Committees attached to the Board of Directors
Three committees were established under the Board of Directors of Zarubezhneft JSC, as follows:
- Strategic Planning Committee;
- Audit Committee;
- Compensation and Nominating Committee.
Composition of the Strategic Planning Committee under the Board of Directors of Zarubezhneft JSC in 2019 |
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The Committee Members, prior to the Annual General Meeting of Zarubezhneft JSC shareholders (January 1, 2019 through June 30, 2019): |
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The Committee Members, subsequent to the Annual General Meeting of Zarubezhneft JSC shareholders (August 12, 2019 through December 31, 2019): |
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Pursuant to the Regulation on the Strategic Planning Committee under the Board of Directors, the issues lying within its competence and expertise include, without limitations, as follows:
- determining priority areas, strategic objectives and basic principles of the Company strategic development;
- considering long-term development programs and reports on implementation thereof;
- considering reports on implementation of the Company strategy, developing recommendations as to adjustment thereof;
- developing recommendations as to establishing branches and opening representative offices;
- developing recommendations as to approval of the Company key performance indicators and target values thereof;
- considering reports on the Company’s achievement of the target values of the approved key performance indicators;
- developing recommendations as to strategic documents covering innovative development issues.
During 2019, 17 meetings of the Strategic Planning Committee were held, each with the participation of all elected members of the Strategic Planning Committee.
Following the results of the meetings held in 2019, the Strategic Planning Committee made recommendations to the Board of Directors of the Company as to the following issues:
- consideration of the Progress Report on Implementation of Zarubezhneft JSC Corporate Strategy for 2019;
- implementation of Zarubezhneft JSC Long-Term Development Program (LTDP) as part of the consideration of the Report on the LTDP Implementation, and the audit report as to the LTDP implementation inspection in 2018;
- approval of Zarubezhneft JSC Business Plan for 2020;
- approval of the report on achievement of the KPI target values for 2018 and establishment of the target values for 2020;
- approval of the Performance Enhancement and Operational Costs Reduction Program for 2019;
- approval of the Report on Implementation of Zarubezhneft JSC Innovation Development Program (hereinafter, the IDP) for 2018;
- issues regulating the sale of non-core assets of Zarubezhneft JSC (NCA), including the approval of the NCA Register and the NCA Sale Plan for 2019.
Besides, at the Committee physical meeting (Minutes No. 53 dated March 6, 2019) consideration of, and recommendations as to, the key issues related to the implementation of the Corporate Development Strategy of the Company, were given as follows:
- On the vision embodied in Zarubezhneft JSC Innovation Development Program.
- On development of renewable energy sources projects in Zarubezhneft JSC.
- On current status of Zarubezhneft JSC as to entering new oil and gas projects in foreign countries and in the Russian Federation.
