rus
OMK Annual Report 2020
4

Corporate
governance

4.1
Approach to corporate governance

In 2020, OMK JSC, which was delegated the functions of the sole executive body, managed the group’s main companies (JSC VSW , JSC Trubodetal, JSC APP , JSC CSW , JSC BVP , LL C Belenergomash-BZEM , JSC VRK-3). The sole shareholder of the main companies of OMK (JSC Trubodetal, JSC AT Z, JSC BA Z, JSC CSW , JSC OMK) is the Russian company JSC VMZ.

OMK’s corporate governance structure is unusual as the sole beneficiary of the group is fully involved in the management process. This means that there is no official dividend policy.

The company discloses detailed information on the ownership structure of the companies as part of the disclosure process by one company of the OMK Group, which is a PJSC.

The specified information is also provided to all counterparties upon request under the KYC procedure. OMK’s business entities comprise no legal entities registered offshore (as defined by the Ministry of Finance of the Russian Federation).

4.1
Approach to corporate governance

OMK JSC is a non-public company. The corporate governance system is built on the basic principles of the Corporate Governance Code, including:

  • The shareholder is provided with reliable and effective methods for registering rights to stocks and shares, and the free and unhindered disposal of the stocks/shares owned by them.
  • The corporate secretary liaises with the shareholder on a daily basis, and coordinates the company’s actions to protect the rights and interests of the shareholder.
  • OMK’s activities are characterized by a fairly high degree of transparency for the shareholder and stakeholders.
  • Remuneration is sufficient to attract, motivate, and retain individuals with the skills and qualifications the company requires.
  • The system of remuneration for members of executive bodies and other key managers of the company is performance related, based on both individual and company results.
  • To provide a systematic independent assessment of the reliability and efficiency of the risk management and internal control system, and corporate governance practices, the company conducts an internal audit.
  • OMK discloses complete, up-to-date and reliable information about its activities so that the shareholder and counterparties can make informed decisions.
  • OMK’s companies provide information and documents at the request of the shareholder in accordance with the principles of fairness and ease of use.
  • Actions that significantly affect or may affect the structure of the equity and the financial state of the company and, accordingly, the position of the shareholder, are significant corporate actions that are carried out on fair terms that ensure the observance of the rights and interests of the shareholder and stakeholders.
  • The company provides a procedure for the performance of significant corporate actions that enables the shareholder to receive full information on such actions in a timely manner, provides them with the opportunity to have an influence on such actions, and guarantees the observance and adequate protection of their rights when taking such actions.
4.2
Corporate governance structure

Almost every company within the group has just one shareholder/ member. For JSC Trubodetal, JSC CSW , JSC APP, LLC Belenergomash-BZEM, and a number of others, the only shareholder/participant is JSC VSW . In this regard, provisions on the general meeting of shareholders or the general meeting of participants are not required.

The above companies, as well as JSC VRK-3, have transferred the powers of the sole executive body under the contract to the managing organization JSC United Metallurgical Company, whose sole shareholder is JSC VSW .

To effectively manage the companies, in 2020 collegial bodies were incorporated into OMK, consisting of the Board of Directors and Management Board.

In February 2021, the company underwent structural changes that are a logical continuation of OMK’s sectoral business model. These changes are designed to improve the quality of management, enhance efficiency, and build a customer-focused company.

In accordance with the company’s updated charter, the corporate governance bodies of JSC OMK are the sole shareholder, the Board of Directors, and the CEO (sole executive body).

The competences of the disbanded Management Board (collegial executive body) are distributed between the Board of Directors and the CEO.

The operating procedures and remuneration of the members of the Board of Directors are determined by the regulations on the Board of Directors. The Board of Directors conducts assessments of its own performance. Decisions adopted at meetings of the Board of Directors are communicated to stakeholders at their request or by the force of law.

4.3
Board of Directors
Chair of the Board of Directors
Anatoly Sedykh

Anatoly Sedykh has been Chair of the Board of Directors since July 2017.

