AMAG Services Presentation: Corporate Governance Improvement


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At AMAG, we firmly believe that a properly communicated improvement in Corporate Governance leads to an increase in the number of investors, thus helping create shareholder value through share price appreciation. In order to maximize efficiency, we advise our Clients to start the improvement process immediately upon completion of a proper Corporate Governance assessment. This will help define the scope of work and will clearly outline all areas where improvement is possible and required, thus allowing for planning and prioritization of individual projects.

We recognize that enhancement of existing Corporate Governance practices and framework is a lengthy and complex process. AMAG embarks on this journey together with the Client and will grant its full support to secure investors’ confidence and trust. AMAG’s experts can help the Client formulate the action plan and facilitate project management, and will work with the Company step by step to develop and implement solutions based on best global Governance practices.

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AMAG Services Presentation: Corporate Governance Improvement

  1. 1. Corporate Governance Improvement Product Outline Aneta McCoy Advisory Group Copyright©2013 AMAG Ltd., All Rights Reserved
  2. 2. Why Improve Your Corporate Governance System? Corporate Governance Assessment • Understand the Company’s relative positioning within the peer group • Focus on perception of existing CG practices by institutional investors • Identify CG solutions based on best practices and assess their applicability Improvement & Communications • Position the Company’s stock as a global investment opportunity • Achieve tangible & measurable results  Close the scoring gap to best practices  Increase overall institutional investor base  Attract A-level investors (SWF* and top-10 global asset managers)  Improve investor perception of existing CG system to predominantly ‘better’ in comparison to Russian peers and predominantly ‘average’ in comparison to international peers • Optimize business processes (faster throughput, lower cost) • Conduct dedicated events and road shows to demonstrate management’s commitment to improvement and communication Monitoring • • • Keep up with evolving global best practices Keep optimizing business processes Continue educating employees responsible for CG matters Aneta McCoy Advisory Group *Sovereign Wealth Fund 2 Copyright©2013 AMAG Ltd., All Rights Reserved
  3. 3. Investment in Efficiency of Company’s CG System is a Rational Managerial Decision Internal External Optimization of decision-making IR marketing tool • Attract responsible investors • Valuation premium/discount • Reputation and goodwill • Sustainable risk/return ratio • Motivation and alignment of interests • Fairness and ethics Ownership evolution • Current or future decoupling from controlling shareholder(s) • Interests of other stakeholders Compliance Efficient CG System • Legal and regulatory requirements • Timing and cost optimization • Effective risk management Robust management system Attract management talent • In-built organizational learning and development • Adaptability and crisis management • Clear ‘rules of engagement’ for top-professionals • Release productivity and creativity of human capital Aneta McCoy Advisory Group 3 Copyright©2013 AMAG Ltd., All Rights Reserved
  4. 4. Results of CG improvement Direct Company and management’s aspiration to perfection Active and independent advisor with high experience and reputation Support from depositary bank and exchange Aneta McCoy Advisory Group Wider investor base Higher MarCap Higher valuation Indirect Corporate Governance System Commitment from Top Management and Dedicated Advisors Are Required to Achieve Results Lower volatility Better reputation Short-term 4 Higher credibility Strategic Strictly Confidential Copyright©2013 AMAG Ltd., All Rights Reserved
  5. 5. AMAG’s Approach to Improvement of Corporate Governance System What we start with How we do it What we deliver 1. Structured Approach 1 Global best practices + 2 Improvement opportunities identified during CG assessment + Leadership Control Communication Improved CG System 2. Increased Importance of CG System Board’s expectations and commitment 5 Management’s support and commitment Best Practices CG ‘Business’ Understanding improvement potential 4 Current state CG 3 ‘Business’ 3. Rebalancing of CG System Better Perception of the Company Leadership Control 6 Clear objectives Communication ‘Russian way’ Aneta McCoy Advisory Group Best Practices 5 Copyright©2013 AMAG Ltd., All Rights Reserved
  6. 6. Example of Deliverables of Corporate Governance Improvement Project TASK DOCUMENT Communication • Corporate communications strategy • CG perception study • CG road show(s) • Coordination between CG/IR/PR • Comprehensive revision and update of CG & IR sections of corporate Web site Board • New board governance document(s) • Proper board evaluation policy and procedures • Introduction of CEO succession planning and CEO’s evaluation • Proper and formal director induction program • Directors’ code of conduct • Evaluation of the role and efficiency of the office of the corporate secretary Disclosure • Facilitation of financial reporting • New approach to proxy/AGM materials • New comprehensive CG policy • Revision and update of current CG-related documents • Development of new CG-related policies Remuneration • Directors ⁻ Proper director remuneration policy ⁻ Alignment of directors and shareholder interests ⁻ Proper disclosure • Executives ⁻ Proper executive compensation policy ⁻ Motivation system ⁻ Proper disclosure Aneta McCoy Advisory Group 6 PROCESS TRAINING √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ Copyright©2013 AMAG Ltd., All Rights Reserved
