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2.2 Board of Directors of JSC “Transneft”

General management of the activity of JSC “Transneft” is carried out by the Board of Directors that makes decisions on material issues related to the Company’s operations within the framework of its competence specified by the Charter. The procedures of the Company’s Board of Directors are regulated by the Charter and Regulation on the Board of Directors of JSC “Transneft”.

The Board of Directors is a collective body consisting of seven members. The quantitative composition of the Board of Directors of seven persons is stipulated by the Charter of the Company (Article 31, Clause 31.1.). Members of the Board of Directors are elected by the General Meeting of Shareholders for the term up to the next Annual General Meeting of Shareholders. The General Meeting of Shareholders may adopt a resolution on early termination of powers of all the members of the Board of Directors. Members of the Board of Directors may be elected an unlimited number of times.

During the reporting period, the Board of Directors of JSC “Transneft” that worked was elected:

  1. by the Annual General Meeting of Shareholders dated June 30, 2011 (Order No. 1255-r of the Federal Agency for State Property Management of June 30, 2011 “On Resolutions adopted by the Annual General Meeting of Shareholders of Oil Transporting Joint Stock Company “Transneft”) consisting of:
    • Warnig Matthias,
    • Oleg Vyacheslavovich Vyugin (independent director),
    • Olga Konstantinovna Dergunova (independent director),
    • Larisa Vyacheslavovna Kalanda,
    • Aleksandr Dmitrievich Nekipelov,
    • Rair Rairovich Simonyan (independent director),
    • Nikolay Petrovich Tokarev
  2. by the Annual General Meeting of Shareholders dated June 29, 2012 (Order No. 1017-r of the Federal Agency for State Property Management of June 29, 2012 “On Resolutions adopted by the Annual General Meeting of Shareholders of Oil Transporting Joint Stock Company “Transneft”) consisting of:
    • Warnig Matthias,
    • Andrey Evgenievich Volkov,
    • Olga Nikolaevna Kostina (independent director),
    • Igor Viktorovich Makarov,
    • Rair Rairovich Simonyan (independent director),
    • Nikolay Petrovich Tokarev,
    • Ilya Viktorovich Shcherbovich (independent director).

Data on the Members of the Board of Directors of JSC “Transneft”from January 1, 2012 through December 31, 2012:

Warnig Matthias
Year of birth: 1955
Education: higher
Positions held during the last five years:
2006 — present — Managing Director, Nord Stream AG (Switzerland)
Share in the charter capital of the issuer: none
Percentage of ordinary shares of the issuer held: none
Andrey Evgenievich Volkov
Year of birth: 1960
Education: higher
Positions held during the last five years:
2006 — present — Rector, Moscow School of Management SKOLKOVO (secondary job)
2007 — present — Executive Director, Moscow School of Management Nonprofit Partnership (MSM NP)
Share in the charter capital of the issuer: none
Percentage of ordinary shares of the issuer held: none
Oleg Vyacheslavovich Vyugin
Year of birth: 1952
Education: higher
Positions held during the last five years:
2007 — present — Chairman of the Board of Directors, MDM Bank OJSC
Share in the charter capital of the issuer: none

