PJSC Tatneft. Annual report 2017
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PJSC Tatneft. Annual report 2017

Company’s management system

MANAGEMENT STRUCTURE

«The decisions made by the Board of Directors are aimed at the long-term successful development of the Company. Management actions are aimed at implementing strategic and current tasks, creating new points of growth in operating profitability, strengthening the asset structure, achieving maximum effectiveness and controlling risks. We ensure the efficiency of business processes by reducing operating expenses, optimizing working capital, and qualitatively improving the mechanisms for purchasing goods and services. The complex multi-level structure of VIKs, which includes about 150 enterprises, requires highly efficient corporate governance, talented managers and a professional cohesive team of workers. Special attention is paid to the development of the system of motivation and evaluation of the implementation of the tasks (KPI). » Nail Maganov General Director, Chairman of the Management Board of PJSC TATNEFT Report of the Board of Directors Annual General Shareholders Meeting on the basis of the Company's activities in 2017

G4 -34 G4 -35 G4 -36 G4 -37 G4 -48

GENERAL SHAREHOLDERS’ MEETING Audit Commission Independent auditor BOARD OF DIRECTORS CHAIRMAN OF THE BOARD OF DIRECTORS Corporate Secretary Internal Audit Department Committees of the Board of Directors Corporate Governance Committee HR and Remuneration Committee Audit Committee CEO CHAIRMAN OF THE MANAGEMENT BOARD MANAGEMENT BOARD Investment Committee Managing Committee on Personnel matters Committee on Ethics and Development of Corporate Culture The current activities of the Company are provided by the services of the Executive Office services, structural subdivisions, curators of business segments and business areas, as well as by authorized representatives in the management bodies of subsidiaries and affiliates.

The Company’s corporate governance system is aimed at ensuring the legitimate rights and interests of shareholders and other stakeholders, effective asset management and increasing equity capital, increasing capitalization and dividend yield, maintaining long-term economic growth through effective management of corporate resources and risk control.

The company operates in the status of the Group.

TATNEFT is the corporate center of the Group, which coordinates the activities of enterprises forming the Company’s business segments.

The management of the TATNEFT Group is organized basing on unified mission and development priorities of the Company with view to ensuring fair interests of all members of the Group.

The General Shareholders’ Meeting is the supreme management body of the Company, which delegates to the Board of Directors general management powers over the Company. There are three committees under the Board of Directors: the Corporate Governance Committee, the Audit Committee, and the HR and Remuneration Committee. In 2016, the position of Corporate Secretary was introduced. The Chief Executive Officer of the Company is the General Director of TATNEFT. The company’s collegial executive body is the Management Board headed by the General Director. The General Director and the Management Board are accountable to the Board of Directors and the General Shareholders’ Meeting.

Audit Commission exercises general control over financial and economic activities of the Company.

Planning of financial and operational indicators, integrated into a single corporate governance system of the Group in accordance with the Development Strategy and key decisions taken by the Board of Directors, including taking into account aspects of sustainable development. The authority to implement the production plans, economic, environmental and social goals and objectives is delegated to the management of the Company, ensuring control at the level of the Board of Directors and its Committees, the Management Board and the General Director.

The management of sustainable development aspects is based on the coherence of the Company’s actions with the basic principles and goals of the UN on sustainable development, global sustainable development trends and priorities of national and regional development.

The Company has built a logical organizational structure that provides all levels of interaction between management bodies and operating segments with information coverage throughout the Company’s perimeter.

To ensure uniform management principles and transparency of operations of subsidiaries, the Company develops appropriate policies and regulations that form mechanisms of corporate relations. A system of unified corporate standards has also been created.

Responsibility for strategic planning and operational activities of the Company is divided among the Board of Directors, the General Director, and the Management Board and at the level of specific powers of business segments managers, with performance monitoring. The business segment management system is based on the KPI.

SYSTEM OF KEY PERFORMANCE INDICATORS

In order to improve the effectiveness and efficiency of operations, ensure the achievement of business goals, the Company is developing a KPI system. In 2017, the strategic goals were decomposed into annual measurable indicators, which made it possible to conduct a transparent assessment of the impact of top management and key employees’ contribution to the implementation of business plans and helped to identify inefficient elements in management processes to further improve the approaches to the development of the KPI system, including sustainable development goals .

In 2018, the Company moved to the next stage of development of the KPI system — the perimeter of job coverage in key business areas was increased, functional areas such as innovation, IT, HR, corporate management, industrial safety and labor protection, environmental indicators were involved — in general, inclusion in Company’s key performance indicators are ESG indicators.

BASIC INTERNAL DOCUMENTS DETERMINING THE CORPORATE GOVERNANCE SYSTEM

  • Charter of PJSC TATNEFT
  • Regulations on the General Shareholders Meeting of PJSC TATNEFT
  • Regulations on the Board of Directors of PJSC TATNEFT
  • Regulations on the Corporate Governance Committee of the Board of Directors of PJSC TATNEFT
  • Regulations on the Audit Committee of the Board of Directors of PJSC TATNEFT
  • Regulations on the Personnel and Remuneration Committee of the Board of Directors of PJSC TATNEFT
  • Regulations on the General Director of PJSC TATNEFT
  • Regulations on the Management Board of PJSC TATNEFT
  • Regulations on the Audit Commission of PJSC TATNEFT
  • Regulations on the Corporate Secretary of PJSC TATNEFT
  • Regulations on the Internal Audit Department of PJSC TATNEFT
  • Corporate Governance Code of PJSC TATNEFT
  • Regulations on the Information Policy of PJSC TATNEFT
  • Regulation on providing information to shareholders of PJSC TATNEFT
  • Internal documents defining the distribution of powers and responsibilities of managers and employees of the executive office in areas of activity
  • Regulations on the payment of monetary remuneration to members of the Board of Directors of PJSC TATNEFT
  • Regulations on the payment of monetary remuneration to members of the Audit Commission of PJSC TATNEFT
  • The remuneration policy of members of the governing bodies of PJSC TATNEFT

You can familiarize yourself with the main internal documents of the Company on the Company’s website.

NSURANCE RESPONSIBILITY OF MEMBERS OF MANAGEMENT BODIES OF THE COMPANY

The company insures the risks of liability of members of the Company’s management bodies, including abroad, on terms and in amounts that are consistent with the insurance market for such risks in the Russian Federation.

During 2017, the insurer of such risks of the Company was SOGAZ Insurance Company.