It is not empty talk?
This is our common cause, like a family.
In order to shine our windows,
and fill our hearts with confidence.
Utilities always care for
light, coziness and warm.
Natalia Kharkova,
1st grade specialist at financial section of finance and economics directorate of Troiskaya GRES
5.4
Board of Directors
The Board of Directors controls the Company’s day-to-day operations, makes decisions on significant issues, controls the implementation of decisions of the General Meeting of Shareholders and ensures the enforcement of the rights and legal interests of the Company subject to the legal requirements. The competence and operating procedures of the Board of Directors are governed by internal documents, namely the Charter and the Regulation about the Board of Directors. The Board of Directors is a collegial body, whose members are elected by the General Meeting of Shareholders for a period up to the next Annual General Meeting of Shareholders. By the decision of the General Meeting of Shareholders, the powers of all members of the Board of Directors may be terminated ahead of schedule. Persons elected to the Board of Directors may be re-elected an unlimited number of times. Candidates to be elected to the Board of Directors may be nominated by shareholders owning at least 2% of the Company’s voting shares, as well as by the Board of Directors in case of the lack of candidates nominated by shareholders.
Assessment of the Board of Directors Operations
Subject to Para. 2.9.2 of the Corporate Governance Code of the Russian Federation, performance of the board of directors, committees and members of the board of directors should be evaluated on a regular basis at least once a year, and it is recommended to engage a third-party company (consultant) from time to time (at least once every three years) to perform independent assessment of the quality of the board of directors work. No quality assessment of the Board of Directors work was performed in 2020, while at the same time the Company is aware of such practice importance and it intends to implement thereof.
Board of Directors Report on the Company’s Development Results
In 2020, the Board of Directors of OGK-2 held 20 meetings, including 10 meetings of the Board of Directors, whose members were elected by the resolution of the Annual General Meeting of Shareholders of OGK-2 JSC (Minutes No.13 of June 11, 2019) and 10 meetings of the Board of Directors elected by the resolution of the AGMS (Minutes No.14 of June 29, 2020). No in-person meetings of the Board of Directors of OGK-2 were held in the reporting year.
| Full name of the member of the Board of Directors | Status of the member of the Board of Directors | Number of meetings of the Board of Directors 20 | Audit Committee 8 meetings | Human Resources and Remuneration Committee 5 meetings | Strategy and Investment Committee 6 meetings | Reliability Committee 4 meetings |
1. | Denis Vladimirovich Fedorov (Chairman) | executive | 20 | x | х | х | х |
2. | Roman Eduardovich Abdullin | non-executive | 20 | 8 | х | х | х |
3. | Albert Fyaritovich Bikmurzin | non-executive | 20 | x | х | х | х |
4. | Nikolai Dmitrievich Rogalyov | independent | 10 | 5 | 3 | 4 | х |
5. | Evgeny Nikolaevich Zemlyanoy | non-executive | 20 | х | х | х | х |
6. | Irina Yuryevna Korobkina | non-executive | 20 | 8 | 5 | х | х |
7. | Sergey Arturovich Zaitsev | non-executive | 10 | х | х | х | 4 |
8. | Valery Gennadievich Pyatnitsev | independent | 20 | 8 | 5 | 6 | х |
9. | Alexander Vladimirovich Rogov | non-executive | 20 | х | 5 | 6 | х |
10. | Artyom Viktorovich Semikolenov | executive | 20 | х | х | х | х |
11. | Pavel Olegovich Shatsky | non-executive | 20 | х | 5 | 6 | х |
12. | Denis Viktorovich Kulikov | independent | 10 | 3 | 2 | х | х |
13. | Andrey Igorevich Dmitriev | non-executive | 9 | х | 2 | 2 | х |
The Board of Directors of OGK-2 JSC resolved the most important issues related to its day-to-day operations and strategic development of the Company. A total of 132 issues were considered (including sub-questions).
The most significant issues of the Company’s operations considered at the meetings of the Board of Directors of OGK-2 in 2020 include:
- determining priority areas of the Company’s development;
- approving and considering the results of the Company’s business plans implementation;
- on liquidation of the branch of OGK-2 JSC, Krasnoyarskaya GRES-2;
- determining the status of members of the Company’s Board of Directors (recognizing the members of the Board of Directors of OGK-2 JSC Mr. N. Rogalyov, Mr. V. G. Pyatnitsev independent);
- terminating the Company’s participation in other organizations (Chaika LLC, OGK-Investproekt LLC) through liquidation.
The list of issues falling within the competence of the Board of Directors of OGK-2 is determined by the requirements of Federal Acts, by-laws and the Charter of OGK-2 JSC.
Controls over the Instructions Implementation Given by the Board of Directors
To exercise control over the implementation of the Board of Directors’ decisions containing instructions to the Company’s management, the Company’s Managing Director shall issue an order on arranging the decisions implementation adopted by the Company’s Board of Directors, specifying the timelines for the implementation and the persons in charge.
Heads of the Company’s structural divisions shall inform the Company’s Managing Director of the results of the decisions implementation adopted by the Company’s Board of Directors.
