Statement in accordance with S172 of the Companies Act
The Board has considered in detail the Company’s business model, which identifies the Company’s stakeholders as:
- Shareholders and investors.
- Suppliers and contractors.
- Local communities.
- Government and regulatory authorities.
- Industry organisations.
The Board of EVRAZ recognises the benefit of clear and precise engagement with the Group’s stakeholders. Value is generated through the Group’s core activities as outlined in the discussion of its business modelin EVRAZ business model, Operational model sections.
Throughout the year, the Board has considered the impact of COVID-19 on all of its stakeholders. Full details of the actions taken are highlighted in the Corporate Governance Statement in the Impact of COVID-19 section.
The Group’s dividend policy anticipates dividend payments to shareholders of US$300 million per annum, provided that the Group’s net debt/EBITDA ratio remains below 3x. In addition, the Board may consider further distributions of free cash flow available after implementing its investment programme to support the business. The Board reviewed and considered that, despite the impact of the COVID-19 pandemic on the operational results of the business and the economy, the underlying strength of the business allowed the Board to continue to pay dividends relating to the 2020 financial year.
The Group has an active IR programme to enable shareholders to engage with the Company and the Board, not only on businesses issues but also on any governance concerns that they might have.
A capital markets day is normally held each year for the investment community, which covers both the current performance and future plans, as well as governance issues. Due to the COVID-19 pandemic, it was not possible to hold the event this year, but one is planned for 2021.
All shareholders are normally welcome in person at the AGM, where all directors are available to discuss any issues that they might raise. This year, a closed meeting had to be held, but arrangements were made to allow private shareholders to submit questions.
The CEO, supported by the CFO, held conference calls and briefed analysts and institutional investors fully after the publication of the Group’s half-year and full-year results. Additionally, the CFO, supported by the director for investor relations, held a series of online meetings with institutional investors during the year.
Engagement with employees remains key, and the Board closely monitors the results of the annual engagement survey, which has seen satisfactory levels of improvement.
Two independent non-executive directors have taken responsibility for engaging with employees in our businesses in North America and Russia, respectively, and this is conducted through their attendance at key staff briefing events and town hall meetings. Throughout the year, senior management attend the Group’s board meetings to present the annual budget for their respective business units and key investment projects that require the Board to approve significant capital expenditure. All presentations made to the board consider both the benefit to shareholders of the proposal and the impact on other key stakeholders. The Remuneration Committee receives a detailed presentation from the Vice President of HR, which outlines remuneration and incentive plans across the whole business at each level. A whistleblowing arrangement is in place that allows staff to raise issues in confidence, and the responses to issues are routinely monitored by the Audit Committee, which escalates key issues to the Board.
In 2011, the Board established a Health, Safety and Environment Committee to help it to monitor the Group’s Health, Safety and Environment performance, as well as the initiatives designed by management to improve the Group’s performance in that area. In addition, it considers the planned actions that are necessary to reduce the Group’s impact on the environment, including the reduction of greenhouse gas emissions. During 2020, the HSE Committee reviewed presentations from management on a revised environmental strategy and recommended its adoption to the Board. More details are available in Sustainable development section.
The Board considers the interests of all stakeholders by taking a long-term view of how the business needs to develop within its economic market (please see principal decisions taken by the Board on Board responsibilities and activities section). The Board has considered the technological developments in the market to ensure that its assets are improved to remain competitive, and that the necessary financing requirements to implement strategic projects will be available over the medium to long term. When development plans for projects are in their early stages, management engages key customers to ensure that the products manufactured meet their specific requirements.
All suppliers are treated in line with agreed contract terms, and when new opportunities come available the Group has transparent tendering procedures to ensure new contracts are awarded on a fair basis. The Board is introducing a stakeholder impact analysis for all proposals brought to its attention and will include an analysis in the annual strategy plan. The full range of EVRAZ Stakeholder engagement is detailed on Stakeholder engagement section.
These actions assist the directors in performing their duties under S172 of the Companies Act 2006, and the analysis will confirm to the Board that the impact of business plans on all stakeholders is being considered by management when developing initiatives for Board approval.