Activities of the Board Committees
Statement of Hans-Joerg Rudloff, Chairman of the Audit Committee:
In 2019, the Company’s management improved control procedures, risk management system, internal control and audit. The quality of materials provided to the Board also gets better all the time.
In 2019, the Audit Committee held 18 meetings (3 in person and 15 in the form of absentee voting) and considered 40 items (8 at in-person meeting and 32 at meetings held in the form of absentee voting).
- audit of Rosneft’s RAS accounting (financial) statements – RUB 7,200,000, including VAT;
- audit of Rosneft’s IFRS consolidated financial statements – up to RUB 83,151,780, including VAT.
The auditor’s fees for 2019 recommended to the General Shareholders Meeting:
The external auditor’s actual remuneration for the audit of financial statements and other services is disclosed on the Company’s website in the Corporate governance – Internal control and audit – Company auditor section.
The Committee recommended that the Board of Directors approves the proposal to the General Shareholders Meeting regarding the distribution of the Company's profit for 2018, the amount of dividends for 2018 and the first six months of 2019, and the payout procedure.
To ensure proper preparation of accounting (financial) statement and impartiality and independence of the external audit, the Committee:
- reviews the consolidated financial results, financial statements and the relevant audit reports (on a quarterly basis);
- recommended Ernst & Young as the Company’s auditor and the amount of the auditor’s fees.
To ensure efficiency of the risk management and internal control system, the Committee conducted preliminary review of the following:
- report on the status of the Comprehensive Plan for the Enhancement of the Risk Management and Internal Control System in 2018 and on approval of the Plan for 2019–2021;
- reporting on the company-wide financial and operational risks materialised in 2018;
- report on internal investigations conducted by Rosneft in 2018;
- results of the survey on strategic risks in 2019.
To ensure the impartiality and independence of the internal audit, the Committee reviewed:
- reports on the internal audit performance in 2018 and first six months of 2019;
- information on assessment and monitoring of potential conflicts of interest in case of the Head of Internal Audit serving on the Management Board (on a quarterly basis).
In the area of corporate governance, the Committee:
- reviewed and recommended for approval amendments to Rosneft’s Corporate Governance Code;
- reviewed 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 and recommended it for approval by the Board of Directors;
- analysed Rosneft’s Dividend Policy against the global economic trends.
The matters related to financial statements and information provided by the auditor were first discussed during conference calls between the Committee members, management, and representatives of internal and external auditors.
The activities of the Audit Committee are governed byRosneft Regulation on the Rosneft Board of Directors Audit Committee.
HR and Remuneration Committee
Statement of Matthias Warnig, Chairman of the HR and Remuneration Committee
The HR and Remuneration Committee and Corporate Secretary have had the performance of the Board of Directors assessed for the first time. The Company’s independent consultant, Ernst & Young, praised strong organisation and high qualifications of the Board members, as well as efficient administrative and information support provided to it. The Committee’s agenda for 2019 also included changes to the Management Board’s composition as part of the scheduled rotation. After performing an analysis of the necessary professional skills, the Committee submitted recommendations to the Board of Directors on new Management Board membership.
In 2019, the HR and Remuneration Committee held 13 meetings (1 in person and 12 in the form of absentee voting) and considered 28 items (1 at an in-person meeting and 27 at meetings held in the form of absentee voting).
To attract skilled talent to the Company’s management and create conditions for high performance, the Committee:
- reviewed proposals regarding the remuneration of the members of the Board of Directors and Audit Commission for 2018–2019, as well as the compensation of the expenses related to their functions;
- provided recommendations for appointments to the Management Board;
- verified the compliance of candidates to the Board of Directors with independence criteria.
To assess the performance of the Company’s management and governing bodies, the Committee reviewed:
- top management's collective and individual KPIs for 2019, their normalised KPI performance criteria for 2018, and the results considered in the 2018 annual bonus calculation;
- Rosneft’s Regulations on Annual Bonus to Top Managers and Heads of Standalone Business Units, Regulations on Annual Bonus to Middle Managers, Specialists and Employees of the Company’s Head Office, and Regulations on Annual Bonus to the CEO and Top Managers of Rosneft Group Subsidiaries;
- results of external assessment of the Board and its committees’ performance;
- report on introducing professional standards in the Company’s operations;
- action plan for introducing professional standards in the operations of Rosneft and Group Subsidiaries.
To ensure sustainable development, the Committee approved Rosneft’s Sustainability Report for 2018The Report is available on the Company's official website..
Key matters related to the Committee activities were discussed in person and during conference calls attended by the Committee members and the Company’s management.
The activities of the HR and Remuneration Committee are governed byRosneft Regulations on Human Resources and Remuneration Committee of Rosneft Board of Directors
Strategic Planning Committee
Statement of Robert Dudley, Chairman of the Strategic Planning Committee
In 2019, the Strategic Planning Committee reviewed key matters related to strategy performance, the Company’s long-term efficiency, as well as strategic and business planning. We continued to focus on HSE matters in line with the ESG approach, which we regard as our priority.
In 2019, the Strategic Planning Committee held 10 meetings (3 in person and 7 in the form of absentee voting) and considered 21 items (8 at in-person meetings and 13 at meetings held in the form of absentee voting).
To determine the Company’s priorities, the Committee reviewed:
- status of the Rosneft–2022 Strategy;
- updated Long-Term Development Programme;
- business plan for 2020–2021, as well as the results of implementation and normalisation of the business plan for 2019.
To promote HSE initiatives, the Committee approved:
- reports on the Company's HSE activities;
- Policy on Offshore Hydrocarbon Exploration and Production.
To run the Company's business projects, the Committee recommended that the Board of Directors approves key metrics and budgets for a number of business projects.
To promote innovation, the Committee:
- approved the Report on Innovative Development Programme performance in 2018.
When reviewing the key matters, the Chairman and Committee members consulted the Company’s management, requested additional information and received written and oral clarifications.
The activities of the Strategic Planning Committee are governed byRosneft Regulation on the Rosneft Board of Directors Strategic Planning Committee.