No. | Meeting / form of holding | Meeting date | Agenda | The Strategic Planning Committee Members having participated in the meeting |
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1 | Strategic Planning Committee meeting / by correspondence | 11.01.2019 |
| K. V. Karapetyan S. I. Kudryashov A. L. Teksler A. V. Tikhonov |
2 | Strategic Planning Committee meeting / by correspondence | 15.02.2019 |
| K. V. Karapetyan S. I. Kudryashov A. L. Teksler A. V. Tikhonov |
3 | Strategic Planning Committee meeting / by personal attendance | 06.03.2019 |
| K. V. Karapetyan S. I. Kudryashov A. L. Teksler A. V. Tikhonov |
4 | Strategic Planning Committee meeting / by correspondence | 14.03.2019 |
| K. V. Karapetyan S. I. Kudryashov A. L. Teksler A. V. Tikhonov |
5 | Strategic Planning Committee meeting / by correspondence | 15.04.2019 |
| K. V. Karapetyan S. I. Kudryashov A. L. Teksler A. V. Tikhonov |
6 | Joint meeting of the Strategic Planning Committee and the Compensation and Nominating Committee / by correspondence | 26.04.2019 |
| A. A. Gladkov K. V. Karapetyan S. I. Kudryashov A. L. Teksler A. V. Tikhonov |
7 | Strategic Planning Committee meeting / by correspondence | 14.05.2019 |
| K. V. Karapetyan S. I. Kudryashov A. L. Teksler A. V. Tikhonov |
8 | Strategic Planning Committee meeting / by correspondence | 17.05.2019 |
| K. V. Karapetyan S. I. Kudryashov A. L. Teksler A. V. Tikhonov |
9 | Strategic Planning Committee meeting / by correspondence | 27.05.2019 |
| K. V. Karapetyan S. I. Kudryashov A. L. Teksler A. V. Tikhonov |
10 | Joint meeting of the Strategic Planning Committee and the Compensation and Nominating Committee / by correspondence | 27.05.2019 |
| K. V. Karapetyan S. I. Kudryashov A. L. Teksler A. V. Tikhonov |
11 | Joint meeting of the Strategic Planning Committee and the Compensation and Nominating Committee / by correspondence | 05.09.2019 |
| P. A. Kadochnikov K. V. Karapetyan S. I. Kudryashov P. Yu. Sorokin A. V. Tikhonov |
12 | Strategic Planning Committee meeting / by correspondence | 05.09.2019 |
| P. A. Kadochnikov |
13 | Strategic Planning Committee meeting / by correspondence | 30.10.2019 |
| P. A. Kadochnikov |
14 | Strategic Planning Committee meeting / by correspondence | 11.11.2019 |
| P. A. Kadochnikov |
15 | Joint meeting of the Strategic Planning Committee and the Compensation and Nominating Committee / by correspondence | 11.11.2019 |
| P. A. Kadochnikov |
16 | Joint meeting of the Strategic Planning Committee and the Compensation and Nominating Committee / by correspondence | 11.12.2019 |
| P. A. Kadochnikov |
17 | Strategic Planning Committee meeting / by correspondence | 24.12.2019 |
| P. A. Kadochnikov |
Composition of the Audit Committee under the Board of Directors of Zarubezhneft JSC in 2019 |
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The Committee Members, prior to the Annual General Meeting of Zarubezhneft JSC shareholders (January 1, 2019 through June 30, 2019): |
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The Committee Members, subsequent to the Annual General Meeting of Zarubezhneft JSC shareholders (August 12, 2019 through December 31, 2019): |
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Pursuant to the Regulation on the Audit Committee under the Board of Directors, the issues lying within its competence and expertise include, without limitations, as follows:
- considering annual report and financial statements;
- considering the results of the financial target values achievement, and reasons for deviations therefrom;
- considering the organization of the risks management system;
- considering the procedures for selecting an auditor;
- considering plans and actual results of the Company’s Internal Audit Service;
- considering the external auditor’s performance, and so on.
In 2019, the Audit Committee held nine meetings, including three physical meetings, each attended by all elected Audit Committee members.
Following the results of the meetings held, the Audit Committee made recommendations to the Board of Directors of Zarubezhneft JSC as to the following issues (without limitations):
- approval of the Annual Report of Zarubezhneft JSC for 2018;
- approval of the Report on Achievement of Zarubezhneft JSC KPI Target Values for 2018;
- approval of initial maximum price and criteria for selecting an auditor, for the purposes of holding a tender for selecting an audit company to audit, under the IFRS, Zarubezhneft Group consolidated financial statements for 2019-2020;
- payment of compensations to the members of the Board of Directors, the Revision Commission, and the General Director of Zarubezhneft JSC.
