The establishment of Gazprom Neft’s sustainable development strategy and the monitoring of its implementation are assured by the Company’s corporate governance system, which complies with the applicable Russian legislation, the Company’s Articles of Association and in-house regulations. Gazprom Neft also takes full account of best international practice.
Gazprom Neft’s Corporate Code of ConductThe Corporate Code of Conduct establishes the system of principles, norms and rules for the Company’s governance and control. This system regulates interaction between the shareholders, Board of Directors, and executive bodies, as well as other corporate relations. is aimed at ensuring the effective protection of the rights and interests of shareholders, transparency of decision-making by management, and the professional and ethical responsibility of members of the management and control bodies of the Company, its employees and counterparties.
GAZPROM NEFT’S MANAGEMENT BODIES
The general meeting of shareholders is the Company’s highest management body and its scope of responsibilities includes the most important corporate matters, such as the approval of annual reports and annual accounting (financial) statements, distribution of profits, and amendments to the Articles of Association. According to the Articles of Association, the general meeting of shareholders is elected by the Board of Directors.
In 2013, the Company’s shareholders convened one annual General Meeting and held six extraordinary general meetings. In light of the Company’s recently approved and more ambitious strategy, a decision was taken to increase the number of Board Directors to improve operational efficiency, particularly with respect to the balance of skills and competencies.
The Board of Directors exercises general management and strategic management of the Company’s business. Among the obligations of the Board of Directors is determination of the Company’s development priorities within its main operational guidelines. The Board of Directors monitors and ensures the efficient working of the Company’s executive bodies. Members of the Board must have the necessary competencies and For a list of the Management Board members, their background data and specific qualifications, and the number of meetings attended by each member, refer to OJSC Gazprom Neft’s Annual Report 2013.experience to meet these challenges.
- General Meeting of Shareholders is the highest management body whose jurisdiction covers the most essential issues related to the Company’s business.
- Board of Directors is the management body that exercises general management of the Company’s business and is responsible for strategic management to increase the Company’s shareholder value. The Board of Directors monitors and ensures the efficient working of the Company’s executive bodies.
- Management Board is a collaborative executive body exercising management of the Company’s day-to-day business.
- Chief Executive Officer is the sole executive performing the functions of the Company’s Chairman of the Management Board.
- Audit Commission is a supervisory body controlling the Company’s financial and business activities, elected by the general meeting of shareholders. The Audit Commission’s jurisdiction includes inspecting and analysing the Company’s financial position, maintaining internal control and risk management systems and monitoring the legality of business operations.
- External Auditor is a supervisory body conducting the annual audit of financial statements in accordance with the Russian Accounting Standards (RAS) and the International Financial Reporting Standards (IFRS), approved by the General Meeting of Shareholders at the recommendation of the Company’s Board of Directors.
In accordance with the OJSC Gazprom Neft Articles of Association adopted by the extraordinary General Meeting of Shareholders on 12 November 2013, the Board of Directors must be compriosed of 13 people. The Company’s Board of Directors is comprised of members of the OJSC Gazprom Management Committee and two independent directors. In the Board, 12 out of 13 are non-executive directors. The Board of Directors is headed by Alexey Miller, Chairman of the Gazprom Management Committee.
The Company carries out an annual evaluation of the Board’s performance, taking into account its actual contribution to the Company’s operating results. The evaluation of the Board of Directors, held in 2013 by the Human Resources and Compensation Committee, noted an improvement in the Board of Directors’ effectiveness as a result of a greater number of topics discussed in Board meetings and active involvement by Board members in the meetings.
In 2013, the Board of Directors considered a number of significant sustainable development issues, including development and approval of the Company’s 2025 Strategy, approval of the 2020 Innovation Development Programme and the Regulations on Insider Information and IT Policy. The agenda of the Board of Directors in 2013 also covered social and economic policy and social investment, including the sponsorship of sports clubs in Gazprom Neft’s operating regions (Zenith Football Club and SKA Hockey Club) during sports seasons.
Structure of Gazprom Neft’s Management and Control Bodies
Two committees have been set up under the OJSC Gazprom Neft Board of Directors: the Audit Committee and the Human Resources and Compensation Committee. These committees have been set up to carry out preliminary in-depth research into matters within their jurisdiction. The procedures governing committee creation and activities are outlined in the respective regulations. The Audit Committee assists the Board of Directors in exercising control over the Company’s financial and business activities by assessing the efficiency of internal control systems and by monitoring the risk management system. The Human Resources and Compensation Committee’s main role is to make a comprehensive preliminary examination and prepare recommendations for the Board of Directors to adopt resolutions regarding the Company’s human resource policies and compensation for members of OJSC Gazprom Neft’s management bodies and the Audit Commission.
