BOARD RESPONSIBILITIES AND ACTIVITIES

The Board and management of EVRAZ aim to pursue objectives in the best interests of the Group, its shareholders and other stakeholders, and particularly to create long-term value for shareholders.

In 2021, despite the significant operational impact caused by the COVID-19 pandemic, disruption to the Board’s activities were minimal as meetings were moved to video format with little loss of efficiency.

The EVRAZ Board is responsible for the following key aspects of governance and performance:

• Financial and operational performance.
• Strategic direction.
• Major acquisitions and disposals.
• Overall risk management.
• Capital expenditure and operational budgeting.
• Business planning.
• Approval of internal regulations and policies.

Generation and preservation of value

EVRAZ’ business model and strategy are presented of the Strategic Report, which describe the basis upon which the Company generates and preserves value over the long term. The Board periodically reviews this model.

In early 2021, the Board announced that it was considering the strategic merits of and possible structures for the demerger of its metallurgical coal business in order to generate value for shareholders. The Board subsequently conducted a comprehensive review of the rationale and feasibility of the demerger and believes that the demerger will benefit stakeholders of the separate businesses in the following areas: increased transparency of sustainability performance and goals, tailored capital allocation, an independent growth strategy for Raspadskaya and differentiated value proposition. For more details, see the Shareholder Circular at the following link and in Chairman’s introduction, CEO letter.

The Board and culture

The Board continues to ensure that the business’s culture is aligned with the Group’s purpose and values as detailed in the Strategic Report. The key feedback tool it uses to monitor progress in this area is the annual employee survey that EVRAZ carries out throughout the business, the details of which are described in the Strategic Report. The Board reviews a summary of the annual survey and monitors the implementation of any necessary actions that the management undertakes.

The Board views corporate social responsibility as an integral part of the Group’s business and strives to address and monitor all relevant matters in this area. The EVRAZ Code of Conduct and EVRAZ Supplier Code of Conduct establishes cultural expectations for the activities of all directors, executives, employees, contractors, suppliers and community members in relation to the Group’s business. It also encourages an environment of ethics and responsibility for the benefit of the Company’s stakeholders. The Group publishes a comprehensive Sustainability Report.

The Board also discussed the following topics during 2021:

In addition, the Board agreed to pay: an interim dividend of US$0.30 per ordinary share, totalling US$437 million, on 7 April 2021; an interim dividend of US$0.20 per share, totalling US$292 million, on 25 June 2021; an interim dividend of US$0.55 per share, totalling US$802 million, on 10 September 2021, and an interim dividend of US$0.20 per share, totalling US$292 million, on 14 January 2022. The level of distributable reserves within the balance sheet was considered at each distribution and was found to be sufficient to enable the dividend to be paid. The dividends paid were in line with the dividend policy previously agreed by the Board, which also considered the impact of COVID-19 on the Group’s going concern and cash flow position.

In keeping with the requirements of the relationship agreements, put in place as required by the FCA Listing rules, between the Company and its major shareholders, the Company’s independent non-executive directors have conducted an annual review to consider the continued good standing of the relationship agreements between major shareholders and are satisfied that the terms of the relationship agreements are being fully observed by all parties. In accordance with LR9.8.4R (14), it has been confirmed that the Company has complied with the independence provisions of the relationship agreements.

As far as the Company is aware the major shareholders, Roman AbramovichOn 16 February 2022 Roman Abramovich became a direct major shareholder of the Company due to the transfer of the Company’s shares from Greenlease 116 International Holdings Ltd to his personal account., Abiglaze Ltd and Crosland Global Limited (or any of their associates) have complied with the independence provisions of the relationship agreements. In addition, as far as the Company is aware, Roman Abramovich, Abiglaze Ltd and Crosland Global Limited have complied with the procurement obligations in the relationship agreements.

Principal decisions

Chairman and chief executive

The Board determines the division of responsibilities between the chairman and the chief executive officer (CEO). This division of duties is documented in a separate document approved by the Board.

The chairman’s principal responsibility is the effective management of the Board, ensuring that the Board as a whole plays a full and constructive part in developing and determining the Group’s strategy and overall commercial objectives. The Board is chaired by Alexander Abramov.