In April 2019, within the framework of interaction with the external auditor, with account taken of Clause 2.1 of the Guidelines for Organization and Conduct of a Statutory Audit of Financial (Accounting) Statements (approved by Order No. 12 of the Federal Agency for State Property Management dated January 21, 2016), and Clause 2.5 of the Guidelines for Organization of Work of Audit Committees under the Board of Directors (approved by Order No. 86 of the Federal Agency for State Property Management dated March 20, 2014), the Audit Committee under the Board of Directors of Zarubezhneft JSC considered the performance of the external auditor, following the results of the audit of Zarubezhneft JSC accounting (financial) statements under the RAS, and consolidated financial statements under the IFRS, for 2018 (Minutes No. 40 dated April 18, 2019).
The external auditors presented to the Audit Committee the main areas and focuses of the audit conducted for 2018, in accordance with the audit engagements, indicated the accounting principles used and material estimates of the financial statements, provided an evaluation of the Company’s internal control procedures aimed at reducing the risk of the accounting (financial) statements unreliability. Also the audit reports and both accounting (financial) and consolidated financial statements of Zarubezhneft JSC for 2018 were properly considered.
No. | Meeting / form of holding | Meeting date | Agenda | The Audit Committee Members having participated in the meeting |
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1 | Audit Committee meeting / by personal attendance | 08.02.2019 |
| A. A. Gladkov M. Yu. Sokolov A. L. Teksler |
2 | The Audit Committee meeting / by correspondence | 14.03.2019 |
| A. A. Gladkov M. Yu. Sokolov A. L. Teksler |
3 | Audit Committee meeting / by personal attendance | 18.04.2019 |
| A. A. Gladkov M. Yu. Sokolov A. L. Teksler |
4 | The Audit Committee meeting / by correspondence | 14.05.2019 |
| A. A. Gladkov M. Yu. Sokolov A. L. Teksler |
5 | The Audit Committee meeting / by correspondence | 27.05.2019 |
| A. A. Gladkov M. Yu. Sokolov A. L. Teksler |
6 | Joint meeting of the Compensation and Nominating Committee and the Audit Committee / by correspondence | 28.05.2019 |
| A. A. Gladkov M. Yu. Sokolov A. L. Teksler |
7 | The Audit Committee meeting / by correspondence | 05.09.2019 |
| P. A. Kadochnikov K. V. Karapetyan M. Yu. Sokolov |
8 | Audit Committee meeting / by personal attendance | 04.12.2019 |
| P. A. Kadochnikov K. V. Karapetyan M. Yu. Sokolov |
9 | The Audit Committee meeting / by correspondence | 09.12.2019 |
| P. A. Kadochnikov K. V. Karapetyan M. Yu. Sokolov |
In May 2019, in pursuance of Clause 2.1 of the Guidelines for Organization and Conduct of a Statutory Audit of Financial (Accounting) Statements (approved by Order No. 12 of the Federal Agency for State Property Management dated January 21, 2016), and Clause 2.5 of the Guidelines for Organization of Work of Audit Committees under the Board of Directors (approved by Order No. 86 of the Federal Agency for State Property Management dated March 20, 2014), the Audit Committee under the Board of Directors of Zarubezhneft JSC considered the performance of the external auditor, following the results of the audit of Zarubezhneft JSC accounting (financial) statements under the RAS for 2018.
The interaction between the internal audit service (Internal Audit Section) and external auditors of the Company was carried out on the basis of the “Policies of Interaction between the Audit Committee under the Board of Directors of Zarubezhneft JSC and External Auditors”, approved by the Company in accordance with the requirements of the Federal Agency for State Property Management guidelines for organization and conduct of statutory audit of financial (accounting) statements.
In 2019, the interaction between internal and external auditors focused on the following issues:
- evaluation of non-current assets (asset impairment testing);
- evaluation of the risks of material misrepresentation of financial statements;
- evaluation of the risk of fraud and biased judgments and estimates;
- application of new standards when preparing consolidated financial statements;
- quality of interaction between the Company’s responsible employees and the auditors of Nexia Pacioli LLC and Deloitte & Touche CIS JSC during external audits.
