2018 Russia Spencer Stuart Board Index Contents

1 Foreword 2 Highlights of the 2018 Russia Board Index 4 our survey approach 5 Board size and composition 16 Board meetings and evaluation 18 Board committees 21 Remuneration 25 comparison tables 26 International comparison 32 Board composition 36 Board statistics, meetings and committees 40 Remuneration 46 about spencer stuart Foreword

The 2018 Russia Spencer Stuart Board Index is an annual study that analyses aspects of board governance, including composition, committees, and remuneration, among major listed companies. First published over 30 years ago in the US, Board Indexes are produced in 22 countries around the world on an annual or biennial basis.

In 2014, we released the firstRussia Spencer Stuart Board Index, which focused on 42 of the top listed companies on the Moscow Exchange. This fifth edition updates our analysis of the data available for the most recent fiscal year and looks at the boards of 42 companies included in the Russian Trading System Index (RTS).

Our purpose is to provide business leaders with a snapshot of current practices on Russian boards. In addition to data for each company, we have again published a detailed chart showing how Russian boards compare with leading companies in the US and other European markets across a key range of governance measures.

We hope that you will find this new edition of the Spencer Stuart Russia Board Index an interesting read. We welcome your feedback and the opportunity to discuss any of the issues that arise from our research.

Yaroslav Glazunov, Board Practice, Spencer Stuart Alexander Chmel, Senior Advisor Spencer Stuart Russia

2018 Russia spencer stuart board index 1

Highlights of the 2018 Russia Board Index

BOARD MEETINGS When board meetings held in absentia are included, 21.4/6.4 Russian boards reported the most meetings held across our European sample, with 21.4 meetings on average. However, when looking at those held in The average number of total/ person, the average number is the lowest in Europe, in person board meetings per at 6.4 meetings on average. Only one company fails company last year to disclose the number of meetings convened. See page 16.

GENDER DIVERSITY The share of women on the boards of companies in 7. 8 % this year’s sample is 7.8% — a slight decrease from 8.1% in 2017. This is the lowest proportion across our European sample but, perhaps more important, The percentage of women on Russia is also the country where least progress Russian boards towards an improved gender balance has been made over the past five years. Nearly half of Russian companies have no female board members, there are no female chairs, and, as of the cut-off date, no female CEOs1. See page 8.

AGE The average age of board directors in the RTS remains 54.5 the youngest in Europe — at 54.5 years, it is more than three years lower than the comparable figure for years Europe. Chairs, however, are on average older, at 59.3 years, up from 58.1 years in 2017 and 57.1 in 2016. The average age of all directors Turkey and Poland are the only other countries in our sample where a chair’s average age is below 60. See page 12.

1 Magnit appointed a female CEO on 21 June 2018 (after the 31 May cut-off date)

2 spencer stuart INDEPENDENCE The proportion of independent board directors in % Russia has been growing slowly, reaching 38.1% in 38.1 2018. Although this is a slight increase on the previous year, there has been no significant change The proportion of directors to the average level of independence during the past considered independent five years. In Europe only Turkish boards are less independent, at 33%. The Russian governance code recommends that one-third of the board be independent, a recommendation met by two-thirds of companies in this year’s analysis. See page 7.

NEW DIRECTORS % More than 22% (97) of the directors in our sample 22.1 were appointed during the past 12 months. This represents an increase of 14% on last year, with an The proportion of board additional 12 director appointments — nearly 0.3 members appointed during the additional new directors per board. Women last year accounted for only 9.3% of new board members; foreigners accounted for 21.6%. See page 13.

DIRECTOR REMUNERATION 7,018,261 ₽ Reporting on remuneration has yet to become fully transparent among Russian listed companies. Although nearly all companies in our survey The average retainer fee paid disclosed some information around board to independent non-executive remuneration, only 13 out of 42 companies disclosed directors detailed remuneration for individual board members. Thirty-two companies reported a cash retainer, resulting in an average annual fee paid to independent, non-executive directors of 7,081,261₽ (€107,242). See page 21.

2018 Russia spencer stuart board index 3

Our survey approach

The 2018 Russia Spencer Stuart Board Index covers 42 of the top listed companies by market value in the Russian Trading System Index (RTS) at 30 April 2018.

This year’s index saw the addition of Safmar Financial Investments, RussNeft, Ros Agro, Detskiy Mir, and X5 Retail. Acron, Bashneft, LSR, Mosenergo and Uralkali are no longer included in our analysis.

We analysed board size and composition, committee structure and director compensation for the 2017 financial year, compiling our research from a combination of publicly available sources such as company annual reports and websites, minutes and agendas of general meetings, and from BoardEx.

