Novolipetsk Steel : Corporate governance 2023

Corporate Governance

136	150
Corporate	Operational control
governance system	and risk management

159

The power of steelmaking

Compliance

and corporate ethics

Corporate governance system

NLMK Corporate Governance Structure

Corporate governance in action

NLMK's corporate governance system plays a key role

in the Сompany's operations, its sustainable development, risk management,

and in balancing the rights and interests of shareholders, Group management,

and other stakeholders.

The system is built on best international practices, the requirements of the prevailing Russian legislation and laws of the countries where the Group companies operate, the OECD Principles of Corporate Governance, applicable listing rules, and provisions of the Corporate Governance Code recommended for use

Key principles lying at the core of our Corporate Governance

1	Sustainable development and long-term
growth of return on equity investment
2	Equal and fair treatment of all shareholders
when they exercise their right to be involved
	in management processes, participate
	in meetings, vote on issues on the agenda,
	and receive dividends
3	Equal treatment of all shareholders, including
non-Russians and minority shareholders
	Commitment to ensure reliable and effective
4 registration of title to shares and guarantee
	the opportunity to dispose of them freely
	and without encumbrances
5	Compliance with existing laws, principles
of the Corporate Governance Code
	recommended by the Bank of Russia,
	and international corporate governance
	standards

[GRI 2-9]

According to internal Сompany documents, NLMK corporate governance structure includes:

• The General Meeting of Shareholders, which is the NLMK's supreme governing body that makes decisions on key business issues
• The Board of Directors, which handles the overall management of the Сompany's activities, excluding issues that fall within the purview of the General Meeting
  of Shareholders according to the NLMK Charter
• Committees of the Board of Directors, which were established to preliminarily review key matters concerning the Сompany's activities

• The CEO (Chair of the Management Board) and the Management Board, which manage the Company's day-to-dayactivities and ensure its efficient operation, while implementing the objectives set by the Board of Directors
• The Corporate Secretary, who handles interaction with shareholders, coordinates the Сompany's activities that aim to protect the shareholders' rights and interests, and supports the Board of Directors
• Internal Audit, which oversees the Company's financial economic activities

by the Bank of Russia.

The Group's corporate governance system secures the rights of shareholders and potential investors, and is considered a driving force for enhancing NLMK's efficiency and investment appeal.

6 Observing the rights of third parties, including creditors and NLMK employees, as required by the law, the Charter, and other regulatory documents

7 Adherence to a common corporate policy in respect of subsidiary companies, affiliates and other legal entities in which NLMK

is the founder, a participant, or a member

8 Complying with business ethics in conducting operations

NLMK's Corporate Governance Structure

Independent	General Meeting of
Auditor	Shareholders
		Strategy Committee
Corporate		Human Resources,
Board of Directors	Remuneration and Social
Secretary
	Policy Committee
		Audit Committee
	CEO (Chair of the Management
	Board)
		Internal Audit

• The key documents regulating corporate governance practices and principles are available onNLMK Group's official website.

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Improving Corporate Governance practices in 2023

In 2023, the Company continued to improve its corporate governance system to ensure that it complies with international standards focusing on safeguarding

the rights and interests of its shareholders

and investors amid the significant regulatory changes and the associated risks.

As of the end of 2023, NLMK complies with all principles of the Corporate Governance Code: 70 principles

are fully observed and 9 principles are partially observed. The Company uses recommendations of the Bank

of Russia on preparing a report on compliance with the Corporate Governance Code as a methodology to assess compliance with corporate governance principles.

At the Meeting of Shareholders held in 2023,

the Company employed an electronic voting service, which enables shareholders to vote regardless of where their shares are registered, as well as an additional electronic voting service on the website of NLMK's registrar that was launched keeping in mind

the shareholders' convenience.

NLMK shareholders were ranked among the most active users of the NSD's e-voting service

89%

the share of the Corporate Governance Code recommendations implemented by

NLMK

Annual General Meeting of Shareholders on 2022 performance was held by absentee ballot1.

Plans for 2024 and the medium term

In 2024, NLMK will continue to analyse the best corporate governance practices and evaluate them in terms of their applicability to the Company's activities. Particular attention will be paid

to implementation of sustainability practices.

As always, the Company will analyse rankings, ratings and benchmarks, which allow to assess issuers' achievements objectively and to identify practices that might bring the greatest benefit to the Company and are important for its stakeholders. The Group

is going to keep analysing best practices, new approaches and tools for ensuring alternative ways of corporate meetings participation, and to maintain its focus on the aspects associated with protecting the rights and interests of shareholders and investors amid significant regulatory changes and the associated risks.

Activities of the General Meeting of Shareholders in 2023

In 2023 the Company held one General Meeting of Shareholders.

Board of Directors

NLMK Board of Directors procedures

A key component of the Company's corporate governance system that is responsible

for the Company's strategic management, the Board of Directors determines its strategic vectors, lays down the principles of and approaches to the risk management and internal control system, monitors the activities of executive bodies, and has other key functions within the Company. NLMK's Board of Directors reports to the Company's shareholders and is elected by a resolution of the Company's General Meeting of Shareholders. The NLMK Charter and the Regulations on the Board of Directors published on the Company's official websitegovern the procedures of the Board of Directors.