  7. 7. Framework of Corporate Governance Improvement Project Approval Controlling Shareholder(s) Initiation Board of Directors CG Committee* Supervision Management Key persons: • CEO • Board Secretary • Chief Compliance Officer Project: planning & administration Solutions: development & implementation Results: communication Working group should include officers from the following departments: • Corporate secretary • IR/PR • Legal • Strategy • Finance Aneta McCoy Advisory Group *Board committee in charge of CG AMAG Working Group Work Stream: ‘Leadership’ • Matrix of competences • Reporting lines • Motivation & remuneration Work Stream: ‘Control & Compliance’ • Risk management • Regulatory compliance • Performance assessment Work Stream: ‘Communications’ • Information flows (people & processes) • Disclosure policy Other Work Streams (if necessary): • Legal documents • Subsidiaries • etc. 7 • Help define objectives • Formalize the CG improvement plan • Assist in project launch & management • Ensure persistent focus on governance • Actively participate in practical problem solving • Provide independent expertise on CG matters and insight into global best practices • Ensure effectiveness and internal consistency of proposed solutions • Serve as an independent messenger • Engage in investor communication Copyright©2013 AMAG Ltd., All Rights Reserved
  8. 8. Example of CG Improvement Timetable* 1st quarter 2nd quarter 3rd quarter 4th quarter 5th quarter Communication & Investor Outreach • Develop a corporate communications strategy • Conduct (with AMAG’s help) a Corporate Governance perception study • Conduct a Corporate Governance investor roadshow Disclosure • Review the CG and IR sections of Company’s Web site (use AMAG’s assessment report as a starting point) • Revise approach to the preparation of proxy/AGM materials • Develop and publish new CG documents (if necessary) • Develop and publish a new Corporate Governance policy Board of Directors • In accordance with best practices, gradually introduce new Board policies and processes • Ensure effective execution and regular revision of the policies • Draft and publish a Board governance document • Enhance Board transparency • Introduce a code of conduct for directors • Design and implement information flows and formats Director Remuneration • Assess and, if necessary, amend the structure of director remuneration • Seek shareholder approval of the new Board remuneration policy • Make relevant disclosure, including of fees paid to individual directors (in annual reports) *Precise timing and steps may differ depending on the current condition of the Client’s CG system. Aneta McCoy Advisory Group 8 Copyright©2013 AMAG Ltd., All Rights Reserved
  9. 9. Disclaimer This presentation has been prepared for information purposes only in connection with a possible offering of AMAG’s services. This presentation must not be reproduced, distributed or republished (in whole or in part) for any purpose. No representation or warranty is given with respect to reliability, accuracy, validity or completeness of information contained in this presentation, and no entity or person may rely on the contents of this presentation. Information contained in this presentation may be updated, supplemented, corrected or modified or significantly altered. Neither AMAG nor any of its shareholders, affiliated parties or representatives is obligated to update the information contained in this presentation. This presentation contains a number of forward-looking statements. Such forward-looking statements include statements regarding plans, tasks, goals, strategies, future events or results, and any other statements in relation to any of the facts that have occurred or may occur in the future. Forward-looking statements contained in this presentation are based on various assumptions. These assumptions are characterized by a high level of uncertainty and conventionality that are hard or impossible to predict and that are beyond reasonable control. This presentation is not intended for distribution or use by any person or organization which is a national of or is located in a place, state, country or another jurisdiction where such distribution, publication, accessibility or use would constitute a breach of statutory regulations or would require registration or licensing in respective jurisdiction. Neither AMAG nor any of its shareholders, affiliated parties, consultants or representatives bears responsibility (including responsibility arising from negligence or otherwise) for a loss of any kind incurred as a result of the use of this presentation or information contained therein or otherwise in connection with this presentation. Aneta McCoy Advisory Group 9 Copyright©2013 AMAG Ltd., All Rights Reserved