Annual
Report 2015

key investment projects ru

Board of Directors

The Board of Directors is the collective management body in charge of the general management of the Company’s activities, with the exception of matters that fall within the scope of the General Meeting of Shareholders, as specified in the Federal Law and the Company’s Charter.

Meetings of the Board of Directors (in person or in absentia) are held as and when required, but at least once every six weeks. Meetings are convened by the Chairman of the Board of Directors at the latter’s discretion or at the request of a member of the Board of Directors, Audit Commission, auditor, Management Board, President, or shareholders holding at least 10% of the Company’s ordinary shares. Such a request shall be made in writing and specify the reasons for convening the meeting. The procedure for convening and holding the meetings of the Board of Directors is specified in the Company’s internal document, Regulation on the Board of Directors.

Members of the Board of Directors are elected at the Annual or Extraordinary General Meeting of Shareholders according to the procedure provided for in the Federal Law for the period until the next Annual Meeting.

In 2015, the composition of the Board of Directors was changed on 13 May by resolution of the General Meeting of Shareholders. As at the end of 2015, the Board of Directors consisted of 13 members including five independent directors, two newly elected directors and one executive director.

A meeting of the Board of Directors is deemed duly constituted (quorate) if at least one half of the elected members of the Board are present. The Board of Directors’ decisions are made by a majority vote of the members of the Board of Directors who participate in the meeting. According to the Charter, certain matters require a bigger quorum and larger number of votes for a decision to be adopted.

The scope of powers of the Board of Directors includes:

  • deciding on the Company’s core business areas, concepts and strategies, implementation of these strategies, approving and amending corporate plans and budgets;
  • making proposals for the consideration of the shareholders’ meeting on the Company’s restructuring and increasing (decreasing) the Company’s authorised capital;
  • recommendations on dividends per share and the related payment procedure, and approval of the Company’s dividend policy;
  • other matters as provided for by the Federal Law On Joint Stock Companies and the Company’s Charter.

Chairman of the Board of Directors and independent directors

Chairman of the Board of Directors

The Chairman of the Board of Directors is elected among the members of the Board of Directors by themselves by a majority vote from the total number of members of the Company’s Board of Directors. The Board of Directors is entitled to re-elect the Chairman of the Board of Directors at any time by a majority vote from the total number of members of the Company’s Board of Directors. When the Chairman of the Board of Directors is unavailable, the respective responsibilities are assumed by member of the Board of Directors appointed by the Board of Directors.

As set forth in the Regulation on the Board of Directors (approved by the Annual General Meeting of Shareholders of MMC Norilsk Nickel held on 30 June 2009), the key responsibilities of the Chairman of the Board of Directors are as follows:

  • organising the work of the Board of Directors, ensuring efficient organisation of activities of the Board of Directors and its committees,
  • ensuring interaction and keeping contacts with other bodies and officers of the Company,
  • convening meetings of the Board of Directors and arranging for timely and due notification of members of the Board of Directors about the upcoming Board of Directors meeting,
  • chairing the Board of Directors meetings or organising absentee voting, ensuring that the procedure for holding the Board of Directors’ meetings is observed,
  • ensuring the opportunity for members of the Board of Directors to express their point of view on the discussed items, ensuring a constructive and benevolent atmosphere at the meeting,
  • drafting the agenda of the Board of Directors’ meeting, making arrangements for minutes to be taken at meetings of the Board of Directors and signing these minutes,
  • organising the preparation of the report of the Board of Directors for the year to be included in the Company’s Annual Report.

Since March 2013, the Board of Directors has been chaired by the independent and non-executive director Gareth Peter Penny. During the reporting year, the Board of Directors chaired by Gareth Peter Penny made some major decisions and took steps enabling the Company to enhance its business competitiveness currently and going forward. Simultaneous participation of the Chairman of the Board of Directors in other companies’ boards of directors did not affect his performance in respect of the Board of Directors of MMC Norilsk Nickel, helping it to remain Russia’s most profitable and financially sustainable mining company.

Independent directors

In accordance with global corporate governance practices and the recommendations of the Corporate Governance Code, no less than one third of the Board of Directors should consist of independent directors. As at 31 December 2015, the Board of Directors of MMC Norilsk Nickel consisted of 13 members, including five independent directors.

Independent members of the Board of Directors meet the independence criteria recommended by the Corporate Governance Code and requirements established by the current version of the Listing Rules of MICEX Stock Exchange, which state that an independent director is one who is not related to:

  • competitors,
  • major counterparties,
  • major shareholders in the Company,
  • federal (Russian Federation or its constituent entities) and regional governments or municipal entities.