In addition to the main functions of the Board

of Directors stipulated by the legislation and NLMK's Regulations on the Board of Directors, NLMK Directors are involved in assessing various kinds

NLMK's Annual General Meeting of Shareholders on 2022 performance was held on 30 June 2023 by absentee ballot using the electronic voting service. During

the meeting, resolutions were passed on the matters stipulated by Item 1, Article 47 of the Federal Law "On Joint-Stock Companies".

TheRegulations on the Board of Directorsestablish

the procedure of preparing for and holding its meetings, as well as the procedure for the nomination

and selection of potential Board members. Board members are elected by the General Meeting

of Shareholders through cumulative voting from among candidates nominated by the shareholders or the Board of Directors. The candidates who have polled

the majority of votes are considered elected to the Board of Directors. The quantitative composition of the Board of Directors is determined by the corporate documents.

[GRI 2-10]

Independent directors are elected to NLMK's Board of Directors to ensure well balanced decision-making process and improve operational efficiency, which

is a global corporate governance practice. The Company is interested in no less than three independent directors to be members of the Board of Directors. Moreover, NLMK seeks to diversify the composition of the Board of Directors in terms of competencies, experience, field

General Meeting of Shareholders

of risks, matters of compliance with corporate governance and sustainable development principles, and monitoring compliance with the Sustainable Development Policy and Information Disclosure Policy.

of expertise, gender and other indicators.

Members of the Company's Board of Directors have sufficient time to fulfil their obligations efficiently and in good faith, including for participation in meetings of the

NLMK's General Meeting of Shareholders procedures

The General Meeting of Shareholders is NLMK's supreme governing body that functions based

on the legislation of the Russian Federation, the NLMK Charter, and the Regulations on the General Meeting

of Shareholders. The Federal Law "On Joint-Stock Companies" and the NLMK Charter establish the General Meeting's competence. The procedure for preparing, convening, holding, and summarizing the results of NLMK's General Meeting of Shareholders is set forth in the Regulations

on NLMK's General Meeting of Shareholderspublished on the Company's official website.

Shareholders have two options for online voting: through the e-voting service of the National Settlement Depository

and the online voting service on the website of NLMK's registrar, the Regional Independent Registrar Agency. These services are available to all Company shareholders, regardless of whether they are the depository's clients or if their share rights are recorded in the register.

The notice about the upcoming General Meeting

of Shareholders and materials to the meeting are published on the Company's website in Russian and English. In addition to the mandatory materials required by law, NLMK provides its shareholders with additional information pertaining

to the agenda items of the General Meeting of Shareholders in line with the recommendations of the Corporate Governance Code of the Central Bank of Russia.

NLMK's independent registrar functions as the counting commission of the General Meeting of Shareholders.

Members of the Board of Directors participate in the Company's operation both within

the Committees and the Board, and beyond the above. They ensure effective cooperation

and share experience with the management through informal meetings among other things. With

the view to reflect long-term trends and challenges in the Company's development strategy, the Board established working groups that include both members of the Board and the management.

Members of the Company's Board of Directors ensure the reliability and stability of the Company's operations, facilitate the adoption of balanced decisions by management, make objective independent judgements and act in the best interests of NLMK and its shareholders.

Board of Directors and its committees. This requirement is enshrined in NLMK's Corporate Governance Code.

Meetings of the Board of Directors are held on a regular basis at least six times a year in accordance with

the approved schedule. The format of NLMK Board meetings is determined based on the importance of the agenda items.

The most important items within the Board's remit are resolved

at in-person meetings, and as a rule, are first reviewed by the Board's committees, thereby ensuring their thorough consideration

and informed decision-making

1 In accordance with Federal Law No. 25-FZ dd. 25.02.2022 and a resolution of NLMK's Board of Directors.

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Chair of the Board of Directors

[GRI 2-11]

The Chair of the Board plays a key role in organizing

its activities and ensuring that the committees function efficiently. The Chair is elected by Board members from among themselves by a majority of votes.

Functions of the Chair of the Board of Directors:

գ Ensure the functioning of the Board of Directors
	and develop its plans
գ Control the execution of the Board's decisions
գ	Set agendas
գ	Ensure the most efficient decisions on the agenda

Composition of the Board of Directors

[GRI 2-17] [GRI 2-9] [GRI 405-1]

The composition of the Company's Board of Directors is balanced in terms of qualification, experience, knowledge, business acumen, and diversity.

The Directors have an impeccable professional reputation in the business community, as well as extensive expertise thanks to their managerial experience with leading international companies across various sectors. Many

of them have occupied CEO positions, which enabled them to obtain competencies in steelmaking, mining, finance, investment, risk management, and ESG. Most Board members have substantial work experience

The Group's functional departments and teams

are directly responsible for executing the tasks assigned to them and for local management of sustainability issues at the Group's companies.

The detection, monitoring, and management

of sustainability risks is an integral part of the corporate risk management system.

