4.5. REMUNERATION OF THE BOARD OF DIRECTORS MEMBERS

In April, 2015 the Rosneft Board of Directors approved a new version of the Regulation on Rosneft Board Remuneration and Compensations (the Regulation)¹ with account of corporate management practices development in terms of the BoD members’ incentive system, updated from the date of approval of the previous version of the document. The Regulation is posted on the Company official website: http://www.rosneft.ru / Investors / corpgov / 

The procedures for calculation and payment of remuneration to the Rosneft BoD members conform to recommendations of the Corporate Governance Code of the Bank of Russia, in particular:

• the fixed amount of base remuneration of a member of the Board of Directors (for performing functions of a BoD member) shall be USD 500,000 (five hundred thousand US dollars) for a fiscal year, similar to remunerations of boards of directors in major vertically integrated oil companies and sufficient to attract, motivate and hold duly competent and qualified persons within the Company Board of Directors;
• available list of all types of payments to the Board of Directors members and conditions of their receipt, providing absolute transparency of the directors' reimbursement estimation procedure;
• set principle of fair estimation of remuneration: remuneration shall be paid in proportion to the period of a BoD member functioning (performing functions of the BoD Chairman / committee member / committee chairman) and shall not be paid to a BoD member taking part in less than 2 / 3 of the held meetings;
• available opportunity to pay remuneration to BoD members with the Company shares and set limits for transactions with the shares received upon the relevant decision of the General Shareholders Meeting in order to correlate financial interests of the directors with the Company long-term development goals and financial interest of its shareholders (BoD members are advised not to sell the major part of their shares of the Company (over 50 % of the received shares) and not to apply any hedging instruments within at least 1 (one) year upon secession of their membership in the Board of Directors);
• set principles and conditions of costs compensations;
• specified list of costs to be reimbursed to BoD members (including the costs for giving expert advice on the issues within the Board of Directors' remit).

Regulation also stipulates payment of renumeration in rubles ( at the Russian Central Bank exchange rate at the date of payment) to all the Board members except for non-residents, who receive payment in USD. The Company does not provide any other forms of short-term motivation or any additional financial incentives to members of the Board of Directors, including participation in an optional program and / or extra payments or compensations, including the cases of early termination of powers of BoD members due to the change of control over the Company or other circumstances.

Remuneration for performing activities in the Company Board of Directors as required by the current Provision for Remuneration and Compensations to the Rosneft BoD Members shall not be paid to:

• Civil officers and persons restricted or not allowed to get any payments from business entities by the current legislation;
• The sole executive body and members of the collective executive body.

The Annual General Shareholders Meeting held on June 17, 2015 (unnumbered Minutes of June 22, 2015) resolved to approve the remuneration to the members of the Company Board of Directors for the period of their service in the following amounts:

• Andrey Akimov — USD 530,000 (USD 500,000 base remuneration and USD 30,000 —
  for performing functions of HR and Compensation Committee member);
• Andrey Bokarev  — USD 530,000 (USD 500,000 base remuneration and USD 30,000 —
  for performing functions of Audit Committee member);
• Matthias Waring — USD 580,000 (USD 500,000 base remuneration, USD 50,000 —
  for performing functions of the HR and Compensation Committee Chairman and USD 30,000 — for performing functions of Audit Committee member);
• Nikolay Laverov — USD 580,000 (USD 500,000 base remuneration, USD 50,000 —
  for performing functions of the Strategic Planning Committee Chairman and USD 30,000 —
  for performing functions of Audit Committee member);
• Alexander Nekipelov — USD 660,000 (USD 500,000 base remuneration, USD 100,000 for performing functions of the Board of Directors Chairman, USD 60,000 for performing functions of HR and Compensation Committee and Strategic Planning Committee member);
• Donald Humphreys — USD 580,000 (USD 500,000 base remuneration, USD 50,000 —
  for performing functions of the Audit Committee Chairman and USD 30,000 —
  for performing functions of HR and Compensation Committee member);
• Artur Chilingarov — USD 530,000 (USD 500,000 base remuneration and USD 30,000 —
  for performing functions of Strategic Planning Committee member).

Remuneration to Robert Dudley, member of the Company Board of Directors, was not paid according to his application. Remuneration to Igor Sechin, Vice-Chairman of the Board of Directors, was not paid either, as he is the sole executive body of the Company.

The total amount of the said remuneration in 2015 is equal to USD 3,990,000. As of December 31, 2015, the Company had fulfilled its obligation to pay remuneration approved by the General Shareholders Meeting to the said Rosneft Board of Directors members.

In addition to that, the above resolution of the General Shareholders Meeting approved reimbursement of expenses to the members of the Rosneft Board of Directors associated with performance of their functions.

Rosneft shares held by the members of the Board of Directors and the Management Board

Transactions with Rosneft securities by members of the Board of Directors and of the Management Board

The effective Company Regulation on Insider Information obliges members of the Board of Directors, the Management Board and the President to disclose to the Company information on transactions which they execute with Rosneft securities.

In 2015, a member of the Rosneft Board of Directors executed a transaction with Company securities. Details of such transaction were presented to the Company (in compliance with the procedure and time limits stipulated by the internal documents) and were disclosed to the stock market in compliance with the applicable legislation.