The Company’s chief executive officer (Managing Company), as well as the Corporate Secretary, at the instruction of the Chairman of the Company’s Board of Directors, shall be entitled any time to request from the Company’s Managing Director the information on the results of the decisions implementation adopted by the Board of Directors.
In the scope of the decisions implementation adopted by the Board of Directors of OGK-2 JSC, six orders were issued at the Company in 2020.
Independent Members of the Board of Directors
In 2020, two directors in each Board of Directors had the status of independent directors, that complies with the requirements of the Listing Rules stipulated by Moscow Exchange PJSC for shares to be maintained in the second quotation list:
- On July 08, 2019, the Board of Directors of OGK-2 JSC recognized Mr. D. Kulikov* an independent member of the Board of Directors (Minutes No. 218 dated July 08, 2019);
- On July 20, 2020 and on November 09, 2020, the Board of Directors of OGK-2 JSC recognized Mr. N. Rogalyov an independent member of the Board of Directors (Minutes No. 242 dated July 20, 2020 and Minutes No. 247 dated November 09, 2020).
- On November 09, 2020, the Board of Directors recognized Mr. V. Pyatnitsev an independent member of the Board of Directors (Minutes No. 247 dated November 09, 2020).
Mr. D. V. Kulikov, Mr. N. D. Rogalyov and Mr. V. G. Pyatnitsev are persons who have sufficient independence to form their own position and who are able to make unbiased and fair judgements, not in any way affected by the company’s executive bodies, certain groups of shareholders or other interested parties, and they also possess a sufficient degree of qualification and experience.
Independence Criteria
The independence criteria have been established by the Listing Rules of Moscow Exchange PJSC (Appendix No. 4 to the Listing Rules). To monitor the whether members of the Board of Directors comply with the independence criteria, the Human Resources and Remuneration Committee under the Company’s Board of Directors makes the analysis of such compliance on a quarterly basis. If a change is identified in the independence status of any member of the Board of Directors, the matter shall be brought to the consideration of the Board of Directors.
During 2020, as part of the issue “On providing recommendations to the shareholders of OGK-2 JSC regarding voting on the issue of candidates election to the Board of Directors of OGK-2 JSC”, the Human Resources and Remuneration Committee considered the issue of availability of affiliation criteria for each nominated candidate. On October 26, 2020, the Human Resources and Remuneration Committee of OGK-2 also considered the issue of determining the status of Mr. V. G. Pyatnitsev and Mr. N. D. Rogalyov and submitted its recommendations to the Board of Directors of OGK-2 JSC.
Members of the Board of Directors of OGK-2 as for December 31, 2020
Training for the Board of Directors Members
The Company aims to hold training events for members of the Company’s Board of Directors on a regular basis (at least once a year) in order to contribute to the development of their competencies and to expand the individual knowledge areas of members of the Company’s Board of Directors. For example, the Annual General Meeting of Shareholders of OGK-2 JSC held on June 24, 2020 (Minutes No. 14 dated June 29, 2020) approved the Company’s Charter as amended, enlarging the competence of the Company’s Board of Directors with the issue of approval of a training and professional development program for the members of the Board of Directors.
* Taking into account second university degree and academic degrees.
Changes among the Members of the Board of Directors for the Reporting Period
In 2020, there were the following changes in the Board of Directors of OGK-2:
| Members of the Board of Directors during the period from June 11, 2019 to June 24, 2020 (elected on June 11, 2019 at the Annual General Meeting of Shareholders of OGK-2 JSC, Minutes No. 13 dated June 11, 2019) | Current members of the Board of Directors as from June 24, 2020 (elected on June 24, 2020 at the Annual General Meeting of Shareholders of OGK-2 JSC, Minutes No. 14 dated June 29, 2020) |
1. | Denis Vladimirovich Fedorov (Chairman) | Denis Vladimirovich Fedorov (Chairman) |
2. | Roman Eduardovich Abdullin | Roman Eduardovich Abdullin |
3. | Albert Fyaritovich Bikmurzin | Albert Fyaritovich Bikmurzin |
4. | Andrey Igorevich Dmitriev | Nikolai Dmitrievich Rogalyov |
5. | Evgeny Nikolaevich Zemlyanoy | Evgeny Nikolaevich Zemlyanoy |
6. | Irina Yuryevna Korobkina | Irina Yuryevna Korobkina |
7. | Denis Viktorovich Kulikov | Sergey Arturovich Zaitsev |
8. | Valery Gennadievich Pyatnitsev (independent director) | Valery Gennadievich Pyatnitsev |
9. | Alexander Vladimirovich Rogov | Alexander Vladimirovich Rogov |
10. | Artyom Viktorovich Semikolenov | Artyom Viktorovich Semikolenov |
11. | Pavel Olegovich Shatsky | Pavel Olegovich Shatsky |
Conditions for Arranging and Selection Criteria for the Candidates to the Board of Directors
The Board of Directors shall be arranged to ensure a balance of qualification, knowledge and expertise, for the members of the Board of Directors to properly perform their duties to the Company’s benefit, taking into account the Company’s development strategy. Members of the Company’s Board of Directors shall have proper goodwill, including among investors, and shall have no conflict of interest with the Company.
