The Concern's corporate governance system is built according to the requirements of the Russian laws and aimed at ensuring the management efficiency, compliance with information transparency and general availability principles, stockholder rights execution, efficient interaction with other stakeholders. The Concern sticks to the core principles of corporate governance recommended by the Corporate Governance Code1.
The Concern's management bodies are structured according to the governance principles applicable in the parent company — Rosatom State Corporation, and predetermining its functioning as the operator of the corporate Power Engineering Division.
Such an approach ensures efficient interaction on all hierarchy levels of management not only between Rosatom State Corporation and the Concern, but in the Concern itself — among structural units, branches, and organizations which form part of its management circuit.
As part of preparation of the Report on Compliance with Recommendations of National Code of Corporate Governance, the Concern performed internal self-evaluation of the corporate governance quality.
The Concern applies certain standards of the Corporate Governance Code recommended by letter No. 06-52/2463 dated April 10, 2014 of the Bank of Russia to its daily practice taking into account the specifics of the legal status of Rosatom State Corporation set forth in regulations of the Russian Federation, which provide for unified management of organizations operating in the nuclear power industry. The standards of the Corporate Governance Code are reflected in a number of local regulations.
ROSENERGOATOM'S CORPORATE GOVERNANCE STRUCTURE
In general, the level of compliance with the recommendations was considered satisfactory. Moreover, taking the Concern's non-public status into account, rather a high degree of information disclosure about the Concern's governance systems, and availability of a series of measures ensuring its stockholders' interests protection were observed. According to the results of self-evaluation, the Concern is planning to continue development of the corporate governance system.
Appendix 11 contains the Report on Compliance with Corporate Governance Code Recommendations1.
PLANNED (ASSUMED) ACTIONS AND MEASURES FOR CORPORATE GOVERNANCE SYSTEM STREAMLINING:
Rosatom State Corporation and Atomenergoprom JSC are the stockholders of the Concern. Atomenergoprom JSC was incorporated in July 2007 according to the Russian Federation Government Resolution No. 319 dated May 26, 2007 to assist in further development of the nuclear power industry and to restructure the nuclear power complex in Russia, as instructed by the Russian Federation President Decree No. 556 dated April 27, 2007 on Restructuring of Nuclear Power Complex in The Russian Federation.
The sole stockholder and the owner of voting shares in Atomenergoprom JSC is Rosatom State Corporation that became a direct holder of shares in Rosenergoatom Concern JSC in 2011.
Information about Registered Capital.
As of December 31, 2015, the Concern's registered capital totaled 671,516,563,474 rubles. The registered capital is divided into 671,516,563,474 common stocks with a nominal value of 1 (one) ruble each.
MATERIAL CHANGES IN SIZE, STRUCTURE, OR OWNERSHIP IN REPORTING PERIOD
In 2013, the Concern's General Meeting of Stockholders approved a resolution to increase the Concern's registered capital (Minutes No. 6 dated November 29, 2013).
The resolution on additional issue of securities was approved by the Board of Directors (Minutes No. 170 dated December 4, 2013), and registered with the Bank of Russia on December 24, 2013 under state registration number 1-01-55417-Е-006D. The number of additionally issued stocks is 250,000,000,000 with a nominal value of 1 ruble, totaling 250,000,000,000 rubles.
Between January 1, 2015 and December 31, 2015, according to the resolution on the increase in the registered capital, the Concern distributed:
In August 2015, the Concern's Board of Directors approved a resolution to extend the stocks distribution period until September 1, 2016. Therefore, it is planned to make amendments in the Concern's Articles of Association related to the Concern's registered capital increase. The amendments will be made after the stocks distribution period expiry.
REPORT ON DIVIDENDS PAID
According to the strategic approach taken by the Concern's stockholders, the whole amount of the Concern's profit is channeled to its own development (investment program funding). Therefore, the Concern's General Meeting of Stockholders dated June 29, 2015 (Minutes No. 9) approved the resolution to omit dividends on the Concern's common stock for 2014.