From January 2013 to July 2017, Anatoly Sedykh was Chair of the OMK Management Board.

He has held leadership positions in the company since 1999. Initially, he headed Vyksa Steel Works and led the company out of crisis. Subsequently, he was appointed OMK CEO and Chair of the Board of Directors of the Vyksa plant.

In 2002, he was elected Chair of the Board of Directors of VSW , and was OMK President between 2003 and 2006.

Anatoly Sedykh was born in 1964 and graduated from the Moscow Institute of Steel and Alloys (Ph.D. in Economics).

Chief Executive Officer
Sergey Toropov

Sergey Toropov was appointed CEO of OMK in February 2021.

He joined OMK as Managing Director of the Car Repair Company in January 2020.

Career path before OMK: July 2018 to January 2020 – Managing Director for Paper Production at Segezha Pulp and Paper Mill (Segezha Group/AFK-Sistema) April 2017 to June 2018 – COO at Zagorsk Pipe Plant 2004 to 2016 – Executive positions at Severstal, including CEO of the Severstal Russian Steel Division in 2013–2016. He began his career as a mill operator.

Born in 1972. Graduated from St Petersburg State Technical University with a degree in metal forming and organization management.

President
Natalya Eremina

Natalya Eremina was appointed President of OMK in February 2021. Prior to that, she served as Chair of the Management Board from July 2017.

Natalya Eremina joined OMK as the Head of the Controlling Department in 2001. In 2004, she was appointed Director for Corporate Finance and Investor Relations. April 2006 - January 2016 - Vice President of OMK. From February 2016 to July 2017 - Deputy Chair of the Management Board, from July 2017 to February 2021. - Chair of the Board.

She was appointed OMK Vice President in 2006. She previously worked at Metallinvestbank as Head of the Interbank Credit Department, Head of the Lending Division, and Deputy Chair of the Management Board.

She was born in 1971 and graduated from the Department of Mechanics and Mathematics at Lomonosov Moscow State University.

4.3
Board of Directors
Head of the Asset Development and Investment Department
Dmirty Chernyshev

Dmitry Chernyshev was appointed Head of the Asset Development and Investment Department in February 2016.

He was appointed Vice President and Director for Research and Strategy in November 2007.

He has worked for the company since 2002, as Project Manager and First Deputy CEO of APP and Director for Strategic Development of VSW .

From 1996 to 2001, he held different positions in the business development divisions of various Russian industrial companies.

He was born in 1974 and graduated from Lomonosov Moscow State University and the Academy of National Economy under the Government of the Russian Federation with a degree in Strategic Management.

* Until May 2021 – Efficiency Management Director
Chief of Staff of the Board of Directors*
Petr Trushin

Petr Trushin joined the OMK Board of Directors in July 2019. Petr joined the company in 2008 as the Head of Business Consulting. He has also held management positions in company divisions that conduct internal audits and improve the efficiency of business processes.

Trushin was appointed Efficiency Management Director and became a member of the OMK Board in February 2017. He previously headed OMK’s Target Setting and Evaluation Department. From February 2017 to June 2019 he was a member of the OMK Management Board.

Prior to joining OMK, he worked at Siberian Coal Energy Company (SUE K) and PwC.

Petr Trushin was born in 1982. He graduated from the Higher School of Economics in Moscow with a degree in Management.

Lawyer at the Moscow Lawyers Board
Anastasia Poletaeva

From 1998 to 2007, Anastasia Poletaeva worked at OMK as a Lawyer, Head of Department, Chief Legal Officer, and Corporate Governance Director.

She served on various boards of directors of OMK companies, including Chusovoy Metallurgical Works, Almetyevsk Pipe Plant, Vyksa Steel Works, and Trubodetal.

Member of the Independent Directors Association.

From July 2007 – Lawyer at Asnis and Partners legal office.

Anastasia Poletaeva graduated from the International Law Institute under the Ministry of Justice of the Russian Federation and completed a Master's program at Moscow State University’s Faculty of Law.