Directors’ liability insurance

Since 2003, the Company has had its directors’ liability insured. The insurance aims to cover potential damage arising from unintended erroneous actions of the Company’s directors in their management activities.

Pursuant to the insurance agreement, insurance premium shall not exceed USD 1 m. The terms and conditions of the agreement as well as the amount of insurance cover are consistent with the world’s best practices for such risks.

Activities of the Board of Directors in 2015

2015 was another difficult year when Norilsk Nickel’s growth strategy and management framework were tested in an environment of slow and uneven global economic recovery as well as a generally complicated international situation. But even in these challenging circumstances, the Company kept demonstrating exceptional resilience delivering excellent operating and financial results. Led by a top-caliber management team with extensive international experience, the Company is committed to the best practices. The Board of Directors of MMC Norilsk Nickel declares that the Company adheres to the highest standards of corporate governance and complies with the most significant (key) principles of the Corporate Governance Code, which are a valuable tool for improving management effectiveness to ensure long-term and sustainable growth of the Company.

2015, the Board of Directors of MMC Norilsk Nickel held 47 meetings: 9 meetings in person, 38 meetings in absentia.

In the reporting year, the composition of the Board of Directors was changed once by resolution of the Annual General Meeting of Shareholders held on 13 May 2015.

Throughout the year, the Board of Directors made serious decisions aimed at strengthening the financial discipline and launched initiatives focused on the Company’s financial stability. In order to protect the Company’s financial interests, ensure effective operation of its management and control bodies and safeguard shareholder rights, a number of amendments were made to the Company’s by-laws. Particularly, the Board of Directors updated the Company’s growth strategy presented to the investment community in the reporting year and approved the management’s key approaches to functional strategies. During the reporting year, the Board of Directors made decisions and took measures on a quarterly basis to ensure that the Company adheres to the highest standards in health, safety and environment across all geographies. Strictly adhering to the highest standards of corporate governance and social responsibility, the Company plans to continue enhancing focus on these areas to maintain and strengthen its leadership reaffirming its reputation of a business capable of achieving outstanding results regardless of economic cycles.

Information about the Board of Directors and participation in meetings
The Board of Directors Independent director Non-executive director Strategy Committee Budget Committee Audit Committee Corporate Governance, Nomination and Remuneration Committee Participation in meetings: in person / in absentia
Current members of the Board of Directors
Gareth Peter Penny — Chairman of the Board of Directors + + + 9/38
Gerhardus Prinsloo + + + + + 9/38
Robert Edwards + + + + 9/38
Sergey Bratukhin + + + + + 9/38
Andrey KorobovLeft the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd). + + 6/25
Andrey Bougrov 9/38
Marianna ZakharovaLeft the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd) + + + 9/38
Sergey Barbashev + + + 9/38
Alexey Bashkirov + + + + 9/38
Maksim Sokov + + 9/38
Vladislav Solovyov + + 9/38
Stalbek Mishakov + + + 9/38
Rushan BogaudinovElected to the Board of Directors formed by the Annual General Meeting of Shareholders held on 13 May 2015. + 6/25
Members of the Board of Directors who stepped down on 13 May 2015
Yegor IvanovNot elected to the Board of Directors formed by the Annual General Meeting of Shareholders held on 13 May 2015. + + 3/13
Sergey SkvortsovNot elected to the Board of Directors formed by the Annual General Meeting of Shareholders held on 13 May 2015. + + 3/13
Gareth Peter Herbert Penny

Gareth Peter Herbert Penny

  • Chairman of the Board of Directors since March 2013
  • Independent non-executive director
  • Member of the Strategy Committee
Born in: 1962 Nationality: UK Education: Diocesan College (Bishop); Eton College (Cape Town); Oxford, Rhodes Scholar, Master of Arts in Philosophy, Politics and Economics Track record: 2007—present — Director at Julius Bär Holding Ltd 2011–2012 — CEO at AMG Mining 2012—present — Executive Chairman at New World Resources Plc 2012—present — Executive Director at New World Resources Plc 2012—present — member of the Board of Directors at OKD Share in the Company’s authorised capital: 0% Share in the common stock: 0%

Corporate Secretary

According to the Company’s Charter, the Corporate Secretary is elected by the Board of Directors for a period of three years. The Board of Directors may terminate the powers of the Corporate Secretary prior to their expiration.