Percentage of ordinary shares of the issuer held: none

Olga Konstantinovna Dergunova
Year of birth: 1965
Education: higher
Positions held during the last five years:
2007 — 2012 — member of the Management Board, JSC VTB Bank
2012 — present — Deputy Minister of Economic Development of the Russian Federation — Head of the Federal Agency for State Property Management
Share in the charter capital of the issuer: none
Percentage of ordinary shares of the issuer held: none
Larisa Vyacheslavovna Kalanda
Year of birth: 1964
Education: higher
Positions held during the last five years:
2006 — 2012 — Vice-President, JSC “Rosneft”
2012 — present — member of the Management Board, State Secretary — Vice-President, JSC “Rosneft”
2007 — present — Acting Director General, JSC “ROSNEFTEGAZ”
Share in the charter capital of the issuer: none
Percentage of ordinary shares of the issuer held: none
Olga Nikolaevna Kostina
Year of birth: 1970
Education: higher
Positions held during the last five years:
2006 — present — Chairperson of the Management Board, Soprotivlenie Interregional Human Rights Public Organization
Share in the charter capital of the issuer: none
Percentage of ordinary shares of the issuer held: none
Igor Viktorovich Makarov
Year of birth: 1962
Education: higher
Positions held during the last five years:
2002 — present — Chairman of the Board of Directors, ITERA NGK OOO
2007 — present — President, ITERA Group OOO
2008 — present — President, ITERA NGK OOO
Share in the charter capital of the issuer: none
Percentage of ordinary shares of the issuer: none
Aleksandr Dmitrievich Nekipelov
Year of birth: 1951
Education: higher
Positions held during the last five years:
2001 — present — Vice-President, Russian Academy of Sciences
2004 — present — Director (Dean of the Faculty) of the Moscow School of Economics of Lomonosov Moscow State University
Share in the charter capital of the issuer: none
Percentage of ordinary shares of the issuer held: none
Rair Rairovich Simonyan
Year of birth: 1947
Education: higher
Positions held during the last five years:
2005 — 2009 — Chairman of the Management Board, OOO Morgan Stanley Bank
2009 — 2012 — Chairman of the Board of Directors, OOO Morgan Stanley Bank
2012 — present — Counsellor of the President, JSC “Rosneft”
Share in the charter capital of the issuer: none
Percentage of ordinary shares of the issuer held: none
Nikolay Petrovich Tokarev
Year of birth: 1950
Education: higher
Positions held during the last five years:
2007 — present — President, Chairman of the Management Board, JSC “Transneft”
Share in the charter capital of the issuer: none
Percentage of ordinary shares of the issuer held: none
Ilya Viktorovich Shcherbovich
Year of birth: 1974
Education: higher
Positions held during the last five years:
2008 — present — President, United Capital Partners (UCP)
Share in the charter capital of the issuer: none
Percentage of ordinary shares of the issuer held: none

Meetings of the Board of Directors of JSC “Transneft”

In 2012, there were 17 meetings of the Board of Directors held (7 in the form of the joint presence, and 10 in the form of the absentee voting)

The Board of Directors considered the following issues:

  • strategies of the development of JSC “Transneft” up to 2020; including priorities of the scientific and technical and innovation policy aimed at satisfaction of the consumers’ needs for oil and oil product transportation in the domestic market and export supplies using modern advanced industrial technologies providing a high level of reliability, industrial and ecological safety;

performance of the Company’s annual and long-term programs:

  • “Complex Program on Diagnostics, Technical Re-equipping, Major Repairs and Development of the Objects of the Oil Trunk Pipelines of JSC ‘Transneft’ for 2011”;
  • “Energy-saving and Energy-efficiency Enhancement Program of JSC ‘Transneft’ for 2010-2011” for 2011;
  • “Investment Program of JSC “Transneft” for 2011;
  • making adjustments to the “Program of the Innovative Development of JSC ‘Transneft’ up to 2017”, “Program of the Strategic Development of JSC “Transneft” up to 2020, “Investment Program of JSC “Transneft” for 2012; amendments to the “Energy-saving and Energy-efficiency Enhancement Program of JSC ‘Transneft’ for 2012-2015”;
  • quarterly reports on the results of the JSC “Transneft” procurement activities;
  • performance of the orders issued by the President of the Russian Federation and Government of the Russian Federation;
  • procedural matters related to the organization of activities of the Board of Directors and Committees of the Board of Directors of the Company;
  • on approval of the JSC “Transneft” budget and consolidated budget of the “Transneft” Group; quarterly reports of the executive body of the Company on the financial and economic standing of JSC “Transneft” and the “Transneft” Group; on the system of economic performance targets of JSC “Transneft”;
  • on approval of the transactions referred to the competence of the Board of Directors according to the Charter of JSC “Transneft”;
  • on the charitable activity of the Company.