The executive bodies of Gazprom Neft are the Management Board (collaborative executive body) and the Chief Executive Officer (sole executive), who is also the Chairman of the Management Board ex-officio. The Articles of Association of Gazprom Neft and the Regulations regarding the Chief Executive Officer and the Management Board govern the functioning of the executive bodies. The Chief Executive Officer and the Management Board report to the Board of Directors and the General Meeting of Shareholders. The Chief Executive Officer of the Company is Alexander Dyukov. As of 31 December 2013, the Management Board of Gazprom Neft consisted of For a list of the Management Board members, their background data and specific qualifications, refer to OJSC Gazprom Neft’s Annual Report 2013.10 members.
Within the Management Board, the Company’s activities for sustainable development with regard to occupational health and safety are supervised by Alexander Dyukov, the Chief Executive Officer and Chairman of the Management Board; human resources are the responsibility of Vitaly Baranov, Deputy Chairman of the Management Board and Deputy CEO for Administrative Issues. Regional socio-economic development programmes are coordinated by Alexander Dybal, member of the Management Board and Deputy CEO for Interaction, including information exchange, between the Company and its stakeholders.Corporate Communications.
In 2013, 11 OJSC Gazprom Neft Management Board meetings were held, and 11 matters were voted upon. At the meetings, a wide range of sustainable development issues was discussed, including:
- OJSC Gazprom Neft Development Strategy to 2025
- Consolidated results of Gazprom Neft in 2012
- Business plan of the Exploration and Production Segment for 2014-2016
- Business plan of the Logistics, Refinement, and Sales Segment for 2014-2016
- Human resources strategy of OJSC Gazprom Neft until 2020
- HR succession pool management system in 2014
- Concept and principles of OJSC Gazprom Neft’s charitable activities
According to the Articles of Association and the Regulations of the OJSC Gazprom Neft Management Board, the Board of Directors receives additional disclosure on the Company’s performance every quarter via management reports.
Internal control over the Company’s financial and business activities is carried out by the Internal Audit Department. Its main functions include conducing internal audits, organizing an integrated risk management system, and carrying out activities to prevent fraud. The General Meeting of Shareholders elects the Audit Commission responsible for inspecting and reviewing the Company’s financial situation, internal control and risk management systems, and for verifying the legality of business operations. For the annual auditing of the financial statements under the Russian Accounting Standards (RAS) and International Financial Reporting Standards (IFRS), Gazprom Neft engages an external auditor. The choice of independent auditor is approved annually by the General Meeting of Shareholders at the suggestion of the Board of Directors.
The Company implements mechanisms to eliminate possible conflicts of interest in its For further information regarding compliance with the Corporate Code of Conduct, refer to Gazprom Neft’s Annual Report 2013. senior management bodies.
Gazprom Neft has a structured programme based on objective criteria for the fair compensation of top and senior management, which establishes the link between short-term goals, including those related to sustainable development, and For information on the remuneration to the members of the Company’s Board of Directors and Management Board, refer to Gazprom Neft’s Annual Report 2013.the amount of remuneration.
Gazprom Neft seeks to maintain a high level of transparent information. The Company publishes its financial statements prepared under international reporting standards, management reports, and sustainable development reports. Since 2010, it has synchronised the drafting process and publishes the whole set of reports simultaneously. These documents are also available on the official corporate website.
This provides stakeholders and the public with access to information in all aspects of the Company’s operations. The mechanisms that enable the shareholders of Gazprom Neft to influence the actions of the Company’s management bodies are established in the Company’s Corporate Code of Conduct. The information on compliance with the Corporate Code of Conduct can be found in the Company’s Annual Report 2013.
The Company actively engages shareholders and improves its relations with the investment community, by ensuring a high level of transparency. The high level of information disclosure to Gazprom Neft’s shareholders and investors has been noted in a number of studies by independent investor relations agencies and confirmed by awards in this See further details in this chapter of the Report. area presented to the Company.
In 2013, Gazprom Neft’s Board of Directors approved a new version of the Regulation on Insider Information, which took into account main changes in Russian Federal law. The Company approved its List of Insider Information based on the official Federal Service for Financial Markets (FSFM) List, and set out a procedure covering the access to insider information and rules to keep insider information confidential and ensure compliance control.
The principles that guide Gazprom Neft in the management of sustainable development are documented in the Company’s corporate guidelines, including the Corporate Code of Conduct and the Corporate Code. These principles are consistent with the scope of the social responsibility principles of the international ISO 26000 standard (Guidance on Social Responsibility).