The CEO is responsible for leading the Group’s operating performance, as well as for the day-to-day management of the Company and its subsidiaries. During the year, Alexander Frolov stepped down as CEO and the Board appointed Aleksey Ivanov as his successor.

The CEO is supported by the executive team.

In addition, the Board appoints one independent non-executive director to serve as the senior independent director, whose duties are detailed in the documents that describe the roles of the chairman and CEO.

Board meetings and composition

EVRAZ plc held ten scheduled Board meetings during 2021. In 2022, up to the date of this report’s publication, two Board meetings were held. Two unscheduled meetings were held in 2021 to: approve the publication of a shareholder circular in relation to the demerger of Raspadskaya from the EVRAZ Group of companies; and to consider the renewal of certain supply contracts for iron concentrate and pellets.

Due to travel restrictions put in place amid the COVID-19 pandemic, no meetings were held in person. All were held by video conference call.

The chief financial officer, the senior vice president for commerce and business development (prior to his appointment as chief executive officer) and the vice president for corporate strategy and performance management attended all Board meetings. Other members of senior management attended meetings by invitation to deliver presentations on the status of projects and performance of business units.

The table on the next page indicates the attendance of each current director of the EVRAZ plc Board and Board committee meetings in 2021.

As of 31 December 2021, the Board comprised the chairman and ten non-executive directors, including a senior independent director. With effect from 1 February 2022, Aleksey Ivanov, the CEO, joined the board as an executive director, and Maria Gordon joined as an independent non-executive director. The appointment of the CEO as an executive director means that the Company continues to operate in accordance with principle G of the Code.

Ms Olga Pokrovskaya, a former non-executive director, is invited to attend Board meetings in an advisory capacity and to attend the Audit Committee meetings as an observer. She is also a member of the Sustainability Committee.

During the year, the following changes in Board membership occurred: Stephen Odell, James Rutherford and Sandra Stash were appointed as directors on 15 June 2021. Ms Laurie Argo stepped down as a director on 15 June 2021. On 1 September 2021, Mr Alexander Frolov ceased to be the Group’s CEO, but remained as a non-executive director. As noted above Mr Aleksey Ivanov and Ms Maria Gordon joined the Board on 1 February 2022. In addition, the Company has announced that both Mr Karl Gruber and Sir Michael Peat are expected to step down as directors on 31 March 2022.

The Board considers that the eight non-executive directors (Karl Gruber, Maria Gordon, Deborah Gudgeon, Alexander Izosimov, Stephen Odell, Sir Michael Peat, James Rutherford and Sandra Stash) are independent in character and judgement, and free from any business or other relationship that could materially interfere with the exercise of their independent judgement, in compliance with the UK Corporate Governance Code. Although both Sir Michael Peat and Karl Gruber have served as directors in excess of the nine years recommended by the Code as a guide to independence, the Board asked them to continue in their positions during the demerger of Raspadskaya from the EVRAZ Group of companies to provide continuity during the transition. The Board considered that under the circumstances it did not believe that their tenure had an impact on their independence and continued to consider them as independent non-executive directors. The Company has now announced their expected retirement date.

Independent non-executive directors comprise the majority on all committees (excluding the Sustainability Committee) and chair all Board committees.

Boardroom diversity

EVRAZ recognises the importance of diversity both at the Board level and organisation-wide.

During the year under review, the Board adopted a new diversity policy, which notes that the Group remains committed to increasing diversity throughout its global operations and takes diversity into account during each recruitment and appointment process, working to attract outstanding candidates with diverse backgrounds, skills, ideas and cultures. EVRAZ sees diversity as a crucial business driver.

The Board considers that this extends to the composition of the Board and the processes associated with Board appointments.

The Board is aware of the guidance issued by the Hampton Alexander review (predecessor of the FTSE Women Leaders Review) for FTSE 350 Companies with regard to female representation on boards exceeding 33%, and the Parker Review Guidance on ensuring that each board contains at least one person from an ethnic minority background. It will take this into account during every recruitment process.

The Board will ensure that female representation on the Board never drops below two members.

The Board is committed to meeting best practice standards in gender and ethnic diversity. While the nature of the steel and mining industries makes this more challenging, it does not diminish the Board’s commitment.