Information on the most material issues was disclosed by the Company in the form of messages about material facts/data.

Specialized Committees of the Board of Directors of JSC “Transneft”

There are three working committees of the Board of Directors of JSC “Transneft”:

  • Strategy and Innovation Committee,
  • Audit Committee,
  • Personnel and Remuneration Committee.

The Strategy and Innovation Committee of the Board of Directors of JSC “Transneft” is a consultative and advisory body that develops recommendations and proposals for the Board of Directors designated to improve the performance of JSC “Transneft”, its long-term strategy, as well as to identify priorities of the scientific and technical and innovation policy in the system of the oil and oil product pipeline transportation.

The committee performed its activities in line with the regulation on the committee approved by the Board of Directors of JSC “Transneft” on May 3, 2011 (Minutes No. 8).

The regulation describes the legal status, main tasks, objective, structure and quantitative composition of the committee.

During the reporting period two compositions of the committee were operating:

  1. that elected by the resolution adopted by the Board of Directors of JSC “Transneft” on September 5, 2011 (Minutes No. 14):
    • Chairman of the committee — Aleksandr Dmitrievich Nekipelov,
    • member of the committee — Larisa Vyacheslavovna Kalanda,
    • member of the committee — Nikolay Petrovich Tokarev.
  2. that elected by the resolution adopted by the Board of Directors of JSC “Transneft” on September 25, 2012 (Minutes No. 13):
    • Chairman of the committee — Igor Viktorovich Makarov,
    • member of the committee — Nikolay Petrovich Tokarev,
    • member of the committee — Andrey Evgenievich Volkov.

The committee paid particular attention to the development of recommendations for the Company’s Board of Directors on the following issues:

  • preparation of the draft “Program of the Strategic Development of JSC ‘Transneft’ up to 2020”;
  • implementation of the “Energy-saving and Energy-efficiency Enhancement Program of JSC ‘Transneft’ for 2012-2015” for 2012;
  • prospects of development of the Eastern Siberia—Pacific Ocean oil pipeline;
  • performance of the “Investment Program of JSC “Transneft” for 2011;
  • consideration of drafts of the “Investment Program of JSC ‘Transneft’ for 2013 and up to 2015” and the “Complex Program on Diagnostics, Technical Re-equipment, Major Repairs and Development of the Objects of the Oil Trunk Pipelines of JSC ‘Transneft’ for 2013”.

Within the framework of performance of the “Program of the Innovative Development of JSC ‘Transneft’ up to 2017”, the committee reviewed the process of implementation of the following projects:

  • “High-precision Package of Intra-pipe Diagnostic Devices Securing Reliability of the Objects of the Oil Trunk Pipelines”;
  • “System of Leakage Identification and Activity Control of the Temperature and Vibroacoustical Mode of Operation”;
  • “Complex System of the Project Production Management”;
  • “Uniform Control System”;
  • “On Participation of JSC “Transneft” in the Technological Platform “Ecological Development Technologies”.

The Audit Committee of the Board of Directors of JSC “Transneft” is a consultative and advisory body that provides for the control by the Board of Directors of JSC “Transneft” over the financial and economic activity of JSC “Transneft”. Its aim is to objectively and independently inform members of the Board of Directors about the financial and economic standing of the Company and to assess efficiency of the internal control systems.

The committee performed its activities in line with the regulation on the committee approved by the Board of Directors of JSC “Transneft” on December 1, 2008 (Minutes No. 15). The regulation describes the legal status, main tasks, objective, structure and quantitative composition of the committee.

