7.8.Remuneration System for Key Management

The key managers include members of the Board of Directors and the Management Board of Transneft (including the sole executive body of the Company), as well as directors general of essential Transneft subsidiaries.

Transneft’s Remuneration Policy and Overview of Key Changes in the Reporting Period Compared with the Previous Reporting Period

Remuneration for the key managers is governed by the regulatory documents adopted by Transneft.

Remuneration for Members of the Board of Directors

Remuneration is governed by the Regulations on Remuneration to Members of the Board of Directors of Transneft adopted by the Annual General Meeting of Shareholders (Order of the Federal Agency for State Property Management No. 541-r dated 30 June 2015).

No amendments were made to the said Regulations in 2019.

Members of the Board of Directors receive remuneration for their participation in the work of the management body. Remuneration for members of the Board of Directors is approved at the Annual General Meeting of Shareholders.

According to the Regulations on Remuneration to Members of the Board of Directors, the remuneration consists of the following parts:

  • fixed;
  • variable;
  • allowances for additional duties.
Fixed part The fixed part of the remuneration is payable for exercising the powers of a member of the Board of Directors.
Variable part The variable part of the remuneration is payable for achieving the key performance indicators established by the Regulations;
Allowances for additional duties These are paid to members of the Board of Directors performing additional duties related to exercising the powers of the Chairman of the Board of Directors and work in the specialised Committees under the Board of Directors.

The amount of remuneration paid to the members of the Board of Directors in 2019 was RUB 70,188.9 thousand.

remuneration paid to the members of the Board of Directors in 2019 (RUB thousand)
Member of the Board of Directors / Full Name Fixed Part Variable part Allowances for Participation in the Committees under the Board of Directors Total
Matthias Warnig 1,126.8 6,261.5 738.8 8,127.1
Kirill Aleksandrovich Dmitriev 1,126.8 6,261.5 1,477.7 8,866.0
Ilya Iosifovich Klebanov 1,126.8 6,261.5 2,216.5 9,604.8
Alexander Leonidovich Korsik 1,126.8 6,261.5 2,216.5 9,604.8
Maxim Yuryevich Sokolov 1,126.8 6,261.5 738.8 8,127.1
Nikolay Petrovich Tokarev 1,126.8 6,261.5 738.8 8,127.1
Valery Pavlinovich Shantsev 1,126.8 6,261.5 738.8 8,127.1
Genadii Iosifovich Shmal 1,126.8 6,261.5 2,216.5 9,604.8

No separate remuneration was payable for the costs associated with the performance of the duties of members of the Board of Directors.

Remuneration was not paid to the members of the Board of Directors who were subject to restriction or prohibition on receiving remuneration from commercial organisations (A. Novak, Minister of Energy of the Russian Federation).

Members of the Management Board of Transneft and Directors General of Transneft Subsidiaries

Members of the Management Board of Transneft and directors general of Transneft subsidiaries receive salaries, annual remuneration based on the performance for the year and other payments according to their employment contracts:

  • performance-based remuneration payable to the sole executive body of the Company in accordance with the Regulations on Remuneration to the Sole Executive Body of Transneft (approved by the resolution of the Board of Directors of Transneft on 23 April 2018, Minutes No. 5);
  • annual performance-based remuneration payable to other Management Board members and to directors general of Transneft subsidiaries in accordance with the Key Performance Indicators System of Transneft’s Economic Activity (approved by the resolution of the Board of Directors, Minutes No. 23 dated 30 November 2016) and the Regulations on Annual Performance-Based Remuneration to the Managers and the Employees of Transneft and Transneft Subsidiaries (approved by the resolution of the Management Board of Transneft, Minutes No. 53 dated 29 December 2014), as amended.

In 2019, the key managers’ remuneration policy was not subject to any significant changes (the key principles and payment procedures were retained).

Remuneration for Members of the Management Board

The Regulations on the Annual Remuneration to the Sole Executive Body of Transneft (approved by the resolution of the Board of Directors of Transneft dated 23 April 2018, Minutes No. 5) stipulate that the remuneration depends on the achievement of target efficiency indicators.

Members of the Management Board of Transneft are employees of Transneft and thus receive remuneration in the form of monthly salaries and other payments (including annual remuneration depending on the achievement of corporate key performance indicators for the reporting period). No separate remuneration is payable for the performance of the duties of members of the Management Board, additional costs are not reimbursed.

In 2019, the remuneration, benefits and compensations to the members of the Management Board of Transneft, including the sole executive body, amounted RUB 1,362,401.5 thousand.

the remuneration, benefits and compensations to the members of the Management Board of Transneft in 2019 (RUB thousand)
Types of Remuneration Amount, RUB thou
Remuneration for participation in the governing body -
Salaries 528,046.40
Bonuses 750,214.7
Commission fees -
Benefits 58,436.2
Compensation of expenses 25,704.2
Other types of remuneration -
Total 1,362,401.5

The total remuneration of directors general of essential Transneft subsidiaries for 2019 amounted to RUB 505,185 thousand.

No remuneration on the basis of shares was paid at Transneft in 2019.

Control over the introduction and implementation of the Company’s remuneration policy (including the payment) is exercised in accordance with the Systems and Regulations adopted by Transneft:

  • for members of the Board of Directors, by resolutions of the Federal Agency for State Property Management (Rosimushchestvo);
  • for members of the Management Board (including the Sole Executive Body of the Company) and directors general of essential Transneft subsidiaries, by respective resolutions of the Board of Directors.