• See the Operational Control and Risk Management section for more detail

All stakeholders of the Company, including employees, have the opportunity to bring any issues related to the actual and potential negative impact of the Company's activities on them to the attention of the members of the Board of Directors through, among other means, contacting the Corporate Secretary. [GRI 2-16]

items

The Chair of NLMK's Board of Directors has extensive experience, professional expertise, and authority among the Сompany's shareholders, members of governing bodies, and employees

The Chair of the Board of Directors does not hold any executive positions in the Сompany.

Independent members of the Board of Directors

Participation of the independent members

in the Board's activities contributes to the formation of objective opinions on the items discussed, improves management efficiency, and has a positive impact on the Company's image.

Independent directors play an important role in the Board's activities and make a decisive contribution to discussions and decision-making

on issues that may affect the interests of shareholders, including

• Devising the Company's development strategy
• Assessing the conformity of its activities with
  the Company's chosen strategy and interests of all shareholders
• Preventing and resolving corporate conflicts
• Assessing the quality of work performed by the executive bodies
• Establishing an efficient incentive system

The Corporate Secretary regularly conducts a preliminary analysis and assessment of the Board members' compliance with independence criteria stipulated

by the Regulations on the Company's Board of Directors and the Corporate Governance Code of the Bank

of Russia. The latest assessment confirmed that the directors fully meet the independence criteria.

on supervisory boards and boards of directors of other companies.

The Board of Directors of nine people in force

as of 31 December 2023 was elected at the Annual General Meeting of Shareholders on 30 June 2023.

Board of Directors' activity in 2023

In 2023, NLMK's Board of Directors held nine meetings. The Board considered 23 items at the meetings.

The main issues were related to the strategy implementation and priority areas for development, designations and remuneration, as well as issues of corporate governance and financial reporting.

100%

All members of the Board of Directors took part in 100% of the meetings scheduled after appointing of the respective director

Sustainability management at the Board of Directors level

[GRI 2-12] [GRI 2-13]

Sustainability management is integrated into NLMK Group's corporate governance system and is carried out at all NLMK companies, including international ones. Sustainability issues consistently feature on the agenda of NLMK Group's leadership. The Board of Directors, the Board's committees, СЕО (Chair of the Management Board),

and the Management Board determine strategic growth priorities and ensure overall sustainability management.

Vice Presidents of functional areas are responsible for identifying specific tasks and initiatives

to manage the social, economic, and environmental aspects of the Group's activities, and monitor their implementation. Departments responsible for developing approaches and implementing measures in matters concerning sustainability report to these Vice Presidents.

Sustainability agenda management at the Board of Directors level

[GRI 2-12] [GRI 2-14]

Board Committee	Key aspect of sustainability
Strategy Committee	Sustainability risk assessment.
	Environment:
	գ	Air emissions
	գ	Discharges and waste
	գ	Use of resources
	գ	Biodiversity
	գ	Climate change
Human Resources, Remuneration and Social Policy	Integration of ESG KPIs in the remuneration system.
Committee
	Social and employment:
	գ Operational health and safety
	գ	Training and development
	գ	Social policy
	գ Diversity and equal opportunities
	գ	Non-discrimination
	գ	Local communities
Audit Committee	Performance monitoring and sustainability reporting
գ Board of Directors;	Corporate governance:
գ Human Resources, Remuneration, and Social Policy	գ	Corporate governance;
Committee	գ	Business ethics
գ Audit Committee	գ	Anti-corruption

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Organizational structure for managing sustainability issues at NLMK [GRI 2-12]

Induction of newly elected members of NLMK's Board of Directors

and the onboarding process

In order to enhance the efficiency of the Board

and with due care and discretion. Given that

the reasonable and good-faith actions of the Board members require the adoption of decisions based on all available information without any conflict

of interest and taking into account the equal treatment

Board of Directors

CEO (Chair of the Management

Board)

Management Board

Board of Directors succession planning

Considering high significance of succession

and performance assessment the Company approved a Succession Policy in 2022. This document reflects

the recommendations of the Bank of Russia, the Corporate Governance Code, research by leading international consultants, and the best experience of global companies with advanced corporate governance practices.

Strategy Committee

HR, Remunerations and Social Policy Committee

Audit Committee

Investment Committee

Risk Management Committee

governing body and enhance its role in achieving the Сompany's goal of successful development.

The assessment of the Board of Directors' performance helps to determine the focus and changes

in the performance of the Board of Directors and its committees, get a comparative analysis of their engagement in the Сompany's successful development, as well as identify areas for the continuous improvement of the Board's procedures. In line with

and support succession planning, the Company has introduced an induction course for newly elected members of NLMK's Board of Directors. It was approved by the HR, Remunerations and Social Policy Committee.

The programme includes an introduction to NLMK Group's key operational and financial indicators and its systems of risk management, internal control, and corporate governance.

Meetings with the CEO (Chair of the Management Board), members of the Board of Directors, the Management Board, and other senior executives of the Сompany

are arranged as part of the course. The newcomers also have an opportunity to get acquainted with the Group's core facilities, processes, and products. Other Board members and of the Сompany management are engaged in integrating newly elected Board members into the work of the Сompany's governing bodies and its operations.

