June 22, 2018
Magnit Announces the Key Decisions of the BOD.
Krasnodar, June 22, 2018: PJSC "Magnit", one of Russia's leading retailers (the "Company", MOEX and LSE: MGNT), announces the key decisions of the Board of Directors of the Company taken at the meeting held on June 21, 2018.
Khachatur Pombukhchan submitted his resignation notice to the Board of Directors. The Board accepted his resignation with immediate effect and appointed Olga Naumova, the current Executive Director, as the new CEO of PJSC "Magnit". The Company, on its own behalf and on behalf of its shareholders, would like to express its deep appreciation to Khachatur for his enormous contribution to the Company's success for more than ten years.
The Board then appointed Olga Naumova to the position of CEO of PJSC "Magnit". "Olga has over 20 years of managerial experience as a senior executive in various sectors including consumer retail and played a crucial role in the transformation of "Pyaterochka" stores at her previous position as the General Director of the format. Members of the Board of Directors are pleased to announce Olga's appointment as the new CEO of the Company and are confident that Olga will make significant contribution to the success story that Magnit is", Charles Emmitt Ryan, the Chairman of the Board of Directors of PJSC "Magnit" said.
The Board believes that it is critically important to be fully engaged with the management during this transition phase to provide strategic guidance and supervision. The Board has decided to involve Paul Foley, Deputy Chairman of the Board of Directors, who has significant retail industry experience, to provide such strategic advice and support to Olga in transitioning to her new role. As a next step, the Board intends that Paul will combine his Board position with a senior executive role to support both Olga and the Company in the development of the Company's strategy focusing on customer engagement and like-for-like growth.
Paul Foley is the Founder and Managing Partner of Foley Retail Consulting GmbH in Europe. Paul is currently serving on the board at GIPPO Hypermarkets in Belarus, VOLI supermarkets in Montenegro and AHT Cooling Systems in Austria. The main bulk of his career was 23 years at Aldi Süd ending in 2012. He was the CEO for the UK and Republic of Ireland from 1999-2009 Paul started his career with Bejam Frozen Foods in 1974 and has over 40 years of experience in retail.
Charles Emmitt Ryan was elected as the Chairman of the Board of Directors, Paul Michael Foley - as his Deputy, Vladislav Golovanov - as the Secretary of the Board of Directors.
The Board of Directors has decided to form the Audit Committee, comprised of Gregor William Mowat (Chairman of the Committee), James Pat Simmons, and Alexander Prisyazhnyuk; the HR and Remuneration Committee, comprised of James Pat Simmons (Chairman of the Committee), Paul Michael Foley, and Alexander Prisyazhnyuk; the Strategy Committee, comprised of Paul Michael Foley (Chairman of the Committee), Alexey Makhnev, and James Pat Simmons.
The Board of Directors has approved the Management Board of PJSC "Magnit", comprised of six members: Olga Naumova (Chairman of the Management Board), Elena Milinova (Deputy Chairman of the Management Board), Tatyana Knyazeva, Elena Zhavoronkova, Artem Smolenskiy, Ilya Sattarov.
The HR and Remuneration Committee has presented a report on the results of consideration of the new organizational structure of the PJSC "Magnit" Group of Companies, as well as drafts of the Short-Term and Long-Term Incentive Programs for the management. "The Short-Term Incentive Program for top managers of the Company proposes changes in remuneration package towards higher share of performance bonuses in total compensation, with the size of bonuses directly linked to meeting key performance targets. In the longer-term, the management should be focused on share price performance as a key metric for the Long-Term Incentive Program. We discussed the key principles of the programs but have not finalized the details so we will continue to work on that", commented James Simmons, the Chairman of HR and Remuneration Committee.
The Board of Directors has recommended approving the new version of the Charter of JSC "Tander" that implies expansion of business activities of the Company: it is planned that JSC "Tander" will obtain a license to enter into a pilot cooperation to operate retail stores within a small number of Russian post offices.
The Board of Directors has examined the matter regarding the status of the Company's improved customer value proposition strategy, and has asked for more detailed information to understand how pharmacy fits into process of substantially increasing customer engagement.
Paul Foley, Deputy Chairman of the Board and Chairman of the Strategy Committee, commented: "We have examined the financial and economic case for the pharmacy business to strengthen the customer value proposition of our existing retail concepts. The Committee believes that this strategy should be developed further. We await a full proposal from the Management, including a comprehensive due diligence on any potential acquisition."
In addition to the agenda items, the Board discussed and preliminary considered an initiative to form the Capital Markets Committee. The Committee would be a body of the Board of Directors and provide recommendations on improving corporate governance. The Board of Directors will return to this issue at the next meeting, after all necessary organizational procedures are carried out and the documents prepared.
Charles Emmitt Ryan, Chairman of the Board of Directors, concluded: "The joint objective of the Board of Directors and the Company's management is to ensure that the Company has the highest quality corporate governance system that meets best practices and international standards, to serve the interests of the Company and all its stakeholders. The Board of Directors takes these issues very seriously. To that end, the Board of Directors and its committees will continue close coordination with, and supervision of, the management on all important matters the Company is facing. In addition, significant attention will be devoted to the appropriate management remuneration system based on KPIs to provide the right incentives for management and ensure maximum transparency both for the investors and for the managers themselves."
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Public Joint Stock Company "Magnit" is one of Russia's leading retailers. Founded in 1994, the company is headquartered in the southern Russian city of Krasnodar. As of March 31, 2018, Magnit operated 37 distribution centers and 16,625 stores (12,283 convenience, 242 hypermarkets, 210 Magnit Family stores and 3,890 drogerie stores) in 2,764 cities and towns throughout 7 federal regions of the Russian Federation.
In accordance with the audited IFRS results for 2017, Magnit had revenues of RUB 1,143 billion and an EBITDA of RUB 92 billion. Magnit's local shares are traded on the Moscow Exchange (MOEX: MGNT) and its GDRs on the London Stock Exchange (LSE: MGNT) and it has a credit rating from Standard & Poor's of BB. Measured by market capitalization, Magnit is one of the largest retailers in Europe.