Gazprom-AR2014

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Corporate Governance 117 Target KPI values for 2015 were submitted for approval of the Board of Directors in Q1 2015. Annual bonus for OAO Gazprom’s management is based on their performance against each KPI. Where a KPI is not achieved, annual bonus is lower. Starting from 2015, target (planned) and actual KPI values are subject to approval by OAO Gazprom’s Board of Directors on an annual basis. Where target KPI values approved by the Board of Directors at the year-start are not achieved at the year-end, OAO Gazprom’s management shall clarify the reasons for such deviation to the Board of Directors. Target (planned), threshold and maximum values of the Company’s key performance indicators for 2015 that are applied to the annual bonus of OAO Gazprom’s executives (approved by Resolution of OAO Gazprom’s Board of Directors No. 2491 dated 20 February 2015) KPI Target value Threshold value Maximum value Financial and economic KPIs per unit costs in Production, RUB/t c.e. 770.12 808.63 731.61 per unit costs in Transportation, RUB/ unit of transportation costs, mcm/100 km 61.84 64.93 58.75 reduction of procurement costs 10% – – total shareholder return, TSR 0.10 0.05 0.15 ROE 12% 9% 15% productivity, RUB thousand/man-hour 71.33 70.94 71.72 Industry-specific KPIs gas sales by volume, bcm 447.77 425.38 470.16 major production facilities commissioned 6 – – Note. KPI values are calculated in accordance with the budget (financial plan) and OAO Gazprom’s 2015 Investment Programme approved by the Board of Directors and may be adjusted under the applicable procedures if the Board of Directors resolves to adopt a new version of such documents. For per unit cost values, the threshold value is reached at the maximum permitted costs, and the maximum value — at the minimum costs. The Employee Equity Sharing Plan for the Management of OAO Gazprom aims at adding a financial incentive to OAO Gazprom’s key employees to support the Company’s stock performance. The Programme contemplates holding of OAO Gazprom’s shares by managers. Managers can acquire shares at their own cost or with money lent by Gazprombank (Open Joint Stocktock Company), which also administrates the Programme, including depositary and broker services. OAO Gazprom’s manager holding a position of department head or higher and subsidiary managers is eligible to participate in the Programme. In the reporting year, 65 employees were eligible to participate in the Programme. Managers are offered the same pension plans as other employees of OAO Gazprom’s in accordance with applicable local regulations governing non-state pension benefits. Upon becoming eligible to pension benefits provided for by the laws of the Russian Federation, employees become contributors to the Non-state Pension Fund GAZFOND. OAO Gazprom makes contributions to the Non-state Pension Fund GAZFOND for the benefit of its employees. Remuneration of members of the Board of Directors Pursuant to the Regulation on the Board of Directors of OAO Gazprom approved by the General Shareholders Meeting (Minutes No. 1 dated 28 June 2002) and OAO Gazprom’s Articles of Association, members of the Board of Directors, during the period of their service, may be remunerated and/or compensated for expenses related to the performance of their duties as members of the Board of Directors. Such remunerations and/or compensations are set by resolution of the General Shareholders Meeting. OAO Gazprom Annual Report 2014
118 Corporate Governance In addition, during a year, members of the Board of Directors of OAO Gazprom, who are staff members, are paid salaries attaching to their positions as per the employment agreements. Approaches to determining remunerations of members of the Board of Directors (as set forth by the Guidelines on Remuneration of the Board of Directors of OAO Gazprom, as approved by Resolution of OAO Gazprom’s Board of Directors No. 1670 dated 03 November 2010). Remuneration of a member of the Board of Directors consists of two parts: fixed base and additional. Fixed base remuneration is paid for acting as a member of the Board of Directors. It is set in accordance with OAO Gazprom’s established practice of remuneration payments to members of its Board of Directors. Additional remuneration is paid to members of the Board of Directors for their additional responsibilities such as acting as Chairman of the Board of Directors, Deputy Chairman of the Board of Directors or for service on committees of the Board of Directors. Additional remuneration takes into account performance against OAO Gazprom’s corporate KPIs. Remunerations of members of OAO Gazprom’s Board of Directors are adjusted to compensate for the negative inflation impact. The Guidelines on Remuneration of the Board of Directors of OAO Gazprom also provide that the Board of Directors may recommend the General Shareholders Meeting to reduce remunerations payable to members of the Board of Directors against those calculated in accordance with the Guidelines due to existing economic conditions. Remuneration of members of the Board of Directors, members of the Management Committee, and Chairman of the Management Committee Short-term remunerations paid by OAO Gazprom in 2014 to members of the Board of Directors, Management Committee and the Chairman of the Management Committee (including salaries, bonuses and remunerations for their work in OAO Gazprom’s management bodies) were RUB 3,118,188 thousand. The amount includes personal income taxes and insurance premiums. Members of the Board of Directors holding public or civil office receive no remuneration from OAO Gazprom. Remuneration of members of the Board of Directors paid by the Company in 2014 Type of remuneration Amount, RUB thou Remuneration for service on a management body 228,687 Salary 51,899 Bonuses 51,085 Compensation for expenses related to acting as member – of a management body Other remuneration 10,380 Total 342,051 Note. The amounts are inclusive of personal income tax. 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
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62 Performance Results Hydrocarbon
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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 and 114: 112 Corporate Governance Corporate
Page 115 and 116: 114 Corporate Governance Summary of
Page 117: 116 Corporate Governance Remunerati
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
Page 165: www.gazprom.com
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Gazprom-AR2014

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