Performance of the Board’s Committees
The Company put in place three Committees of the Board of Directors:
- Audit Committee;
- HR and Remuneration Committee;
- Strategic Planning Committee.
Members and chairmen of the Committees are elected at the first in-person meeting of the Board of Directors.
AUDIT COMMITTEE’S MEMBERS
- Hans-Joerg RudloffFrom 1 January 2018 to 21 June 2018, Donald Humphreys was the Chairman of the Committee. On 21 June 2018, he resigned from the Board of Directors upon the expiry of term of his powers. – Chairman (Independent Director)
- Matthias Warnig (Independent Director)
- Oleg Viyugin (Independent Director)
HR AND REMUNERATION COMMITTEE’S MEMBERS
- Matthias Warnig – Chairman (Independent Director)
- Hans-Joerg Rudloff (Independent Director)
- Guillermo Quintero
STRATEGIC PLANNING COMMITTEE’S MEMBERS
- Robert Dudley – Chairman
- Alexander Novak – Deputy Chairman
- Faisal Alsuwaidi
- Andrey Belousov
- Oleg Viyugin (Independent Director)
- Ivan Glasenberg
Performance of the Board’s Committees
Message from Hans-Joerg Rudloff, Chairman of Audit Committee
Ensuring the compliance with international and Russian financial reporting standards is one of the key factors for the investors to take a decision on acquiring the Company’s shares.
The Audit Committee together with the Company’s top managers and Ernst & Young LLC auditing company seek to ensure the compliance with the above-said standards and internal documents and to improve audit management and risk management and internal control processes.
The Board of Directors was recommended to approve the·proposals to the General Shareholders Meeting on the distribution of the Company’s profit for the financial year 2017, the amount of dividend and dividend payout procedure for 2017 and H1 2018.
As part of preparing the Company’s accounting (financial) statements and safeguarding the objectivity and independence of the external audit function:
- the Company’s consolidated financial results and financial statements, as well as their audit results, were reviewed (on a quarterly basis);
- a nominee to the Company’s auditor - LLC Ernst & Young - and the auditing cost were recommended to the Board of Directors;
- an issue of overseeing the audit tendering process in 2019–2021 was discussed.
As part of ensuring an efficient internal control and risk management system, the following was preliminarily reviewed:
- the report on corporate risks monitoring for 2017;
- the progress report on Internal Control Development, Implementation, and Maintenance Plan for 2017;
- the reports on the identification of the current financial and business corporate risks for 2019;
- the amendments to the Rosneft’s Regulations on the Audit Committee of the Board of Directors and to the Policy on the Risk Management and Internal Control.
As part of assuring objective and independent internal audit , the following was reviewed:
- internal audit reports for 2017 and H1 2018, and information on independence and objectivity of the internal audit;
- information on assessment and monitoring of potential conflicts of interest related to the Head of Internal Audit holding the position of a Member of the Management Board (on a quarterly basis).
As part of corporate governance, the amendments to the Company’s Regulations on Insider Information were previewed and recommended for approval by the Board of Directors.
The matters of financial statements and data prepared by the auditor had been discussed at conference calls attended by Committee’s members, the Company’s management, and representatives of the External Auditor.
Message from Matthias Warnig, Chairman of HR and Remuneration Committee
In 2018, the Committee reviewed the key issues on the efficiency of the Company’s HR and Social Policy, the appointment and remuneration system, and assessment of the Board of Directors’, executives’ and top managers’ performances.
The Board of Directors was recommended to improve the top managers’ remuneration system.
As part of involving the best talent in the Company’s management and creating incentives to drive their performance, the Committee:
- reviewed the proposed remuneration of members of the Board of Directors and the Audit Commission for the 2017–2018 corporate year, and reimbursement of expenses they incurred when discharging their duties;
- recommended top manager candidates for appointment to the Management Board;
- evaluated the compliance of the candidates to the Board of Directors with independence criteria.
As part of assessing the performance of the Company’s governing bodies, the Commitee:
- reviewed the 2018 team and individual KPIs for top managers, as well as normalized criteria for achievement of the top manager KPIs for 2017 and the progress against the KPIs for the purposes of the 2017 annual bonus program;
- preliminarily reviewed the amendments to the Regulations on Annual Remuneration of Top Managers and Heads of the Company’s Units and recommended them to the Board of Directors;
- evaluated the expedience of implementing the long-term incentive program for the Company’s top managers;
- reviewed the results of the self-assessment of the Board of Directors’ performance for the 2017–2018 corporate year;
- recommended the Board of Directors to assess their performances (efficiency) in 2019, involving an independent consultant.
A report on PJSC NK Rosneft sustainable development in 2017 was negotiatedThe report is posted on the Company’s official website..
Upon an initiative of Matthias Warnig, phone conferences with the members of the Company’s Committee and management were held to discuss the key aspects of the Committee’s activities.
Message from Robert Dudley, Chairman of Strategic Planning Committee
In the reporting year, aside from focusing on the key issues of the strategic development and business planning, the Committee recommended to the Board of Directors to review the sustainable development principles and approve the public statement of the Company in relation to ESGESG (Environment, Social, Governance) is corporate responsibility in relation to the environment, social and governance issues.
Commitment to 17 UN sustainable development goals confirms that one of the Company’s core values is corporate social responsibility.
As part of defining the business priorities, the Commitee:
- reviewed the progress of Rosneft – 2022 Strategy, approved additional initiatives to Rosneft – 2022 Strategy;
- approved the strategic sustainable development guidelines and the public statement of the Company - “Rosneft: contributing to implementation of UN Sustainable Development Goals”;
- approved the updated Long-term Development Program;
- approved the financial and business plan for 2019–2020, and reviewed the results of implementation and normalization of the Rosneft’s financial and business plan for 2018.
As part of health, safety, and environment, the following have been approved:
- the reports on the Company’s HSE activities;
- the HSE Policy;
- the Policy on offshore hydrocarbon exploration and production.
As part of implementing the Company’s business projects, the Board of Directors was recommended to approve key performance indicators and investment for several business projects.
As part of innovation activities, the Committee:
- approved the progress report on the Company’s Innovative Development Program for 2017;
- agreed the Terms of Reference to benchmark the technological development level and KPI values of the Company’s innovative activities against the leading foreign peer companies.
While considering the key issues, the Chairman and the member of the Committee consulted with the Company’s management, requested additional information, and received written and verbal explanations.