The General Meeting of Stockholders is the supreme management body.
In its activity the General Meeting of Stockholders is guided by legislation of the Russian Federation, Articles of Association, and Regulation on Concern's General Meeting of Stockholders1.
The decision to convene the General Meeting of Stockholders is taken by the Board of Directors. The sole executive body — the Concern's CEO — arranges the General Meeting, including its information and documentary support.
In 2015, four General Meetings of Stockholders were held. In line with the competence of the General Meeting of Stockholders stipulated by the Concern's Articles of Association, the following issues were considered during the meetings:
All decisions were approved unanimously by holders of the voting stocks.
The Board of Directors is a collegiate governing body in charge of overall management of the Concern. It is responsible for development of the strategy and controls activity of executive bodies ensuring observance of rights and legitimate interests of the Concern's stockholders.
Members of the Board of Directors are elected through a transparent procedure that permits stockholders to obtain information about candidates sufficient to get an idea about their personal and professional qualities.
The activity of the Board of Directors is regulated by applicable legislation of the Russian Federation, standards of the Concern's Articles of Association, and Regulation on the Board of Directors approved in its new version by resolution of the General Meeting of Stockholders on July 29, 2014 (Minutes No. 9).
BOARD OF DIRECTORS COMPOSITION
Members of the Board of Directors are elected through a transparent procedure that permits stockholders to obtain information about candidates sufficient to get an idea about their personal and professional qualities. When selecting candidates, they are required to have professional experience (including at least 15 years of experience in the nuclear power industry), specialized education, excellent professional reputation, particular set of personal qualities and skills.
The Board of Directors operational in 2015 was elected at the annual General Meetings of the Concern's Stockholders dated June 24, 2014, and June 29, 2015 in the following composition:
The Concern's Board of Directors has no committees. Members of the Board of Directors do not participate in the Concern's registered capital, do not hold the Concern's common stock, and have not entered into transactions on acquisition or alienation of the Concern's stock in 2015.
CHANGES IN COMPOSITION OF BOARD OF DIRECTORS
Upon the request of the Concern's stockholders, in November the Board of Directors approved the resolution to convene an extraordinary General Meeting of Stockholders in February 2016, and on re-election of the Board of Directors (Minutes No. 234 dated November 27, 2015).
On February 19, 2016, the following candidates were elected to the Concern's Board of Directors as proposed by the stockholder:
In 2015, the Board of Directors held 42 meetings with 100% attendance.
During the year, the Board considered 61 issues within the competence defined by the Concern's Articles of Association.
Experts from specialized structural units of the parent company actively participate in addressing the issues on the agenda of the Board of Directors according to the Procedure for Interaction between Rosatom State Corporation and the Concern. Therefore, the Board of Directors Committees are not operational at the moment. However, their formation practicability will be defined in 2016.
The Concern considers monitoring of the management bodies' instructions execution as one of the most important aspects of management. Thus, the Board of Directors annually reviews a report on its decisions implementation results. In addition, reports on execution of the decisions made by the Board of Directors and the General Meeting of the Concern's Stockholders are sent to Rosatom State Corporation on an annual basis.
Tasks and functions of the Concern's Corporate Secretary are performed by the Board of Directors Secretary whose activities are governed by the Regulation on the Concern's Board of Directors.
One of the main tasks of the current management model is optimization of the horizontal management of Rosatom State Corporation structural units interaction and vertical interaction of Rosatom State Corporation with its organizations in process groups.