The Company is interested in shareholders nominating to the Company’s Board of Directors the candidates having experience and expertise in electric power, finance, audit, strategic management, risk management, human resources and remuneration, corporate governance, process renewal, innovation and investments, having experience in boards of directors or in senior positions at other public companies, including international ones.
To arrange the effective work of the Board of Directors, the Company advices its shareholders to nominate candidates who participate in no more than 5 public joint stock companies at the time of nomination to the Board of Directors.
Members of the Board of Directors shall have an impeccable reputation. However, committing by a person any economic crime or crimes against state authorities, public service or local authorities, or any administrative offences, mainly in the areas of business, finance, taxes and dues, or the securities market, is a factor that adversely affects its reputation.
Since 2020, the Human Resources and Remuneration Committee has assessed all candidates nominated to the Board of Directors for their compliance with the criteria established by the Regulations about the Board of Directors of OGK-2 JSC, as well as with the independence criteria defined by the securities market regulator and Moscow Exchange PJSC, and it has subsequently provided recommendations to the General Meeting of Shareholders of OGK-2 JSC in respect of voting for candidates to be elected to the Company’s Board of Directors.
According to the preliminary analysis made by the Human Resources and Remuneration Committee on June 01, 2020, all candidates nominated to the Company’s Board of Directors have high professional qualifications and meet the following criteria set forth in the Regulations about the Board of Directors of OGK-2 JSC:
- have competence and experience in energy, finance, audit, strategic management, risk management, human resources and remuneration, corporate governance, process modernization, innovation and investment;
- have experience of participation in boards of directors or at senior positions at other public companies;
- participate in no more than 5 public joint stock companies.
Liability Insurance for the Members of the Board of Directors
OGK-2 provides liability insurance for the members of the Board of Directors as for the members of the management bodies of the Company. Insurance’s goal is to compensate for potential damage as a result of unintentional erroneous actions (omissions) of insured persons in the course of their functions exercising. The insurance premium under the contract made in 2020 amounts to 3 million rubles, and the insurance amount to 600 million rubles.
Avoiding Conflicts of Interest in the Board of Directors
The Code of Corporate Ethics of OGK-2 JSC provides for a list of measures to prevent potential or actual conflicts of interest between the members of the Board of Directors and the Company interests. In particular, these relate not only to their own interests, but also to those of their family, friends and other personal relationships, receiving gifts, services, other benefits, using the Company’s assets and resources, and disclosing information. Members of the Board of Directors shall also refrain from having labor or civil law relations with a competitor, including cases of predominant participation in the authorized capital of a competing company or in the management bodies of such companies by the Board members themselves or their close relatives or family members.
The Regulations about the Board of Directors stipulate the duty for a member of the Board of Directors to refrain from any actions that will or may lead to a conflict of interest. If a member of the Board of Directors has a conflict of interest, he/she shall advise the Board of Directors thereof by notifying the Chairman of the Board of Directors.
In 2020, the Company did not receive any notifications on the conflicts of interest; nonetheless the Corporate Secretary monitors the possibility of any conflicts of interest arising on a quarterly basis by analyzing the updated questionnaires of the members of the Board of Directors.
According to the analysis made:
- none of the members of the Board of Directors or the members of the Committees under the Board of Directors have any family relations with other persons who are the members of the management bodies and/or bodies controlling the financial and economic activities of OGK-2;
- none of the members of the Board of Directors or the members of the Committees under the Board of Directors of OGK-2 received any loans (credits).
In 2020, no conflicts of interest were revealed among the members of the Board of Directors and executive bodies of the Company.
Plans for 2021
In 2021, the Company intends to submit for approval by the Board of Directors of OGK-2 the Regulations about Control over Compliance with Legal Requirements to Counteract Illegal Use of Insider Information and Market Manipulation and the Regulations about the Procedure of Access to Insider Information as amended, that provide for a prohibition on transactions making with the Company’s financial instruments, including for the members of the Board of Directors of OGK-2:
1) During the period from the first calendar day of the first month of the second quarter of a calendar year up to the publication of the Company’s annual consolidated financial statements for the reporting year made subject to International Financial Reporting Standards (IFRS).
2) During the period from the fifteenth calendar day of the second month after the end of the reporting quarter (except for the first quarter of a calendar year) until the publication of the interim consolidated financial statements of the Company for the reporting period consisting of three, six or nine months of the current year, made subject to International Financial Reporting Standards (IFRS).
3) During the period of thirty calendar days as of the date when a member of the Company’s Board of Directors and/or persons related to them make a transaction with financial instruments of the Company in their own interests, when the members of the Company’s Board of Directors and persons related to them shall refrain from making contrary transactions in relation to such transactions. Contrary transactions are transactions that directly or indirectly result in the closing and/or hedging of a previously open position.