During the reporting period two compositions of the committee were operating:

  1. that elected by the resolution adopted by the Board of Directors of JSC “Transneft” on September 5, 2011 (Minutes No. 14):
    • Chairman of the committee — Olga Konstantinovna Dergunova,
    • member of the committee — Oleg Vyacheslavovich Vyugin,
    • member of the committee — Larisa Vyacheslavovna Kalanda;
  2. that elected by the resolution adopted by the Board of Directors of JSC “Transneft” on September 25, 2012 (Minutes No. 13):
    • Chairman of the committee — Ilya Viktorovich Shcherbovich,
    • member of the committee — Olga Nikolaevna Kostina,
    • member of the committee — Rair Rairovich Simonyan.

The committee paid particular attention to development of recommendations for the Company’s Board of Directors on the following issues:

  • consideration of the annual report of JSC “Transneft”, annual accounting statements, profit and loss statement, as well as distribution of profit for 2011;
  • examination of the opinion of the auditor of JSC “Transneft” following the results of the audit of the financial and economic performance of JSC “Transneft” for 2011 and evaluation of the auditor’s opinion, which is to be presented to the persons entitled to participate in the Annual General Meeting of Shareholders of JSC “Transneft”;
  • expected performance of the budget of JSC “Transneft” and of the consolidated budget of the “Transneft” Group for 2012 and budget of JSC “Transneft” and consolidated budget of the “Transneft” Group for 2013;
  • offers of the initial (maximum) price of the contract for holding an open tender for selection of the audit company that shall carry out mandatory audit of JSC “Transneft”.

The committee reviewed the statements of JSC “Transneft” on its financial and economic activity drawn up using the forms approved by the committee; the scope and plans of performance by an external auditor of audit of the annual statements for the year; the committee listened to the report of JSC “Transneft” on the comments made by the auditor and on the measures for their elimination; the committee approved:

  • “Regulation on Holding an Open Tender for Selection of Audit Companies that shall Carry out Mandatory Annual Audit of JSC “Transneft” for the Year;
  • “Regulation on the Tender Committee for Selection of an Audit Company that shall Carry out Mandatory Annual Audit of JSC “Transneft” for the Year;
  • the composition of the tender committee for selection of an audit company that shall carry out mandatory annual audit of JSC “Transneft”.

The Personnel and Remuneration Committee of the Board of Directors of JSC “Transneft” is a consultative and advisory body that develops recommendations and proposals for the Board of Directors designated to improve the performance of JSC “Transneft” in the area of the personnel policy, remuneration and compensation system.

The committee performed its activities in line with the regulation on the committee approved by the Board of Directors of JSC “Transneft” on December 1, 2008 (Minutes No. 15). The regulation describes the legal status, main tasks, objective, structure and quantitative composition of the committee.

During the reporting period two compositions of the committee were operating:

  1. that elected by the resolution adopted by the Board of Directors of JSC “Transneft” on September 5, 2011 (Minutes No. 14):
    • Chairman of the committee — Rair Rairovich Simonyan,
    • member of the committee — Olga Konstantinovna Dergunova,
    • member of the committee — Aleksandr Dmitrievich Nekipelov.
  2. that elected by the resolution adopted by the Board of Directors of JSC “Transneft” on September 25, 2012 (Minutes No. 13):
    • Chairman of the committee — Rair Rairovich Simonyan,
    • member of the committee — Andrey Evgenievich Volkov,
    • member of the committee — Olga Nikolaevna Kostina.

The committee paid particular attention to development of recommendations for the Company’s Board of Directors on the following issues:

  • making amendments to the System of the Annual Remuneration of Managers and Employees of JSC “Transneft” and organizations of the Transneft system;
  • improvement of the personnel training system within the framework of the “Program of the Innovative Development of JSC ‘Transneft’ up to 2017”;
  • payment of compensation to the Company’s management following results of the production and economic activity for 2011;
  • payment of compensation to the members of the Board of Directors of JSC “Transneft”;
  • draft regulation on payment of compensation to the members of the Board of Directors of JSC “Transneft”.