Pursuant to Order No. 1/218-P dated March 4, 2013 of Rosatom State Corporation on Approval of Regulations on Management Model of Civil Part of Industry, the Concern is the management company of the Power Engineering Division.
|CHARACTERISTICS OF THE DIVISION||MAIN COMPETENCES OF THE DIVISION||CORPORATE GOVERNANCE BODIES OF THE DIVISION||REGULATORY DOCUMENTS FOR OPERATIONS MANAGEMENT|
|Implements development strategy of the Division||Ensures efficient performance of operating processes||General Meeting of Stockholders||Interaction procedure|
|Provides for operation management of organizations which form part of its management circuit||Forms a liaison system among the organizations included in its management circuit||Board of Directors||Industry-level procedures|
The Division is an organizational unit whose activities are aimed at implementing the strategic business goals of Rosatom State Corporation in certain sectors and lines of business for the organizations which form part of its management circuit. The Division head is included in the decision-making system of the Corporation.
According to the Procedure for Interaction between the Corporation and the Concern, (which is a joint document defining the procedure for interaction between the Corporation and the Concern, a list of the organizations included in the Concern's management circuit was updated in 2015: 51 organizations (including 16 subsidiary companies) whose management mechanisms are implemented in the following way:
According to the Articles of Association, tasks and functions of the Concern's operations management are performed by the Chief Executive Officer — a sole executive management body of the Concern.
According to the resolution by the General Meeting of Stockholders dated October 5, 2015 (Minutes No. 13) on early termination of the powers of Yevgeny Vladimirovich Romanov as CEO of Rosenergoatom Concern JSC on October 6, 2015 (last working day), Andrey Yuvenalyevich Petrov was elected CEO of Rosenergoatom Concern JSC starting from October 7, 2015.
ANDREY YUVENALYEVICH PETROV
Member of the Board of Directors, Rosenergoatom Concern JSC (since 2016); CEO, Rosenergoatom Concern JSC since October 7, 2015.
Born in 1963.
Education: Ivanovo Power Engineering Institute.
Professional Experience: 2008–2009 — Deputy CEO, Director of Smolensk Nuclear Power Plant (Branch of Energoatom Concern JSC).
2009–2015 — Deputy CEO, Director of Smolensk Nuclear Power Plant (Branch of Rosenergoatom Concern JSC).
Since 2015 — CEO, Rosenergoatom Concern JSC.
The Directorate is the Concern's advisory collegiate body headed by the CEO. The Directorate activities are governed by the Russian Federation laws, the Concern's Articles of Association, the Concern's organizational and administrative documents as related to the Directorate activities, and the Regulation on Directorate.
The Directorate operates under an approved quarterly plan.
The Directorate competence includes consideration of the issues related to performance of target benchmarks of safe and efficient power production at the existing NPP power units, physical protection and anti-terrorist stability of NPPs, economic safety, supervisory control of NPP safety, occupational safety management system, strategic development, personnel related and social issues, as well as consideration of the issues related to summarizing of the Concern's activities in the reporting period, and defining the goals and objectives for the planning period.
The Coordination Council (before November 2015 — Executive Council) is the Concern's advisory collegiate body headed by the CEO. The Coordination Council activities are governed by the Russian Federation laws, the Concern's Articles of Association, the Concern's organizational and administrative documents as related to the Coordination Council activities, and the Regulation on Coordination Council.
Key Objectives of Concern's Coordination Council:
The quantitative and personal composition of the Concern's Coordination Council, including its secretary, and changes in the composition are approved by the CEO's orders.
|BOARD OF DIRECTORS||DIRECTORATE|
|Under 30 years old (inclusive)||0||0||0||0||0||0|
|From 31 to 50 years old (inclusive)||1||0||1||6||0||6|
|Over 51 years old||4||0||4||23||1||24|
INFORMATION ABOUT MAJOR TRANSACTIONS AND INTERESTED PARTY TRANSACTIONS
No major transactions or interested party transactions subject to approval by the Concern's management bodies were conducted in 2015.
s regulated in Clause 10.1.18 of the Concern's Articles of Association, if so decided by the General Meeting of Stockholders, members of the Concern's Board of Directors, while in office, may be entitled to remuneration, and reimbursement of costs related to their functions as Board Members. The sums of such remunerations shall be established by resolution of the General Meeting of Stockholders.
In 2015, no remuneration was paid to the Concern's Board Members.
