Corporate governance practices
Corporate governance assessment
To assess corporate governance, PhosAgro relies on the Corporate Governance Code recommended by the Bank of Russia, the UK Corporate Governance Code (UK CGC, FRC, 2024), and criteria from key corporate governance and ESG ratings as best practice benchmarks. The actual compliance with the CGC is evaluated on an annual basis and disclosed in a dedicated report (CGC Report), which is subject to review by the Audit Committee of the Board of Directors and approval by the Board of Directors, and forms a part of PhosAgro’s annual report.
In February 2025, the Board of Directors reviewed the 2024 CGC Report and the performance of the 2024 improvement plan. The Board scrutinised the evolution of compliance with the Code’s principles and trends in the quality of explanations for non‑compliance or partial compliance. Post‑review, the Board of Directors approved the 2024 CGC Report, and issued a positive assessment of compliance with the CGC recommendation.
| CGC section | Total number of matters | Full compliance | Partial compliance | Non‑compliance | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2023 | 2024 | 2022 | 2023 | 2024 | 2022 | 2023 | 2024 | ||
| 1. Shareholders’ rights | 13 | 11 | 11 | 11 | 1 | 1 | 1 | 1 | 1 | 1 |
| 2. Board of Directors | 36 | 30 | 30 | 30 | 5 | 6 | 6 | 1 | ||
| 3. Corporate Secretary of PhosAgro | 2 | 2 | 2 | 2 | ||||||
| 4. Remuneration | 10 | 8 | 8 | 8 | 2 | 2 | 2 | |||
| 5. Risk management and internal control | 6 | 6 | 6 | 6 | ||||||
| 6. Information disclosure | 7 | 7 | 7 | 7 | ||||||
| 7. Material corporate actions | 5 | 5 | 5 | 5 | ||||||
| Total | 79 | 69 | 69 | 69 | 8 | 9 | 9 | 2 | 1 | 1 |
| Percentage of compliance with the CGC principles, % | 87 | 87 | 87 | 10 | 11 | 11 | 3 | 1 | 1 | |
For every case of partial compliance or non‑compliance, PhosAgro specifies the measures taken to mitigate the associated risks in the CGC Report. In 2023, the quality of PhosAgro’s disclosure to explain the non‑compliance (partial non‑compliance) with the recommendations of the Code, according to the Bank of Russia, remained unchanged at 77%, while the average level in the Russian Federation grew from 64% to 66%.
Plans for 2025
Key initiatives to further enhance compliance with the Code, along with the factors that will impact decisions on their implementation in 2025, are provided in the table “Changes in self‑assessment as regards compliance with corporate governance principles”.
For detailed analysis of changes in self‑assessment as regards compliance with corporate governance principles in 2024 vs 2023 see the “Customers and product management” section.
Additionally, PhosAgro plans to implement the recommendations submitted following the Board of Directors’ self‑assessment for 2024, for more information see the “Research, innovations and education” section.
