Gazprom-AR2014

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Corporate Governance 113 Major and intrested-party transactions In 2014, OAO Gazprom closed no transactions treated as major transactions under the applicable laws of the Russian Federation. For OAO Gazprom’s transactions closed in 2014 which are treated as intrested-party transactions under the applicable laws of the Russian Federation and approved by resolutions of the annual General Shareholders Meeting on 28 June 2013 and 27 June 2014 and the Board of Directors, see the Additional Information section of this Report. All transactions approved by the General Shareholders Meeting and the Board of Directors are in furtherance of the Company’s business and its corporate interests. Assessment of OAO Gazprom’s Corporate Governance Framework compliance with the Russian Code of Corporate Governance In November 2014, OAO Gazprom’s current corporate governance standards were benchmarked against provisions of the Code of Corporate Governance approved by the Board of Directors of the Central Bank of the Russian Federation on 21 March 2014 (the “Russian Code of Corporate Governance”, the “Code”). The benchmarking showed that OAO Gazprom’s corporate governance practice largely complied with recommendations of the Russian Code of Corporate Governance. The compliance was also confirmed by an independent comprehensive corporate governance practice audit carried out by qualified professionals. Results of an independent corporate governance practice audit of OAO Gazprom The independent audit results prove that OAO Gazprom’s ownership structure is transparent, rights and responsibilities of the Company’s shareholders are clearly defined in the Articles of Association and other internal regulations, the Company’s shareholders have equal votes, and their voting rights are properly protected. Procedures for convocation, preparation, conduct and closing of General Shareholders Meetings are complied with. Dividends are paid in strict accordance with the laws, protection against asset value dilution is in place. The Company timely discloses information required by the laws and internal regulations. Information disclosure is governed by provisions of internal regulations which are put into practice. OAO Gazprom upholds equal disclosure of information to all stakeholders. Moreover, the Company has a Coordinating Committee for Shareholder and Investor Relations. OAO Gazprom manages shareholder, investor and analyst relations by hosting various events, such as forums, conferences, etc. Interested-party transactions are approved in accordance with the laws and the Articles of Association. However, a number of principles and recommendations of the Russian Code of Corporate Governance that are treated as key principles and recommendations under the below described methodology, are not partially or fully complied with at OAO Gazprom. Methodology of assessment of compliance with the Russian Code of Corporate Governance Key provisions of the Code include principles and recommendations that correspond to the mandatory requirements of the Russian stock exchanges (ZAO Micex Stock Exchange and OAO Saint-Petersburg Exchange) applicable to issuers’ corporate governance framework for the purposes of inclusion of their shares in the first (top) level quotation list (mandatory for OAO Gazprom to maintain its listing level on the said stock exchanges). OAO Gazprom Annual Report 2014
114 Corporate Governance Summary of the instances of non-compliance of OAO Gazprom’s corporate governance practice to some of the key recommendations of the Russian Code of Corporate Governance Code’s principles and recommendations OAO Gazprom’s corporate governance practice It is recommended that independent directors account for at least one third of the elected members of the board of directors (section 2.4.3 of the Code). For preliminary discussion of matters referring to supervision over financial and operating performance of a company, it is recommended to set up an audit committee consisting of independent directors (section 2.8.1 and 173 of the Code). It is recommended that the principal tasks of the audit committee in countering unfair practices of employees or third parties include monitoring of efficient operation of the system of reporting potential bad-faith practices of employees or third parties or other bad faith conduct in the company (section 172 of the Code). For preliminary discussion of matters referring to efficient and transparent remuneration practice, the Code recommends to set up a remunerations committee consisting of independent directors and led by an independent director who is not the chairman of the board of directors (section 2.8.2 and 179 of the Code). For preliminary discussion of matters referring to talent management (succession planning), qualified staff and efficient performance of the board of directors, it is recommended to set up a committee for nominations (appointments, HR) where most members should be independent directors (section 2.8.3 of the Code). Where setting up a separate nominations committee is not practical, its functions may be charged to any other committee at the board of directors, i.e. a corporate governance committee or remunerations committee (section 185 of the Code). The corporate secretary shall ensure efficient ongoing shareholder relations, coordination of shareholder rights and interests protection initiatives, and support efficient performance of the board of directors (section 3.1 of the Code). Current Board of Directors of OAO Gazprom (11 members) was elected by the General Shareholders Meeting on 27 June 2014 as proposed by the shareholders. The Board of Directors includes two independent directors who meet the independence criteria set by the Code (T. A. Kulibaev and V. A. Musin). The Company partially complies with the principle and recommendation. OAO Gazprom has an Audit Committee at the Board of Directors consisting of three members. The Committee is led by V. A. Musin, an independent director, while other directors are not independent directors in the meaning of the independence criteria set by the Code. The Regulation on the Board of Directors’ Audit Committee of OAO Gazprom does not