Preventing a conflict of interest among Board members

[GRI 2-15]

Members of the Board of Directors must act in good faith and reasonably in the interests of the Company and its shareholders based on sufficient awareness

of shareholders the Company has developed a number of measures to prevent conflicts of interest. As part of these requirements, members of the Board

of Directors shall:

• Notify the Board and put the Company's interests above their own under all circumstances in case there is a potential conflict of interest (including an interest in the Group making a transaction)
• Refrain from any acts that will or may lead to a conflict between their personal interests and those
  of the Company
• Promptly inform the Board of Directors of any conflict of interest before the start of a discussion on the item with respect to which the Board member has
  a conflict of interest at a Board Meeting or a Board committee meeting
• Abstain from voting on items in which they have a conflict of interest. Where the nature of the item discussed or the specific aspects of a conflict
  of interest so require, the Board member experiencing said conflict of interest should not be present
  at the Board's meeting when the item is discussed

According to the information available to the Company, there was no conflict of interest among the members of the Board of Directors in 2023 including any conflicts related to their participation in the governing bodies of NLMK's competitors.

The Board of Directors Succession Policy includes such aspects as:

գ Principles of the Board of Directors formation,

ensuring diverse, competent and efficient

composition

the recommendations of the Corporate Governance Code of the Bank of Russia and best international practices, NLMK has been conducting an annual assessment (self- assessment) of the Board of Directors' performance since 2016. The assessment covers the Board of Directors, its committees and their chairmen. It includes

Committees of the Board of Directors

գ	Succession goals
գ	Succession stages
գ	Approaches and tools for performance assessment

Board of Directors performance assessment

[GRI 2-18]

The Board of Directors is one of the key bodies in the Сompany's corporate governance system. The quality of the Сompany's governance depends

on the efficiency of its activities, and its decisions directly affect the Сompany's market capitalization. The Board of Directors' performance assessment is a reliable tool for improving the corporate governance system, each component of which is related to the work of the directors.

The main purpose of the assessment is to determine the efficiency of the Board's performance as a collective

an analysis of such aspects as the Board's composition and qualifications, its agenda, meeting efficiency, interaction with the management and the Corporate Secretary, as well as benchmarking with the practices of other companies' boards of directors with advanced corporate governance.

Results of the Board of Directors performance assessment

The annual Board of Directors performance assessment held in 2023 covered the activity of the Board of Directors, including best practice benchmarking, taking into consideration a number of corporate governance studies. Recommendations were given on developing certain aspects of the Board of Directors activities. Results

of the assessment were issued in the form of a report that was considered at a meeting of the HR, Remunerations and Social Policy Committee.

The Board of Directors has set up the following standing committees in order to improve the efficiency of the decisions, ensure the preliminary examination and study of the most essential matters and prepare the appropriate recommendations:

• Strategy Committee
• Audit Committee
• Human Resources, Remuneration and Social Policies Committee

The committees of the Board of Directors report to the Board and serve as its advisory bodies.

The resolutions of the committees are advisory in nature.

The status, goals, objectives, and functions

of the committees, as well as the procedures for their composition, formation, and operation are set out

in the Regulations on Committees, which are approved by the Company's Board of Directors and published on NLMK's official website.

Due to the need for a comprehensive discussion of the issues under consideration, the committees are composed of Board members with specialized knowledge, skills and professional experience. Committee composition is balanced to ensure optimal application of the members' competencies and professional experience.

If necessary, a committee chair may engage experts and consultants to work with their committee on a temporary or permanent basis with no right to vote during the decision-making.

In order to balance approaches to problem solving with respect to risk management and the protection of shareholders' interests, in two out of three committees the majority of members, including their chairpersons, are independent directors.

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Audit Committee

The Audit Committee's main purpose is to draft and submit recommendations to the Board

of Directors in order to ensure its effective involvement in the supervision of the Company's financial

and business activities, including matters related to:

• Conducting an annual independent external audit of NLMK's accounting (financial) statements, the quality of the auditor's services, and their compliance with the requirements of auditor independence
• The independent assessor's appraisal of property in cases stipulated by the legislation and other documents
• Disclosing information associated with the Company's sustainable development, monitoring performance and reviewing reporting on sustainable development matters, including the environment, labour protection and industrial safety

The Committee holds regular meetings with the external auditor, the internal audit team, and other Company managers.

Internal Audit

The Audit Committee is responsible for monitoring the operation and evaluating the efficiency

of the internal audit function. The Committee ensures this by discussing significant matters with the Audit Director, approving the annual internal audit plan and report on the internal audit activities, and reviewing reports on the conducted audits, which contain key conclusions

and recommendations.

The Audit Committee, which assessed

the effectiveness of the internal audit, was satisfied with the quality of the services provided by it.

Strategic Planning Committee

The Strategic Planning Committee provides support to the Board of Directors in resolving matters that involve

• Enhancing the efficiency of the Company's activities in the long-term
• Promoting asset growth, profitability, and investment appeal

The Committee defines the goals for minimizing the Сompany's environmental and climate impact,

including greenhouse gas emissions, and reviews and approves the appropriate investment programme.