The Internal Audit Section conducted, and submitted (in May 2019) for consideration of the Audit Committee, an assessment (evaluation) of the interaction between the Company and the external auditor, based on the criteria recommended by the Federal Agency for State Property Management. The Audit Committee members were also interviewed to assess the quality of the Company’s interaction with external auditors. The quality of interaction between the Company and the external auditors was assessed as “efficient”.
Composition of the Compensation and Nominating Committee under the Board of Directors of Zarubezhneft JSC in 2019 |
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The Committee Members, prior to the Annual General Meeting of Zarubezhneft JSC shareholders (January 1, 2019 through June 30, 2019): |
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The Committee Members, subsequent to the Annual General Meeting of Zarubezhneft JSC shareholders (August 12, 2019 through December 31, 2019): |
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Pursuant to the Regulation on the Compensation and Nominating Committee under the Board of Directors, the issues lying within its competence and expertise include, without limitations, as follows:
- developing recommendations as to the Company’s HR Policies and personnel motivation;
- supervising the implementation of the Company’s compensation policies and a range of motivation programs;
- developing recommendations as to the amount of compensation payable to the members of the Board of Directors and management personnel of the Company;
- improving the system of key performance indicators of the Company;
- considering reports on the Company’s achievement of the target values of the approved key performance indicators.
During 2019, 8 meetings of the Compensation and Nominating Committee were held, each with the participation of all elected members of the Compensation and Nominating Committee.
Following the results of the meetings held, the Committee made recommendations to the Board of Directors of Zarubezhneft JSC as to the issues relevant for the compensation system covering the management personnel, the Board of Directors, and the Revision Commission of the Company, as follows (without limitations):
- approval of the Report on Achievement of the Corporate KPI Target Values for 2018;
- payment of compensation to the General Director;
- the amounts of compensation to the members of the Board of Directors of Zarubezhneft JSC;
- the amounts of compensation to the members of the Revision Commission of Zarubezhneft JSC;
- approval of the KPI target values for 2020.
The Compensation and Nominating Committee also recommended that the Board of Directors of the Company approve the revised edition of the Regulations on Compensation to the General Director of the Company, and the data sheet of the Corporate Business Initiative “Challenge”.
No. | Meeting / form of holding | Meeting date | Agenda | The Compensation and Nominating Committee Members having participated in the meeting |
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1 | The Compensation and Nominating Committee meeting / by correspondence | 14.03.2019 |
| A. A. Gladkov M. Yu. Sokolov A. V. Tikhonov |
2 | Joint meeting of the Strategic Planning Committee and the Compensation and Nominating Committee / by correspondence | 26.04.2019 |
| A. A. Gladkov M. Yu. Sokolov A. V. Tikhonov |
3 | Joint meeting of the Compensation and Nominating Committee and the Audit Committee / by correspondence | 28.05.2019 |
| A. A. Gladkov M. Yu. Sokolov A. V. Tikhonov |
4 | Joint meeting of the Strategic Planning Committee and the Compensation and Nominating Committee / by correspondence | 27.05.2019 |
| A. A. Gladkov M. Yu. Sokolov A. V. Tikhonov |
5 | Joint meeting of the Strategic Planning Committee and the Compensation and Nominating Committee / by correspondence | 05.09.2019 |
| K. V. Karapetyan M. Yu. Sokolov P. Yu. Sorokin |
6 | Joint meeting of the Strategic Planning Committee and the Compensation and Nominating Committee / by correspondence | 11.11.2019 |
| K. V. Karapetyan M. Yu. Sokolov P. Yu. Sorokin |
7 | The Compensation and Nominating Committee meeting / by correspondence | 12.12.2019 |
| K. V. Karapetyan M. Yu. Sokolov P. Yu. Sorokin |
8 | Joint meeting of the Strategic Planning Committee and the Compensation and Nominating Committee / by correspondence | 11.12.2019 |
| K. V. Karapetyan M. Yu. Sokolov P. Yu. Sorokin |