include such task (function). However, the Company has the Code of Corporate Ethics of OAO Gazprom in place (current version approved by resolution of OAO Gazprom’s Board of Directors No. 2309 dated 25 February 2014); Corporate Ethics Commission of OAO Gazprom was set up and operates with its operating procedures approved by OAO Gazprom’s Order No. 59 dated 11 February 2014. The Corporate Ethics Commission addresses matters related to present (potential) conflict of interest of the Company’s employees or third parties. The Code of Corporate Ethics of OAO Gazprom provides for a procedure for a conflict of interest disclosure by an employee to his/her immediate superior and the procedure for escalating the matter to the Corporate Ethics Commission of OAO Gazprom. The Code of Corporate Governance (Behavior) of OAO Gazprom (approved by the Resolution of OAO Gazprom’s Annual General Shareholders Meeting on 28 June 2002) provides for a nominations and remunerations committee at the Board of Directors, however no such committee is currently in place. However, the Company runs efficient talent management and management incentive programmes that help recruit employees whose professional skills and performance qualities are necessary for OAO Gazprom to achieve its goals and objectives. Due to a large number of matters related to the preparation and holding by OAO Gazprom of corporate events, large scale and complicated nature of the related matters, and importance of such decisions for the Company, its counterparties, shareholders, investors, and other stakeholders, including the government, corporate secretary functions are currently shared between several business units of OAO Gazprom depending on their competencies. OAO Gazprom Annual Report 2014
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OAO Gazprom Annual Report 2014 The
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Contents 4 Statement of OAO Gazprom
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4 Statement of OAO Gazprom’s Chai
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6 Major results Gazprom Group Resul
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8 Company Information OAO Gazprom
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10 Company Information OAO Gazprom
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12 Company Information Track Record
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14 Company Information Gazprom Grou
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16 Company Information Operations a
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18 Business Development Prospects S
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20 Business Development Prospects G
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22 Business Development Prospects E
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24 Business Development Prospects T
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26 Business Development Prospects E
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28 Business Development Prospects P
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30 Business Development Prospects U
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32 Business Development Prospects S
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34 Board of Directors and Managemen
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42 Board of Directors’ Report on
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48 Trends and Developments on Oil a
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54 Performance Results Exploration
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56 Performance Results Distribution
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58 Performance Results Distribution
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60 Performance Results The company
Page 63 and 64: 62 Performance Results Hydrocarbon
Page 65 and 66: 64 Performance Results Transportati
Page 67 and 68: 66 Performance Results Gas transpor
Page 69 and 70: 68 Performance Results Gas Infrastr
Page 71 and 72: 70 Performance Results Hydrocarbon
Page 73 and 74: 72 Performance Results Gazprom, on
Page 75 and 76: 74 Performance Results OAO Mezhregi
Page 77 and 78: 76 Performance Results Major invest
Page 79 and 80: 78 Performance Results European gas
Page 81 and 82: 80 Performance Results In accordanc
Page 83 and 84: 82 Performance Results Oil and gas
Page 85 and 86: 84 Performance Results Sales of ref
Page 87 and 88: 86 Innovations In 2014, the budget
Page 89 and 90: 88 Innovations — produced a techn
Page 91 and 92: 90 Innovations 14 meetings of coord
Page 93 and 94: 92 Environment and Social Responsib
Page 101 and 102: 100 Environment and Social Responsi
Page 111 and 112: 110 Corporate Governance OAO Gazpro
Page 113: 112 Corporate Governance Corporate
Page 117 and 118: 116 Corporate Governance Remunerati
Page 119 and 120: 118 Corporate Governance In additio
Page 121 and 122: 120 Corporate Governance Liability
Page 123 and 124: 122 Corporate Governance Audit Comm
Page 125 and 126: 124 Corporate Governance The intern
Page 127 and 128: 126 Corporate Governance Efficient
Page 129 and 130: 128 Corporate Governance Stock Mark
Page 131 and 132: 130 Corporate Governance Dividend P
Page 133 and 134: 132 Risk Management Gazprom has con
Page 135 and 136: 134 Risk Management Customs, curren
Page 137 and 138: 136 Glossary ADR of OAO Gazprom APG
Page 139 and 140: 138 Corporate Governance Units of M
Page 141 and 142: 140 Additional information List of
Page 143 and 144: 142 Additional information 11. Adde
Page 145 and 146: 144 Additional information 27. Bank
Page 147 and 148: 146 Additional information 45. Adde
Page 149 and 150: 148 Additional information 59. Trad
Page 151 and 152: 150 Additional information 68. Trad
Page 153 and 154: 152 Additional information 84. Cont
Page 155 and 156: 154 Additional information 96. Volu
Page 157 and 158: 156 Additional information Inclusio
Page 159 and 160: 158 Additional information Improvem
Page 161 and 162: 160 Additional information These ef
Page 163 and 164: 162 Addresses and Contact Details F
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Gazprom-AR2014

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