The Corporate Secretary is responsible for:

  • monitoring the compliance of the Company’s bodies and officers with the procedures that ensure the enforcement of rights and interests of the Company’s shareholders,
  • supervising the preparation and running of the General Meeting of Shareholders as provided for by the applicable Russian law, the Company’s Charter and by-laws,
  • assisting directors in carrying out their duties and responsibilities,
  • safekeeping the Company’s constituent documents, minutes of the General Meeting of Shareholders and BD meetings, ballot sheets, and proxies (copies thereof) for the General Meeting of Shareholders,
  • supervising the disclosure (presentation) of data about the Company to the shareholders as per their request and to the Bank of Russia and other government authorities,
  • managing the operations of the Secretariat,
  • handling communication with the Company’s shareholders on their registration ahead of the General Meeting of Shareholders,
  • certifying extracts from resolutions of the Company’s governance bodies and copies of documents.

Since December 2011, the position of the Corporate Secretary has been held by Pavel Platov.

Pavel Platov

Pavel Platov

  • Corporate Secretary of the Company since 7 December 2011
Born in: 1975 Nationality: Russia Education: Linguistics University of Nizhny Novgorod, Russian Presidential Academy of National Economy and Public Administration Track record: 2010 — 2011 — Deputy Corporate Secretary of MMC Norilsk Nickel 2011 — 2015 — Corporate Secretary at MMC Norilsk Nickel 2015 — present — Corporate Secretary at MMC Norilsk Nickel Share in the Company’s authorised capital: 0% Share in the common stock: 0%

Committees of the Board of Directors

In 2015, the following committees of the Board of Directors continued their work:

  • Audit Committee,
  • Strategy Committee,
  • Budget Committee,
  • Corporate Governance, Nomination and Remuneration Committee.
Participation in the BD committee meetings
Current members of the Board of Directors Participation in meetings
person in absentia joint meeting1On 27 March 2015 and 27 August 2015, the Budget Committee and the Audit Committee of the Board of Directors held joint meetings. On 6 August 2015, the Strategy Committee and the Budget Committee of the Board of Directors held a joint meeting. total
Audit Committee held 9 meetings, including 5 meetings in person, 2 meetings in absentia and 2 joint meetings
Gerhardus Prinsloo, Chairman 5 2 2 9
Stalbek Mishakov 4 1 1 6
Alexey Bashkirov 2 2
Robert Edwards 5 2 2 9
Marianna ZakharovaLeft the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd). 3 2 2 7
Strategy Committee held 7 meetings, including 5 meetings in person, 1 meeting in absentia and 1 joint meeting
Maksim Sokov, Chairman 5 1 1 7
Gerhardus Prinsloo 5 1 1 7
Alexey Bashkirov 5 1 1 7
Gareth Peter Penny 5 1 1 7
Sergey Bratukhin 3 1 1 5
Budget Committee held 6 meetings, including 1 meeting in person, 3 meetings in absentia and 2 joint meetings
Alexey Bashkirov, Chairman 1 3 2 6
Vladislav Solovyov 1 3 2 6
Sergey Barbashev 1 3 2 6
Sergey Bratukhin 1 3 2 6
Gerhardus Prinsloo 1 1 2
Marianna ZakharovaLeft the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd). 2 2 4
Corporate Governance, Nomination and Remuneration Committee held 9 meetings, including 4 meetings in person and 5 meetings in absentia
Sergey Bratukhin, Chairman 4 5 9
Sergey Barbashev 2 1 3
Stalbek Mishakov 4 5 9
РRobert Edwards 4 5 9
Marianna ZakharovaLeft the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd). 3 3 6
Directors who stepped down on 13 May 2015
Audit Committee
Yegor Ivanov 1 1 1 3

Audit Committee

The Audit Committee is made up of four directors, including two independent directors one of whom should chair the Committee.

The Audit Committee provides the Board of Directors with assistance related to:

  • financial reporting,
  • risk management and internal controls,
  • external and internal audits,
  • fight against fraudulent behaviour of the Company’s employees and third parties,
  • other functions pertaining to the Committee’s operations.

The Committee issued recommendations to the Board of Directors to facilitate decision making on the Company’s business priorities, financial reporting, health, safety and environment, improvement of the corporate accounting framework for metal-bearing products, and approval of the Company’s auditors. The Committee also considered and took note of the results achieved in identifying, assessing and managing technical and production risks across Norilsk Nickel Group’s operations and assets, and results of audits conducted by the Internal Control Department. Next year, the Committee plans to go on with the existing projects and focus on managing risks.

Members of the Audit Committee
Pre-2015 AGMS: Post-2015 AGMS:
Gerhardus Prinsloo1, ChairmanIndependent director Gerhardus PrinslooIndependent director —
Marianna Zakharova Marianna ZakharovaLeft the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).
Robert EdwardsIndependent director Robert EdwardsIndependent director. Joined the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).
Yegor Ivanov Alexey BashkirovJoined the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).
Stalbek MishakovJoined the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).

Strategy Committee

The Strategy Committee is made up of five directors, including two independent directors. All directors are non-executive.