The Strategic Planning Committee includes one independent director. All members

of the Committee, including those who are not members of the Board of Directors, have the right to vote on the Committee's agenda items.

There were no Committee meetings in 2023.

The Audit Committee analyses and evaluates information disclosure on sustainable development matters and monitors its completeness, accuracy, and reliability. [GRI 2-14]

The Committee is chaired by an independent director. Most of its members are also independent directors with a background in the preparation, analysis, evaluation, and audit of accounting (financial) statements.

In 2023 the Audit Committee held 5 meetings, where draft documents on financial reporting, risk management, internal control and corporate governance, as well as reports related to asset protection and significant risk management, were reviewed, including the report on statistics of calls to the hotline at the Russian and international sites of NLMK Group.

The key issues reviewed were related to external and internal audits, including non-audit services provided by the independent auditor.

Risk management and internal control

The Audit Committee exercises control over

the reliability and efficient functioning of the risk management, internal control, and corporate governance systems, and the drafting of proposals on their improvement. It reviews reports

on performance of the internal control and risk management system prepared by the external auditor, internal auditor, and other Group bodies responsible for fulfilling the risk management, oversight, and compliance functions.

Reports on monitoring the execution of the Internal Auditor's recommendations are submitted

to the Committee to ensure that the actions taken by the executive management are efficient.

In an effort to ensure independence, the Audit Director reports directly to the Board of Directors, has the right to raise any matter that they deem to be important, and meets with the external auditors as required.

The Internal Audit undergoes regular self- assessment for quality, and independent external assessment. The results of these assessments are submitted to the Audit Committee

for consideration.

External audit

Technologies of Trust Audit JSC (formerly PricewaterhouseCoopers Audit JSC, hereinafter TeDo) is the Group's auditor. From time to time, group entities engage TeDo for the provision of non- audit services. NLMK management has concluded that such services do not impair the auditor's independence and are not related to financial statement preparation. In 2023, the share of non- audit services was at an acceptable level of no more than 5% of the total services provided by TeDo. TeDo regularly rotates key audit staff (at least once every seven years) to ensure compliance with independence requirements.

• See the External Auditor section for more detail

Human Resources, Remuneration and Social Policy Committee

The main purpose of the Human Resources, Remuneration and Social Policy Committee is conducting preliminary reviews and developing recommendations for the Board of Directors to ensure

the efficient operation of its decision-making on the following issues:

• Appointment of members of the Company's management and other key employees and training of succession candidates
  for their positions
• Performance assessment of the Company's management and other key employees
• Remuneration of the Company's management and other key employees
• NLMK's social policy

The Committee is chaired by an independent director. Most of the Committee members are also independent directors. The Human Resources, Remuneration and Social Policy Committee includes an independent director knowledgeable in matters concerning motivational management and personnel administration.

In 2023, the Committee continued

to analyse and evaluate the implementation of the Company's HR Strategy,

the performance of key executives, and the execution of the Committee's instructions.

The Committee continued its systematic succession planning efforts for the position

of CEO (Chair of the Management Board). Several documents were approved and recommendations were given to the Board of Directors, including those related to Board of Directors succession.

In 2023, the Human Resources, Remuneration and Social Policy Committee held 3 meetings (1 in presentia and 2 absentee meetings).

The Committee reviewed and passed resolutions on the following issues:

• Implementation of NLMK Group HR Strategy 2018-2022
• Status of the succession pool for the position of CEO (Chair of the Management Board)
• Progress against target KPIs by the NLMK Group CEO (Chair of the Management Board) in 2022 and approval of 2023 target project KPIs
• Performance of the Board of Directors in 2022 and nomination of candidates to the Board of Directors in 2023
• Eligibility of the nominees proposed for independent directors to be voted on at the NLMK Annual General Meeting of Shareholders on the Company's 2022 performance
• Professional background of the nominees to the Board of Directors to be voted
  on at the Annual General Meeting of Shareholders on the Company's 2022 performance

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Corporate Secretary

NLMK's Corporate Secretary ensures day-to-day interaction with shareholders, coordinates the Company's activities to protect shareholders' rights

and interests, and supports the efficient operation of the Board of Directors.

Management Board

Management Board procedures

[GRI 2-9]

The Management Board is in charge of managing

the Company's day-to-day operations and implementing the approved strategy and specific resolutions

Activities of the Management Board in 2023

[GRI 2-13]

The Management Board functions in accordance with the approved meeting plan or as necessary. The CEO

The Corporate Secretary's activities, rights, and obligations are fixed in the Regulations on the Corporate Secretary, developed in accordance with the recommendations

of the Corporate Governance Code of the Bank of Russia. The Corporate Secretary is also in charge of the induction of newly elected members of the Company's Board

of Directors, corporate governance in subsidiaries and affiliates, working with insiders, and registering affiliates of the Group's companies. This enables

the establishment of a dynamic and balanced corporate governance system that ensures efficient interaction between the Company's shareholders, Board of Directors, and management.