Anastasia Poletaeva was born in 1972.

4.4
Compliance system

OMK strives to ensure that the company’s activities comply with the requirements of current legislation, regulatory requirements, and the principles of ethical business conduct.

Functional support for the system is provided by the compliance group, which includes the Chief Compliance Manager and the compliance officers for the various areas of activity. The compliance group’s activities are governed by the Regulation on the Compliance Group, adopted in 2019, and the policies for different areas of activity.

Participants combine their compliance work with their main job. Employees can familiarize themselves with the composition of the compliance group and keep track of requirements on the corporate portal.

OMK compliance principles

1.An integrated approach to identifying compliance requirements and assessing risks. We constantly assess the company’s activities for compliance with current legislation, statutory, regulatory, and other external requirements.

Compliance officers are responsible for promptly identifying requirements in the area entrusted to them and informing colleagues about the

risks associated with the implementation of procedures. Company employees are required to notify the group about compliance requirements.

2.Involvement of company employees in creating the compliance system. All company employees are involved in creating the compliance system, monitoring compliance with requirements, and preventing and eliminating violations.

3.All employees are guided by the established requirements of the compliance system. It is the personal responsibility of every OMK employee to implement measures, rules, and procedures to minimize compliance risks.

4.Provision of unimpeded, prompt, and unrestricted access to information. At OMK, members of the compliance group are provided with any information that is necessary to perform their work, subject to compliance with the required level of information protection.

Priority areas for the development of the compliance system at OMK:

  • Competition compliance
  • Tax compliance
  • Anti-corruption compliance and compliance with ethical norms
  • Compliance in the area of trade and economic sanctions
  • Industry regulatory compliance, which includes:
  • Compliance with the implementation of government support measures
  • Personal data protection compliance
  • Environmental safety compliance
  • Combating money laundering and the financing of terrorism
4.4
Compliance system

Competition compliance

OMK’s anti-monopoly policy objectives:

  • To ensure that the company's activities comply with the requirements of the anti-monopoly legislation of the Russian Federation or other jurisdictions where it operates and plans to operate;
  • To ensure a uniform understanding among employees and executives of the measures, rules, and procedures aimed at complying with the requirements of anti-monopoly legislation;
  • To prevent and minimize the risks of violations of anti-monopoly legislation by OMK and its employees.

The main rules established by the anti-monopoly policy relate to the following aspects of OMK's activities:

  • Market power
  • Liaison with competitors
  • Participation in business associations
  • Unfair competition
  • Liaison with contractors
  • Liaison with government authorities
  • Participation in public procurement.

Anti-corruption compliance

OMK implements anti-corruption compliance in accordance with the OMK policy adopted in 2018. The company monitors areas such as conflicts of interest, corporate gifts, charitable assistance, agency contracts, and anti-corruption awareness among employees. All employees (except workers) take an online training course on anti-corruption policy, the compliance officer regularly sends out emails with a reminder of corporate anti-corruption rules, and information is provided on boards in office and industrial premises.

Corruption offenses can be reported through the OMK hotline. During the reporting period, OMK’s anti-corruption practices were introduced in new business units. To reduce the risk of a conflict of interest, the management decided to provide employees with the opportunity to recuse themselves when making certain types of decisions (for example, when signing acceptance certificates). This is implemented at the level of the respective IT systems.

Personal data compliance

OMK complies with personal data security requirements:

  • The required local regulations have been developed and approved;
  • Employees who are responsible for ensuring the security of personal data have been selected;
  • Information security documents have been drawn up.

Training courses have been created:

  • For employees who have access to personal data – on ensuring the security of personal data during processing and the procedure for interacting with owners of personal data;
  • For all employees – on the general principles of processing personal data;
  • Face-to-face training for employees involved in the processing of personal data was conducted in Moscow and Vyksa. The rest of the staff were assigned mandatory e-courses.

We developed a checklist and conducted a compliance audit on the fulfillment of personal data security requirements in the company’s Moscow office.