Corporate Governance

Activities of the Board of Directors

In 2019, the Board of Directors held 24 meetings (4 in person and 20 in the form of absentee voting) and considered 130 items (23 at in-person meeting and 107 at meetings held in the form of absentee voting).

The Board of Directors is governed by the Regulations on the Board of Directors of Rosneft Oil Company.

Matter considered

Board Resolutions in Key Focus Areas

Review of the Rosneft–2022 Strategy performance. The Board of Directors noted achievement of the Strategy’s goals for 2019.

Approval of Accounting Function Development Strategy to 2024. It sets out new priorities in improving the efficiency of the Company's accounting function, including higher quality of services and customer focus of shared services centre while keeping the cost of services below or at the market level.

Review of the audit results for Rosneft's Long-Term Development Programme performance in 2018.

The Long-Term Development Programme was updated to reflect new strategic targets and its performance in 2018.

Approval of the Company's business plan for 2020–2021. Its goal is to meet the key objectives of the Rosneft–2022 Strategy, deliver on hydrocarbon production targets while maintaining opex and capex efficiency leadership, strong HSE performance, and a balanced financial position. The Board of Directors took notice of the preliminary results of the business plan performance and normalisation in 2019.

External assessment of the performance of the Board of Directors and its committees with Ernst & Young as an independent consultant.

To ensure compliance with the orders of the Russian President and the Russian Government, the following items were considered:

  • informing relevant federal executive bodies about the value of procurement contracts signed with defence companies for civilian products for the fuel and energy sector not included in the state defence order;
  • updating the long-term development programme;
  • import substitution of radiation, chemical and biological protection equipment;
  • introduction of professional standards in the Company’s activities;
  • developing (updating) internal documents regulating the KPIs and remuneration of the Company’s top management;
  • improving procurement management.

Approval of business projects to develop Yurubcheno-Tokhomskoye and Tagulskoye fields, Erginsky licence area, the Russkoye and North Komsomolskoye fields (PK1 formation).

In 2019, the Board of Directors conducted the first independent assessment of its performance.

It was based on questionnaires and individual interviews with the Board members and Corporate Secretary, as well as on the analysis of publicly available and internal documents, meeting minutes and materials of the Board of Directors and its committees.

The consultant praised the Board’s practices and presented a report where it identified potential areas for improvement.

In the report, the consultant noted:

  • high qualifications of the Board members;
  • effective balance of power between independent directors and directors who represent major shareholders;
  • strong organisation of the Board and committee meetings.

The procedure for assessing the performance of the Board of Directors is described in Rosneft Oil Company's Regulation on Evaluation of Rosneft Board of Directors Performance.

Approval of the Succession Plan for Directors and the Members of the Management Board to ensure succession in the Company’s management bodies, preservation of the best practices and consistency with the Company’s development strategy.

Evaluation of the independent directors against independence criteria (Gerhard Schroeder, Matthias Warnig, Oleg Viyugin and Hans-Joerg Rudloff).

Review of the progress of the Action Plan to Improve the Performance of Rosneft’s Board of Directors.

Review of the roadmap status for incorporating the key provisions of the Bank of Russia’s Code in the Company’s operations.

The roadmap for incorporating the key provisions of the Bank of Russia’s Code in the Company’s operations was completed.

The following internal documents were approved/amended:

  • Rosneft's Corporate Governance Code;
  • Policy on Offshore Hydrocarbon Exploration and Production;
  • Rosneft’s Procedure for Classifying Group Subsidiaries as key Subsidiaries;
  • Procedure for Appointment and Activities of Rosneft Board of Directors Committees;
  • Rosneft's Regulations on the Induction of Rosneft Board Members;
  • Rosneft’s Regulations on Internal Control Rules for the Prevention, Detection and Suppression of Illegal Use of Insider Information in Rosneft and/or Market Manipulation;
  • Rosneft’s Regulations on Annual Bonus to Top Managers and Heads of Standalone Business Units;
  • Rosneft’s Regulations on Annual Bonus to Middle Managers, Specialists and Employees of the Company’s Head Office;
  • Rosneft’s Regulations on Annual Bonus to the CEO and Top Managers of Rosneft Group Subsidiaries.

The following programmes and reports were reviewed/approved:

  • reports on the Board's committees activities in 2018–2019;
  • report on the progress of Energy Saving Programme 2018–2022 in 2018;
  • progress report on the Non-Core Assets Disposal Programme in the fourth quarter of 2018 and the first three quarters of 2019;
  • reports on related party transactions entered into by Rosneft in 2018;
  • reports on the Company's HSE activities;
  • report on the internal audit performance in 2018 and first six months of 2019;
  • report on the Company’s compliance with legislative requirements for countering the abuse of insider information and market manipulation for the second half of 2018 and the first six months of 2019;
  • report on the Innovative Development Programme progress in 2018;
  • report on the status of the Comprehensive Plan for the Enhancement of the Risk Management and Internal Control System in 2018;
  • report on Introducing Professional Standards in the Company’s Operations as of 1 November 2019;
  • reporting on the identification of company-wide financial and operational risks for 2020.

The following documents and criteria related to remuneration were approved:

  • performance indicators of Rosneft's top managers for 2019;
  • normalised KPIs of top managers for the 2018 annual bonus calculation, and their performance and bonus amount for 2018.

Approval of amendments to the terms of the mandate agreement for maintaining the register of Rosneft securities holders.

The Board of Directors approved and reviewed around 100 related party transactions.

Plans for 2020

The Board of Directors approves its work plans and meeting schedule semi-annually.

The work plan takes into account the proposals of members of the Board, executive bodies and top management, and always includes the following matters:

  • oversight of the Strategy performance;
  • reviewing the business plans and results;
  • results/updates of the Long-Term Development Programme;
  • approval of management’s collective and individual KPIs;
  • assessment of the Board performance;
  • preparations for the General Shareholders Meetings, etc.

The Board of Directors considers strategic matters determined by the Charter at in-person meetings.

The Company’s Corporate Governance Code defines the list of additional issues that the Board of Directors seeks to consider in person.

The committees of the Board of Directors plan their activities taking into account the schedule of the Board of Directors’ meetings.

Committees of the Board of Directors

The Board of Directors has three committees:

  • Audit Committee;
  • HR and Remuneration Committee;
  • Strategic Planning Committee.

The Board of Directors sets up the committees and elects committee chairs at the first in-person meeting.

The committees are appointed and perform their functions in accordance with Procedure for Formation and Work of Rosneft Board of Directors Committees

Committees of the Board of Directors

Members of the Audit Committee

Hans-Joerg Rudloff – Chairman, independent director

Matthias Warnig – independent director

Oleg Viyugin – independent director

Members of the HR and Remuneration Committee

Matthias Warnig – Chairman, independent director

Hans-Joerg Rudloff – independent director

Guillermo Quintero

Members of the Strategic Planning Committee

Robert Dudley – Chairman

Alexander Novak – Deputy Chairman

Faisal Alsuwaidi

Andrey Belousov

Oleg Viyugin – independent director

Hamad Rashid Al-MohannadiHamad Rashid Al-Mohannadi was elected to the Strategic Planning Committee on 4 June 2019.