The Corporate Secretary is functionally subordinate

and reports to the Board of Directors and administratively to NLMK's CEO (Chair of the Management Board).

The Corporate Secretary is appointed and dismissed by the CEO (Chair of the Management Board) based on a resolution from the Board of Directors.

The Corporate Secretary oversees the Corporate Secretary's Office.

Valery Loskutov has been the Company's Corporate Secretary since 2005.

Valery Loskutov

Year of birth: 1969.

Mr. Loskutov graduated from the Lipetsk Polytechnic Institute and the Academy of National Economy under the Government of the Russian Federation with an MBA.

• For more than twenty years, he has been
  a member of the governing bodies of a number of Russian companies
• Valery Loskutov has been with NLMK since 1998 and has served as NLMK's Corporate Secretary since 2005
• Mr. Loskutov is a co-founder of the National Association of Corporate Secretaries. He was elected to the Board of the National Association of Corporate Secretaries
  on 20 December 2019
• He won the XIII Director of the Year national award in the Corporate Governance Director/ Corporate Secretary category

of the General Meeting of Shareholders and the Board

of Directors. The main objective of the Management Board is to ensure that the Company is operating efficiently.

In its efforts to reach this objective, the Management Board is guided by the following principles:

• Efficient and objective decision-making that favours the interests of the Company and its shareholders
• Fair, timely, and efficient execution
  of the resolutions of the General Meeting of Shareholders and the Board of Directors
• Cooperation with trade unions to engage with the employees
• Cooperation with government agencies and local authorities on the most socially important issues
• The list of issues in the Management Board's remit
  is regulated by theNLMK Charter andtheRegulations on the Management Board, which are available
  on the Company's website.

6members

NLMK Group's Management Board consisted of six members as of 31 December 2023

(Chair of the Management Board) determines the format of the Management Board's meetings.

In 2023, the Management Board held 36 meetings, including 14 by absentee ballot. The following issues were considered at these meetings:

• Achievement of the Group's targets and status of the development programme on occupational health and safety
• Execution of NLMK Group's budget
• Implementation of the strategy regarding operational efficiency, investment programme, and sales portfolio management
• HR and Social Strategy implementation
• Development programmes for functional areas and production facilities
• Development avenues and projects
• The Group's participation in and withdrawal from other companies, defining position on participation of subsidiaries in other companies.
• Recommendations to the governance bodies of subsidiaries

NLMK Management Board members had no conflict of interest in 2023.

The Company has no particular share ownership requirements for the CEO (Chair of the Management Board) and other Management Board members.

CEO (Chair of the Management Board)

The CEO (Chair of the Management Board)

is a permanent sole executive body, whose main responsibility is to manage the Company's day-to-day activities, arrange for the execution of resolutions passed by the General Meeting of Shareholders and the Board of Directors, organize the work of the Management Board, and ensure the timely adoption of resolutions by the Management Board.

The rights and obligations of the CEO (Chair

of the Management Board) are outlined in the existing legislation of the Russian Federation as well as the CEO's contract with the Company.

The CEO (Chair of the Management Board) is elected by the shareholders for a period lasting until

the next Annual Meeting unless otherwise stipulated by the resolution.

According to the prevailing corporate documents, the CEO (Chair of the Management Board) cannot simultaneously be the Chair of the NLMK Board of Directors.

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Report on remuneration paid to governing bodies

The level of remuneration the Company pays to members

of governing bodies is sufficient to attract, motivate, and retain persons with the expertise and qualifications NLMK seeks.

KPIs for the CEO (Chair

of the Management Board) include annual financial performance,

as well as long-term indicators

for Energy and Environment. For top executives, KPI data is recorded as financial gains from implementing the corresponding operational efficiency projects. The KPIs of all top managers include targets

for the injury rate reduction and OHS-related indicators.

Approach to remuneration

and reimbursement paid to members of the Board of Directors

[GRI 2-19] [GRI 2-20]

Members of the Board of Directors are paid remuneration during the period in which they perform their duties, and they receive reimbursement of expenses related to the performance of their duties. The Regulations on Remuneration

of Members of the Board of Directors approved by the General Meeting of Shareholders establish the amount of remuneration and determine

the terms and conditions as well as the procedure

for remuneration payment. The Regulations are available on the Company's official website.

The Remuneration Policy for members of the Board of Directors serves

to align their financial interests with the long-term financial interests of shareholders

The Regulations contain transparent mechanisms for determining the amount of remuneration paid

to the directors and govern all types of compensation, benefits, and privileges offered to them.

Remuneration is paid to members of the Board of Directors for executing their rights and duties reasonably and faithfully in the interests of the Company. It consists of the basic remuneration and a bonus.

Members of the Board of Directors are entitled

to basic remuneration if they participated in over half of the Board meetings over the reporting period.

Members of the Board of Directors are also paid remuneration for chairing the Board, as well as for being a member or Chair of one or more Board committees.

A member of the Board of Directors may receive

a bonus that shall not exceed the amount of two basic remuneration packages. The amount of bonuses

is determined based on the member's contribution and based on the recommendations of the Human Resources, Remuneration, and Social Policy Committee.