The CEO's remuneration is regulated by the employment contract and payable after its amount approval by the Board of Directors. The variable part of remuneration depends on achieved key performance indicators (KPI). Key performance indicators are established for the Concern as a whole and included in the indicator matrix of the CEO. KPIs for Rosenergoatom Concern JSC are decomposed and translated to executives of all levels.
|Specific forecast cost of NPP construction, taking into account time limits, rubles/kW|
|Integral indicator of investment efficiency, %|
|Adjusted free cash flow of the State Corporation (including the adjusted free cash flow of the Division), bln rubles|
|Labor productivity, mln kWh/pers.|
|Fulfillment of the Investment Program of Rosenergoatom Concern JSC, %|
|Power generation at NPPs, bln kWh|
|Specific semi-fixed costs, in prices of 2013, rubles/MWh|
|Foreign order portfolio for 10 years (including Rusatom Service), bln USD|
|Integral performance on new products, %|
|Revenue from new products sales outside the circuit and inside the circuit on a competitive basis, mln rubles|
|New product orders portfolio of the State Corporation for 10 years, mln rubles|
|No incidents above Level 2 on the INES scale in the industry, and no personnel exposure incidents over 50 mSv per year|
|No incidents above Level 2 on the INES scale in the industry|
|Fulfillment of state objectives, %|
551.2 mln rubles is the total remuneration paid in 2015 to key management personnel: executives (CEO and his Deputies) and other officers vested with authority and responsibility for planning, directing, and controlling activities of the company.
Total performance ratio in 2015 adjusted by weight factors was 111.76% (with 106.58% in 2014).
For additional information on the KPI system refer to Section 3.8 — HR Policy, Occupational Safety and Health.
The Concern's activity is based on corporate values which are common for the entire nuclear power industry:
Following common corporate values makes it possible for the Concern to achieve strategic goals.
The Concern prepared and approved the following: Ethics Code, Ethics Panel Regulation, and Authorized Ethics Officer Regulation.
The Ethics Code defines the ethical basis of activity of the Concern, its branches, and employees. It covers ethical principles, basic mechanisms of their execution, and the Concern's commitments in specific areas of activity, including its relationship with Rosatom State Corporation, society, and business partners. Ethics Panels are created, and Authorized Ethics Officers are selected at all NPPs. An updated version of the Concern's Ethics Code was approved in 2015. More details about the Ethics Code are available at: http://www.rosenergoatom.ru/partners/Ethical_practice/.
The Ethics Panel is a permanent collegiate body on the level of the Headquarters and branches. Its primary objective is to develop and implement the ethics practices: assistance in settlement of ethical dilemmas, prevention of violations in business ethics and business conduct.
The Ethics Panel objectives also include preparation of a reasoned decision and its delivery for approval to the CEO or another manager. The Authorized Ethics Officer is constantly vested with powers and responsibilities for organization of ethical practices. The Officer is responsible for consideration of employees' applications and assessment of the Ethics Panel powers applicability to them. In case an ethical dilemma is not settled on the level of the Ethics Panel, the employee is entitled to apply to the hotline of the Concern or Rosatom State Corporation.
The Order of Rosatom State Corporation dated July 16, 2014 No. 1/655-P approved and enacted the Concern's Anti-Corruption Plan for 2014–2015 in order to ensure the Concern's participation in 2015 in implementing the provisions of the National Anti-Corruption Plan for 2014–2015 approved by the Russian Federation President Decree dated April 11, 2014 No. 226. As of December 31, 2015, all of the planned measures were accomplished.
With a view to implement the action plan for organization of training and legal education of the Concern's employees in the matters of preventing and countering corruption, the Concern's Employees Training Program for Corruption Prevention was approved and enacted. The Program allowed for 749 employees of the Concern's Headquarters and branches to pass training (advanced training) at specialized educational institutions in 2015.
No corruption risk assessment was performed in 2015. The guidelines for assessment of corruption risks are developed and being approved at the moment.