The Strategy Committee was established to support the Board of Directors by conducting a preliminary review of the matters pertaining to:

  • sustainable business development,
  • health, safety and environment,
  • investment planning,
  • structural changes,
  • interaction with capital markets and government authorities.

The Committee is also entitled to take any other action deemed reasonable or required for delivering on their agenda in accordance with the Russian and other applicable laws, the Company’s Charter, its by-laws and other regulations binding on the Company.

Pursuant to the most recent Regulation on the Strategy Committee, only non-executive directors may serve on the Committee. At least one Committee member shall be an independent director.

The Committee issued recommendations to the Board of Directors to facilitate decision making on updating the Company’s development strategy and approving its function specific strategies (sales, marketing, environment, transport and logistics, health and safety, fuel and energy). In addition, the Committee amended the list of non-core assets and reviewed reports on the disposal of non-core assets and implementation of the procurement plan and budget. For strategic planning purposes, the Committee reviewed the long-term reserve base development plan, the production report and the deliverables of a programme designed to improve production efficiency and reduce operating costs of the Company.

Members of the Strategy Committee
Pre-2015 AGMS: Post-2015 AGMS:
Maksim Sokov, Chairman Maksim Sokov, Chairman
Gerhardus PrinslooIndependent director Gerhardus PrinslooIndependent director
Alexey Bashkirov Alexey Bashkirov
Gareth Peter PennyIndependent director Gareth Peter PennyIndependent director
Sergey BratukhinIndependent director Sergey BratukhinIndependent director

Budget Committee

The Budget Committee is made up of five directors, including one independent director.

The Budget Committee was established to support the Board of Directors by conducting preliminary reviews and making recommendations on the finance, budgeting and business planning policies.

The Committee issued recommendations to the Board of Directors to facilitate decision making on the amount of dividends to be paid out and the cut-off date to be suggested by the Board of Directors. The Committee approved the Company’s 2016 budget and recommended the continuation of the capex reduction initiatives.

Members of the Budget Committee
Pre-2015 AGMS: Post-2015 AGMS:
Alexey Bashkirov, Chairman Alexey Bashkirov, Chairman
Sergey Barbashev Vladislav SolovyovIndependent director
Sergey BratukhinIndependent director Sergey BarbashevJoined the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).
Marianna Zakharova Sergey BratukhinIndependent director. Joined the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).
Vladislav Solovyov Gerhardus PrinslooIndependent director. Joined the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).
Marianna ZakharovaLeft the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd)

Corporate Governance, Nomination and Remuneration Committee

The Corporate Governance, Nomination and Remuneration Committee is made up of four directors, including two independent directors one of whom should chair the Committee. All directors are non-executive.

The Corporate Governance Committee supports the Board of Directors by:

  • assessing, controlling and improving the Company’s corporate governance framework,
  • promoting a sustainable business environment in the context of corporate governance,
  • ensuring succession planning for the Board of Directors and the Management Board,
  • providing incentives, assessing the performance of and remuneration policies for the Company’s Board of Directors, Management Board, President and Corporate Secretary,
  • supervising the development and implementation of the Company’s information policy.

The Committee is also entitled to take any other action deemed reasonable or required for delivering on their agenda in accordance with the Russian and other applicable laws, the Company’s Charter, its by-laws and other regulations binding on the Company.

The Committee issued recommendations to the Board of Directors to facilitate decision making on the convocation, preparation and running of the annual and extraordinary general meetings of shareholders, and on the matters reserved to such meetings (approval of the Company’s Charter, remuneration and reimbursement of expenses of the members of the Board of Directors and the Audit Commission, liability insurance and indemnification of the members of the Board of Directors and the Management Board, and approval of prospective related-party transactions that may be entered into in the normal course of the Company’s business). The Committee approved new versions of regulations on the Board of Directors’ committees, issued recommendations on changing the approach to the approval of related-party transactions, and suggested a methodology to assess performance of the members of the Company’s Board of Directors and Management Board. In addition, the Committee adopted a Long-Term Incentive Programme focusing on MMC Norilsk Nickel’s executives, and reviewed the existing Management Remuneration and Performance Assessment Policy.

Members of the Corporate Governance, Nomination and Remuneration Committee
Pre-2015 AGMS: Post-2015 AGMS:
Sergey BratukhinIndependent director Sergey BratukhinIndependent director
Marianna Zakharova Sergey BarbashevJoined the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).
Stalbek Mishakov Stalbek MishakovJoined the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).
Robert EdwardsIndependent director. Robert EdwardsIndependent director. Joined the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).
Marianna ZakharovaLeft the Committee as per the Board of Directors’ resolution of 8 October 2015 (Minutes No. GMK/35-pr-sd).