Gazprom-AR2014

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