It will, of course, balance this with appointing directors who can best serve the Company’s and shareholders’ interests by providing excellent governance and the appropriate challenges. Consequently, all appointments will be made on the basis of merit.

As stated in the Sustainability section, EVRAZ sees diversity as a crucial business driver and strives to ensure that all employees’ rights receive equal protection, regardless of race, nationality, religious belief, gender or sexual orientation. People with disabilities are given full consideration both during the recruitment process and once employed to ensure that their unique aptitudes and abilities are taken into account.

The Company believes that the Board’s composition provides an appropriate balance of skills, knowledge and experience. The Board members comprise a number of different nationalities with a wide range of skills, capabilities and experience from a variety of business backgrounds. Biographies of the Board members are provided in the Board of Directors section.

Board expertise

The Board has determined that, as a whole, it has the appropriate skills and experience necessary to discharge its functions.

All non-executive directors have the experience required to contribute meaningfully to the Board’s deliberations and resolutions. Non-executive directors assist the Board by constructively challenging and helping to develop strategy proposals.

The recruitment of new independent non-executive directors in 2021 and 2022 has strengthened the Board’s expertise and widened its skills base. The Nominations Committee has commenced a process to identify suitable candidates for the role of independent non-executive director to replace the director who will be required to stand down at the 2022 AGM, having completed his term of nine years.

Introduction and professional development

The chairman, supported by the Nominations Committee, is responsible for ensuring that there is a properly constructed and timely induction for new directors upon joining the Board. Following the appointment of three new independent non-executive directors during the year and a further one in early 2022, a revised programme was drawn up. The programme focused on ensuring that all newly appointed directors:

• Worked with an existing Board director, who acted as a mentor.
• Obtained a full understanding from management of the Group’s strategy, its key operations, business development plan as well as investment projects that are underway or have been proposed.
• Reviewed the HSE processes in place and considered developments planned in that area.
• Were briefed on EVRAZ’s HR structure and the Group’s employees, its digitalisation programme and IT development, and the EVRAZ business system.
• Were advised of existing Board processes, along with holding meetings with key Board advisers to ensure appropriate knowledge of the regulatory environment in place.

The programme was fully implemented for all four new appointees, although the level of site visits and interaction with staff was severely curtailed due to COVID-19 restrictions.

Directors have full access to a regular supply of financial, operational, strategic and regulatory information to help them discharge their responsibilities.

Performance evaluation

An external annual Board evaluation was conducted by Lintstock in 2020. In 2021, an internal review was carried out by the EVRAZ company secretary. The review was carried out at the initiative and with the participation of the Company’s Nominations Committee. Questionnaires were distributed to all Board directors for their response and comment.

The results were discussed at three levels: (i) among the members of the Nominations Committee; (ii) between Alexander Izosimov (as chairman of the Nominations Committee) and Alexander Abramov (as chairman of the Board); and (iii) among the members of the Board as a whole.

The Board’s performance was deemed to be satisfactory. The outcome of the 2021 Board evaluation called for:

• A review of board processes with regard to major projects.
• Further investor analysis to understand shareholder views, along with increased engagement with shareholders on governance concerns.
• Deep dives into customer end-use of products, and the underlying culture of the business.
• Further consideration of risk appetite focussing on operational risk issues.
• Enhanced review of the ESG and climate risk agenda by the Sustainability Committee and consideration of appropriate ESG metrics by the Remuneration Committee for incentives.
• Review by HR and the Remuneration Committee of remuneration structures to align them with value creation.

The Company undertakes regular performance evaluations of the Board in line with the requirements of the UK Corporate Governance Code.

Board committees

The following principal committees support the Board in its work: the Audit Committee, the Remuneration Committee, the Nominations Committee and the Sustainability Committee. Each committee has written terms of reference that have been approved by the Board and summarise its role and responsibilities. The committees review their respective terms of reference each year and submit any recommended changes to the Board for approval. All terms of reference for the committees are available on the Group’s website.

The Audit Committee consists of five non-executive directors, all of whom are independent, which complies with the Code. The Board considers that, as a whole, the committee has competence relevant to the industry sector in which the Group operates. Specifically, Deborah Gudgeon and James Rutherford have relevant recent financial experience.