Board of Directors

The Board of Directors as a strategic and professional governing body plays a key role in the development of the Company’s corporate governance framework, ensures the protection and exercise of shareholder rights, and identifies the key directions for the development of the Company. The Board of Directors is accountable to the meeting of shareholders of the Company.

The remit of the Board of Directors and the procedure for exercising its functions and working with the other governing bodies of the Company are governed by the Federal Law On Joint Stock Companies, the Articles of Association of the Company, and the Regulations on the Board of DirectorsApproved by the Annual General Shareholders Meeting on 6 May 2022, Minutes No. 57 dated 12 May 2022..

Membership of the Board of Directors

According to the Articles of Association, FESCO’s Board of Directors comprises nine members. The number of members of the Board of Directors is in line with the law and makes it best positioned to operate to the scale and ambition of the Company and serve shareholders in an optimal way. The members of the Board of Directors are elected by the General Shareholders Meeting on an annual basis for the period until the next Annual General Shareholders Meeting.

As at 31 December 2022, FESCO’s Board of Directors was comprised of two independent directors, two executive directors and five non-executive directors.

All members of (nominees for) the Board of Directors are assessed for independence at the time they are included in the list of nominees from which members of the new Board of Directors are elected, as well as throughout their tenure on the Board of Directors on a quarterly basis in accordance with the procedure for maintaining the Company’s securities in Level 2 Quotation List of the Moscow Exchange.

main characteristics of the members of the Board of Directors

Categories of the Board members, %

Gender profile of the Board of Directors, %

Age of the Board members, %

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Induction Programme for new members of the Board of Directors

The Company has an Induction Programme for new members of the Board of Directors, which helps the newly elected members become acquainted with the practices of the Board of Directors and its Committees and integrate quickly. The programme includes the following activities:

learning about the Group’s business, including its key facilities;
familiarising with the key resolutions that the Board of Directors adopted in the corporate year;
learning about the Company’s development strategy, geography of operations and key performance data;
getting acquainted with the work plans of the Board of Directors and the Board committees;
learning about ways in which communication is ensured between the Board of Directors, the Executive Board and the management of the Group.

Board of Director’s Report

The Board of Directors held 24 meetings and considered 194 items in 2022.

100% of the members of the Board of Directors participated in the work of the Board.

The Board of Directors’ high engagement is due to the planning of activities of the Board of Directors on a half-year basis, preparation for and conduct of meetings via an automated information system, detailed consideration of key items by the Board’s dedicated committees, and professionalism of the management and the Corporate Secretary.

In the reporting year, the Board of Directors focused on:

identifying new directions for the Group;
approving development strategies for FESCO’s controlled entities until 2030;
approving FESCO’s 2023 budget and overseeing the implementation of FESCO’s 2022 budget;
approving the Company’s by-laws;
improving the corporate governance framework and control over the fulfilment of the instructions given by the Board of Directors;
appointing and assessing the performance of the Group management;
considering the work plan and progress reports of the Internal Audit Department;
assessing and monitoring FESCO’s risk management processes and approval of the material risk map.

Information on the meetings of the Board of Directors held and the resolutions made is disclosed by the Company on the website of an authorised agency.

Number of the Board of Directors’ meetings

Structure of agenda items considered by the Board of Directors, %

Committees of the Board of Directors

The committees of the Board of Directors are advisory and consultative bodies responsible for ensuring the efficiency and quality of work of the Board of Directors.

The Board of Directors has three committees:

Strategy, Investment and General Affairs Committee;
Human Resources and Remuneration Committee;
Audit Committee.

The committees’ rules of procedure, goals, objectives and remit are set out in the Company’s relevant regulations approved by the Board of DirectorsApproved by resolution of the Board of Directors on 28 November 2022, Minutes No. 22/22 dated 29 November 2022..

In the reporting year, the regulations on the committees were updated to align the remit and objectives of the committees with the Bank of Russia’s requirements and FESCO Group’s business practice.

Members of committees of the Board of Directors

The committee members are elected at the first meeting of the Board of Directors following the Annual General Meeting of Shareholders and continue in office until the new Board of Directors is elected.

Presently, the committees are made up of members of the Board of Directors, and each member of the Board of Directors is a member of one or two committees.

A majority of the Audit Committee consists of independent directors, a composition maintained since 2021.

Committees report

To organise the work of its relevant committees in a way that ensures their efficiency, the Company relies on the following principles:

the committees review the most important matters related to FESCO’s business;
the committees engage in an in-depth consideration of matters and provide recommendations to the Board of Directors to inform its decisions;
the committees are involved in monitoring and overseeing the implementation of resolutions and instructions of committees and the Board of Directors;
a majority of the Audit Committee consists of independent directors;
there is effective communication between different committees of the Board of Directors;
the committees may engage FESCO Group’s officers and employees, as well as third-party advisors and experts.

Participation of the members of the Board of Directors in the Board committees in 2022 was reported at 100%.

Meetings of the Board committees

Number of meetings and items considered	Objectives	Key items considered in 2022
Strategy, Investment and General Affairs Committee
In 2022, the Committee held seven in-person meetings to consider 48 items	Putting together recommendations to the Board of Directors for strategic management, implementation of investment projects and long-term development programmes, budgeting, and operating performance evaluation for the Group’s companies	Key matters related to the development of the Group, including development strategies for controlled entities, concepts for FESCO’s expansion into new areas, performance evaluation of new projects; progress on the roadmap to improve FESCO’s ESG profile; FESCO’s 2022 budget implementation forecast; approval of FESCO’s 2023 budget; the President’s reports on the fulfilment of the Strategy Committee’s assignments, investment and general affairs.
Human Resources and Remuneration Committee
In 2022, the Committee held seven in-person meetings to consider 19 items	Putting together recommendations to the Board of Directors for the Company’s personnel policy, motivation and remuneration system, and corporate culture development	Matters related to FESCO Group’s human resources development until 2025; harmonisation of the remuneration and incentivisation system across FESCO Group’s companies; operating efficiency evaluation of the Company’s executive bodies, key personnel, and the Corporate Secretary; training and development opportunities for FESCO Group’s managers and employees; reports on the fulfilment of the instructions given by the Human Resources and Remuneration Committee.
Audit Committee
In 2022, the Committee held nine in-person meetings to consider 29 items	Putting together recommendations to the Board of Directors for exercising control over the Company’s financial and business operations related to risk management, internal control and corporate governance, conducting internal and external audits, and accounting	Alignment of the Company’s corporate governance framework with the Corporate Governance Code and an action plan to improve it; FESCO Group's 2022 quarterly material risk maps; a plan to improve the risk management system at FESCO Group; draft by-laws; consideration of potential auditors of FESCO and its controlled entities for the audit of the 2022 financial statements under RAS and IFRS and determining the auditors’ remuneration; reports on the fulfilment of the instructions given by the Audit Committee; quarterly progress reports of the Internal Audit Department.