The remuneration is paid to the members of the Board of Directors based on the resolution of NLMK's General Meeting of Shareholders.

The following expenses are considered to be reimbursable:

• Transportation expenses of Board members incurred while travelling to and from meetings
• Accommodation costs incurred while attending meetings
• Representation expenses
• Costs associated with obtaining the professional advice of experts on issues under consideration at Board meetings

Compensation shall only be paid if the member of the Board of Directors participated in more than half of its meetings. The maximum amount of the compensation shall not exceed the amount of the basic remuneration package.

The Company does not have other forms

of remuneration, including short-term or long-term incentive programmes that depend on financial performance, or stock option programmes.

Approach to remuneration

and Compensation for Management Board members and other top executives

[GRI 2-19] [GRI 2-20]

The material interest of the members

of the Management Board in achieving the Company's strategic goals is ensured by short-term and long- term incentive systems. Short-term motivation system is based on the current system of key performance indicators (KPIs). The amount of bonuses paid

to the members of the Board depends on their KPIs. The variable part of remuneration for Management Board members amounts to approximately half

of the total yearly remuneration.

The KPIs used to determine rewards for senior management are related to NLMK's financial and operating performance and are intrinsically linked to shareholder value. They include operational performance, social responsibility and occupational safety, ecology and energy efficiency, and organizational development indicators.

of NLMK's strategy implementation, such as achieving the sustainable development targets. For example, the weight of the LTIFR indicator is 10% of the CEO's annual compensation

Top executives including heads of NLMK Group's main production sites, have KPIs related to reducing air emissions and СО2 emissions, as well as increasing the share of recycled waste. In addition, energy efficiency KPIs are set for the relevant executives, including heads of sites and the Vice President

The Company also has a long-term incentive programme for members of the executive bodies

and other senior executives of the Company. The current programme adopted in 2019 covers the 2019-2023 strategic cycle.

Long-term incentive programme payments depend on attainment of NLMK's strategic goals. 50%

of the payment depends on achieving structural effect of the Company's strategy while the other 50%, on achieving the target value of the Company's EBITDA over the five-year horizon.

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Operational control and risk management

In order to safeguard shareholder value and sustainability, we employ

the latest operational control and risk management practices and methods.

As a major international steel producer, NLMK is subject	in its Internal Control and Risk Management System;
to a variety of risks that could have a negative impact	it also provides for 'three lines of defence' and four levels
on the Group's business and our stakeholders if	of management. Control procedures apply in the Group's
materialized. NLMK Group's approach to operational	Russian and international operations and are an integral
control is based on a clear segregation of authority	component of key corporate decision-making activities
and functions between the entities involved	and processes.

Internal Control and Risk Management System

Participant	Key functions
LEVEL 2
Management Board	գ Defines the strategy and approves critical risk management measures
	գ Ensures the effective functioning of the Internal Control and Risk
	Management System
Management Board Risk Management	գ Approves the principles, strategy, and regulatory instruments for risk
Committee	management processes and the internal control system
	գ Regularly reviews the Company's risk map (a list of significant risks, indicating
	their weight and trends for a certain period) and ensures the overall
	monitoring of the implementation of risk management measures
	գ Approves and performs general monitoring of risk management
	measures
	գ Regularly reviews the results of an analysis and assessment
	of the internal control system, approves and ensures the general
	monitoring of the implementation of measures to enhance
	the system
	գ Ensures overall organization of activity to enforce the Code
	of Corporate Ethics and Anti-Corruption Policy
	գ Regularly reviews reports on anti-corruption issues
	գ Coordinates the work of subdivisions participating in the risk
	management process and internal control system
Investment Committee	գ Provides general control over the magnitude of risks and over
	the selection, implementation, and inclusion into the budget
	of investment project risk management measures

The internal control and risk management system

of the risk management system and regularly reviews

LEVEL 3

employed by NLMK is designed to ensure reasonable certainty that the Group's strategic and operational goals will be achieved, to create and protect value for the Group, and to ensure sustainable development. The above is implemented through rapidly identifying, assessing, and effectively managing risks and opportunities.

The NLMK Board of Directors, which determines the principles and approaches to the organization

reports on the status of the Company's risks, plays a key role in the risk management process. [GRI 2-12]

The Internal Control and Risk Management Department functions as a separate structural unit within NLMK.

Its goals and objectives include analysing risks associated with key business processes, ensuring that risk management processes are effective, implementing monitoring procedures, and developing a corporate culture of risk awareness.