| Number and brief description of the principle | Compliance status | Comments |
|---|---|---|
| 1.1.2 Publishing of a general meeting notice on the company’s website at least 30 days prior to the date of the general meeting of shareholders | 2023 2024 | In 2023, criterion 1 was partially complied with. A notice on one of the three General Meetings of Shareholders held in 2023 was published 22 days (not 30 days) before the Meeting date. In 2024, notices on General Meetings of Shareholders were published 30 days prior to the Meeting date. In 2024, criterion 3 was partially complied with, as in the run‑up to the Annual General Meeting of Shareholders PhosAgro did not disclose on its website information about nominees to the Company’s Board of Directors (biographies, the Remuneration and Human Resources Committee’s assessment of professional qualifications, experience and skills of Board candidates against the Company’s present and future needs, and information on the candidate’s compliance with the independence criteria). PhosAgro considered that publishing such information could lead to the imposition of restrictive measures against the Company and/or other parties. Going forward, PhosAgro will continue to strive for full disclosure of all mandatory information, except for cases where the release of specific details could result in restrictive measures against PhosAgro and/or other parties. |
| 1.1.5. Ability for shareholders to freely exercise their rights to vote | 2023 2024 | Formally speaking, the criterion is not complied with, as PhosAgro’s Charter does not provide for online ballot completion on the website. However, the vast majority s shareholders of the Company hold their shares through nominee shareholders (with the exception of only 56 out of 276,000 shareholders, or 0.02%) and can take advantage of remote voting by instructing their nominees accordingly (proxy voting) and thus freely exercise their voting rights in a simple and convenient way. Going forward (for example, if the number of shareholders who do not use nominee shareholding services increases drastically), PhosAgro may once again consider an option of electronic voting. |
| 2.3.2. Availability of information on nominees to the company’s board of directors to shareholders | 2023 2024 | In 2023, the criterion was partially complied with, as, due to the tight timeframe of the Annual General Meeting, the shareholders were not provided with the findings of the assessment completed by the Board of Directors or its Remuneration and Human Resources Committee to determine whether the professional qualifications, experience and skills of nominees to the Board of Directors meet the present and future needs of PhosAgro. In 2024, the criterion was partially complied with, as in the run‑up to the Annual General Meeting of Shareholders PhosAgro did not disclose on its website information about nominees to the Company’s Board of Directors (biographies, the Remuneration and Human Resources Committee’s assessment of professional qualifications, experience and skills of Board candidates against the Company’s present and future needs, and information on the candidate’s compliance with the independence criteria). PhosAgro considered that publishing such information could lead to the imposition of restrictive measures against the Company and/or other parties. Going forward, PhosAgro will continue to strive for full disclosure of all mandatory information, except for cases where the release of specific details could result in restrictive measures against PhosAgro and/or other parties. |
| 2.8.2. Performance of the remuneration committee | 2023 2024 | The description of partial non‑compliance in 2023 and 2024 is identical. Criterion 1 was only partially complied with, as one of the members of the Remuneration and Human Resources Committee does not meet the independence requirements. Once the General Meeting of Shareholders elects new members of PhosAgro’s Board of Directors in 2025, the Board will seek to staff the Remuneration and Human Resources Committee with independent directors only. Criterion 2 was only partially complied with, as the Chairman of the Remuneration and Human Resources Committee does not meet the independence requirements. Upon the re‑election of the Remuneration and Human Resources Committee in 2025, the Board of Directors will seek to elect an independent director as the Chairman of the Remuneration and Human Resources Committee. Criterion 3 was not met with respect to the failure to define in the Company’s internal documents the conditions (events) upon the occurrence of which the Remuneration and Human Resources Committee of the Board of Directors considers the revision of PhosAgro’s policy on remuneration of the Board members, members of executive bodies, and other key executives. The Company proceeded from the fact that the responsibility to regularly revise the policy, which is specified in the Regulations on the Remuneration and Human Resources Committee of the Board of Directors, implies ensuring that it is updated and meets the current needs of the Company. When deliberating on amendments to the Regulations on the Remuneration and Human Resources Committee or the adoption of a new version of the Regulations (anticipated in 2025–2026), specific triggers (events) for reviewing the above policy will be incorporated into the draft documents. |
| 2.8.5. Composition of committees of the Board of Directors | 2023 2024 | Criterion 1 was not complied with to the extent that the Remuneration and Human Resources Committee is chaired by a director who does not meet the independence requirements. However, the director’s competencies, professional experience and dedicated skills enable him to run the Committee in the most efficient manner. Upon the re‑election of the Remuneration and Human Resources Committee in 2025, the Board of Directors will seek to elect an independent director as the Chairman of the Remuneration and Human Resources Committee. |
| 2.9.1. Assessment of the Board of Directors’ performance | 2023 2024 | The description of partial non‑compliance in 2023 and 2024 is identical. Criterion 2 was not met with respect to the failure to conduct individual assessment of each member of the Board of Directors in 2024 (for 2023), 2023 (for 2022) and 2022 (for 2021). Given the substantial 70% renewal of the Board’s composition since July 2022, the Remuneration and Human Resources Committee found it irrelevant to carry out an individual assessment. In this context, the Board identified no significant risks associated with not proceeding with an individual assessment. In 2025, the Company will resume the practice of assessing each Board member individually, as part of the Board’s overall performance assessment exercise |