1.2. Corporate Governance

In 2019, Gazprom continued to improve the corporate framework in order to enhance the Company’s systemic efficiency as a vertically integrated company, fully completing the Corporate Governance Improvement Action Plan for 2018–2019.

The work to develop and refine corporate governance was to a large extent based on the principles established by the Bank of Russia’s Corporate Governance CodeThe Corporate Governance Code was approved by the Board of Directors of the Bank of Russia on March 21, 2014 and recommended for application by publicly traded joint-stock companies.

PJSC Gazprom’s corporate governance is based on the Company’s key management and supervisory bodies: the General Shareholders Meeting, the Board of Directors, the Management Committee, the Chairman of the Management Committee, and the Audit Commission. The Company’s financial and business performance is independently reviewed by an external auditor.

For more details on PJSC Gazprom's compliance with the Bank of Russia's Corporate Governance Code see PJSC Gazprom Annual Report 2019, pages 165–168

 

GRI 102-18GRI 102-26

The General Shareholders Meeting is the supreme corporate governance body of PJSC Gazprom responsible for electing members of the Board of Directors. The Board of Directors performs general management of the Company’s activities and defines its development strategy, policies and core operating principles, including in respect of investments and borrowings, risk management and administration of assets. The Management Committee and the Chairman of the Management Committee administer the Company’s day-to-day operations and arrange the implementation of the resolutions of the General Shareholders Meeting and the Board of Directors. The activities of the Board of Directors, the Management Committee, and the Chairman of the Management Committee are governed by the Articles of Association and internal regulations of PJSC Gazprom.

 

For more details on the corporate governance structure and regulatory documents see PJSC Gazprom Annual Report 2019, pages 165, 170 and Company’s website

 

GRI 102-24GRI 102-22

The members of PJSC Gazprom Board of Directors comply with stock exchange listing rules. Nominees to the Board of Directors are assessed under the Listing rules of the Russian stock exchangesPJSC Moscow Exchange, PJSC St. Petersburg Exchange for shares included in the Level 1 (highest) quotation list.

 

As of December 31, 2019, the Board of Directors consisted of eleven members, including three independent members. The members of PJSC Gazprom Board of Directors possess sufficient expertise, qualifications and impeccable professional reputation, which enables them to address the tasks at hand for the benefit of the Company as a whole. In 2019, the Board of Directors developed and approved the Induction Program for First-Time Elected Members of the Board of Directors of PJSC GazpromApproved by resolution of the PJSC Gazprom Board of Directors No. 3304 dated August 7, 2019.

The Board of Directors has the Audit Committee, the Nomination and Remuneration Committee, and the Commission on Strengthening Financial Discipline for Domestic Gas Supplies.

For details on the selection criteria, composition and structure of PJSC Gazprom Board of Directors and its Committees and Commissions see:

the Articles of Association of PJSC Gazprom;

Reasoned justification for recognizing individual nominees to PJSC Gazprom Board of Directors as independent nominees to the Board of Directors;

Issuer’s Quarterly Report as of Q4, pages 187–208;

PJSC Gazprom Annual Report 2019, pages 41–43, pages 171–174, 175.

GRI 102-34GRI 102-33GRI 102-31

In 2019, the Board of Directors held 55 meetings, including 13 in-person meetings and 42 meetings held in absentia.

 

For the full list of matters reviewed by the Board of Directors see Additional Information to PJSC Gazprom Annual Report

 

GRI 102-35GRI 102-37

The amount of remuneration payable to the members of the PJSC Gazprom Board of Directors is determined in accordance with the procedure set forth in the respective RegulationApproved by resolution of PJSC Gazprom Board of Directors No. 2523 dated April 15, 2015. The Regulation also stipulates that the Board of Directors may recommend the General Shareholders Meeting not to pay remuneration to the members of the Board of Directors or pay less remuneration than calculated under the Regulation.

The members of the Board of Directors holding public or civil office receive no remuneration from PJSC Gazprom.

The key functions of the Nomination and Remuneration Committee of PJSC Gazprom Board of Directors include, in particular, making recommendations to the Board of Directors on the policy of PJSC Gazprom for remunerating the Board of Directors members and providing financial incentives for the Management Committee Members and the Chairman of the Management Committee, as well as supervising the adoption and implementation of that policy. Independent Directors Viktor Martynov and Vladimir Mau represent the majority in this Committee.

In 2019, the Annual General Shareholders Meeting of PJSC Gazprom resolved to pay a remuneration of RUB 227.3 million to the Members of PJSC Gazprom Board of Directors who hold no public or civil office.

For more details on the system of remuneration of the members of the governance bodies see PJSC Gazprom Annual Report 2019, pages 180–184

 

 

GRI 102-28

The performance of the PJSC Gazprom Board of Directors undergoes regular external and internal assessments.External assessment is carried out by independent experts from specialized organizations, while internal assessment is performed in the form of self-assessment. The performance results are reviewed by PJSC Gazprom Board of Directors and used for further improvement of the corporate governance system.

In 2019, internal assessment of the activities of the PJSC Gazprom Board of Directors and its Committees was performed via a questionnaire survey covering the following areas: composition and structure, organization of activities, and key functions of the Board of Directors and its Committees. The current level of development of the PJSC Gazprom Board of Directors and its Committees was highly rated by the members of the Board of Directors.

The Board of Directors places a special emphasis on efficient stakeholder communication and, therefore, keeps them informed on current operations and ongoing projects. In 2019, independent directors held a number of meetings with investors, including those dedicated to ESG matters.

In order to maintain a transparent and meaningful dialogue with the investment community, PJSC Gazprom has in place the Coordinating Committee for Shareholder and Investor Relations.

Risk Management and Internal Controls

GRI 102-30

For more details on PJSC Gazprom’s approach to sustainability risk management see Appendix 3.

 

 

For details on the Risk Management and Internal Control System see PJSC Gazprom Annual Report 2019, pages 191–196

 

Internal and External Audit

For more details on how Internal and External Audit is arranged see PJSC Gazprom Annual Report 2019, pages 188–190

 

Corporate Governance Improvement Plans

PJSC Gazprom intends to continue improving its corporate governance system. Work is underway for the Company to be assessed with the use of the National Rating of Corporate Governance with a view to comparing the current corporate governance practice with the best practices of other major Russian companies. In 2019, amendments were made to the Articles of Association and the Regulation on the General Shareholders Meeting so as to provide for the use of electronic voting in the course of General Shareholders Meetings.