve their professional knowledge and develop skills on a continuous basis. Within the reporting period all directors have received the relevant information concerning the new rules and changes in the existing regulations and laws. G4-43

Remuneration Policy

The remuneration policy for members of the Board of Directors and the Management Board is determined by the Remunerations Committee. G4-51

The total remuneration (including fees, salary, performance-based premiums, contributions for benefits programs with the fixed payments (including pension payments), accommodation payments and other incentives and bonuses) received by directors of the Group within the reporting year which ended on 31 December 2015, was approximately USD 23 million; remuneration of senior executives – US 22 million.