գ Risk Management and Internal Control
գ	OHS
	㈭ See the OHS section for more detail
գ	Environment and Climate
	㈭ See the Environmental protection section
	for more detail
գ	Legal Support
գ	Compliance
	㈭ See the Compliance section for more
	detail

գ Ensures assessment and regular monitoring of the level of risks taken

and assessment of the efficiency of management activities

գ Coordinates and provides methodological support for risk

management process

գ Drafts regulatory and methodological documents concerning risk

management and internal control

գ Records and processes incidents associated with deviations

in the internal control system and risk management, plans

and monitors corrective measures

գ Systematically looks into the risk coverage by the internal control

and risk management system in cooperation with line managers,

plans and monitors the implementation of corrective measures

գ Builds a system for effective internal communication about risks

գ Increases the Company's resilience to business interruptions

Division of functions within the Internal Control and Risk Management System

Participant	Key functions
LEVEL I
Board of Directors	գ Defines principles for and approaches to the organization

գ	Corporate Security
գ	Financial Controlling
գ	Information Security
	㈭ See the Information Security section for
	more detail

գ Ensures effective response and business recovery after interruptions.

գ Ensures compliance of NLMK's operations to the relevant legislation

and internal documents

գ Promotes and assesses the effectiveness of measures to counteract

corruption and fraud implemented in accordance with the Group's

anti-corruption policy

գ Creates a risk-awareness culture

	of the internal control and risk management system
Audit Committee	գ Monitors the reliability and effectiveness of the internal control
	and risk management system
	գ Monitors procedures to ensure the Group's compliance with legislative
	and trade exchange requirements, and with corporate ethical
	standards, rules, and procedures
	գ Carries out analysis and assessment of execution of the conflict-of-
	interest management policy
	գ Oversees compliance with policies and operational controls over
	environmental and social risks, as well as occupational health
	and safety risks

LEVEL 4

Risk owners (business subdivisions)	գ Risk identification
	գ Implement risk management measures
	գ Monitor key risk indicators (KRIs)
Internal Audit	գ Assesses the reliability and effectiveness of internal control and risk
	management, and evaluates the corporate governance system
	with a view to provide independent and objective guarantees
	and consultations to the Board and the CEO
	գ Provides advice and recommendations, promotes knowledge sharing

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Our approach to risk management

Risk map

Risk management is a continuous process that aims

to reduce risk to an acceptable level and prevent events that could have a negative impact on NLMK achieving its business goals. The Group is committed to effectively and proactively managing risks and opportunities

on a day-to-day basis and to the ongoing development of a risk-awareness culture.

NLMK's internal control and risk management system was developed to take into account the challenges posed by the external environment and in accordance with the principles set forth in international risk management standards. NLMK's key internal document in risk management is the Internal Control and Risk Management Policy, approved by the Board of Directors. Internal documents have also been developed for managing individual risk categories, which are of relevance to the Group.

Assessing the probability and impact of risks is one of the most crucial factors in making informed management decisions. To this end, NLMK utilizes modern risk analysis practices and tools. By applying specially developed methods for assessing individual risk categories, anticipated losses and the probability of risk materialization can be determined with a very high degree

of precision, and effective risk management measures can be developed.

The Risk Management Committee of the Management Board is an important link in the internal control and risk management process. During its meetings, it conducts a detailed review of changes in the Company's

risk profile, issues related to the functioning

of the internal control and risk management system, and methodological approaches to risk management. The Management Board and the Board of Directors review the map of significant risks to which NLMK

is exposed and take into account information on current and emerging risks in the course of decision-making.

NLMK's functional units work on identifying and responding to risks that are relevant to their operations with methodological support from

the Internal Control and Risk Management Department. The Department monitors the effectiveness

of the measures used to manage risks as part

of an analysis of management reporting from risk- owning functional units; this includes operational data at the business process level on current and planned KRI values, the status of risk management measures, and risks that have materialized.

NLMK is committed to continuous development

of its corporate risk management culture, which aims to identify and respond to risks in a timely and effective manner. With this aim in mind, the management regularly emphasizes the importance of risk management in internal corporate communications. Systematic training in managing individual risk categories and integrating risk management into

the daily activities of the Group also help to develop a corporate risk-awareness culture.

The majority of significant risks to which NLMK is exposed are assessed on a quantitative basis. The Group assesses significant risks using scenario analysis models and stress testing.

Risk management requires specific knowledge and often involves data processing and modelling. In order to cope with specific local tasks in business units, the Company runs the Risk Lab, a specialized competence centre. It develops innovative methods and tools for quantifying risk and making decisions in conditions of uncertainty to contribute

to the continuous improvement of the risk management methods.

The Company regularly monitors the effectiveness of its internal control and risk management system and implements measures to improve it.

NLMK's Risk Map enables systemic identification, analysis and monitoring of risks. The Company has drawn up a list of salient (critical) risks. This list covers both financial and non-financial risks, which, according to the Group's estimations, are highly likely to materialize or may have a big impact on the Company's operations. Analysing critical risks and monitoring

the implementation of measures to manage risks of this kind are a continuing priority for the NLMK Group management team.

The Risk Map is regularly updated to reflect the strategy, changing operations, and external context

The major changes in the Risk Map in 2023 were related to external factors: increased risks in finances (prices and exchange rates, and credit) and in supply continuity, which triggered risk exposure of the investment project management and IT&IS. The Company developed a list of measures to ensure business continuity and analysed the IT&IS risk profile. The Group continues to pay particular attention to occupational safety and the social well-being of employees.

1 Including ISO 31000:2018 and COSO ERM:2017.

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