The following elements were measured as of 31 May 2018: »» Supervisory board composition »» Tenure »» Management board composition »» Board commitments »» Female representation »» Age »» Independence »» Foreign representation

Measured as of 31 December 2017: »» Board Meetings »» Board committee meetings »» Board evaluations

The 2018 Russia Spencer Stuart Board Index focuses on quantifiable data pertaining to boards of directors and offers comparisons with leading companies in a number of other European countries, namely Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Poland, Spain, Sweden, Switzerland, Turkey, and the UK, as well as with S&P 500 companies in the US.

4 spencer stuart Board size and composition

BOARD SIZE The average size of Russian boards has fluctuated between 10 and 11 directors since 2014. Between 2014 and 2016 average size dropped from 10.6 to 10.1 directors, but in the past two years the average number has risen to 10.4 directors this year.

Russian law requires company boards to be made up of at least five directors2. Board size varies within this year’s sample, from the minimum requirement of five directors at Ros Agro, to 15 directors at Alrosa, Rosseti, and Tatneft. As seen in our 2017 Index, the majority of boards range in size from nine to 11 directors.

Board size

Number of directors Percentage of companies 5 to 8 17% 9 to 11 55% 12 to 14 21% 15 7%

From a broader perspective, board size in Russia is close to the European average of 10.2; akin to those seen in Switzerland (10.4) and Sweden (10.6)3.

THE BROADER VIEW: Average board size Russia Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland Turkey UK USA Average 10.4 10 9.8 8.1 13.7 13.8 11.5 6.7 8.1 8 10.9 10.6 10.4 9.8 10.1 10.8

2 The Federal Law on Joint Stock Companies (LJSC) Article 66(3): Five directors at minimum for companies with 1,000 or fewer shareholders with voting rights; seven for companies with 1,001–10,000 shareholders with voting rights; nine directors for companies with more than 10,000 shareholders with voting rights. 3 Board size averages for Europe include employee representatives where applicable.

2018 Russia spencer stuart board index 5 Board size and composition

EXECUTIVE DIRECTORS Following the Federal Law on Joint Stock Companies (the LJSC), executives shall not make up more than one-quarter of the members of the board, whether it has a unitary or supervisory structure4. Executive directors account for 15.1% of all board members this year, slightly above the 14.3% recorded the preceding year.

Several of the companies analysed have a higher proportion of executive directors on the board than the LJSC stipulates: Ros Agro and Severstal have the highest proportion of executive directors, with 40%. At a further six companies the proportion ranges between 27% and 33%.

In line with the LJSC requirement, the chair of a Russian board may not also serve as the company’s sole executive body5. Indeed, across our sample no company combines the role of chair and chief executive. However, the chief executive is often a member of the board of directors, as is common practice in many European countries with one-tier board structures. In 78% of the companies in our analysis, the chief executive, or director-general, sits on the company board.

THE ROLES OF Chair AND VICE Chair The Russian Code of Corporate Governance recommends the appointment of an independent chair or, alternatively, that a senior independent director is appointed among a board’s members6. Forty per cent of companies comply with this provision of the code: 10 companies have an independent chairperson; seven others have no independent chair but do have a lead independent director, or an independent vice chair.

Regardless of independence status, a vice chair was identified at 35.7% of company boards7. Four boards had two vice chairs; six companies had a senior independent director.

THE BROADER VIEW: Companies with a vice chair Russia Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland Turkey UK Percent % 36 20.3 100 92 35 100 49 74 56 80 67 48 90 96 15

4 The Russian governance system is a mixture of a one- and two-tier system; companies are governed either by a board of directors or a supervisory board, both of which have the same powers and responsibilities. 5 LJSC Art. 64 and 66. 6 Article 2.5.1, Corporate Governance Code, 2014 (“the Code”). Translated by EBRD. 7 Indication of a vice chair in the annual report or on the company webpage. In some cases, the vice chair position is only indicated in the annual report. In cases where this member left after the reporting date, no chair could be identified, causing a discrepancy between last year’s figure (41.9%) and this year.

6 spencer stuart INDEPENDENT DIRECTORS The proportion of independent directors on Russian boards has increased from 36.7% last year to 38.1% this year. Yet this is the second-lowest proportion observed across our European sample; only Turkey’s is smaller (33%). Russian boards were at their most independent in 2014, when 39% of directors were classified as independent. However, when the effects of changes in board size from year to year are disregarded, the average number of independent directors per board increases to four, from 3.6 in 2014.

The Russian governance code states that at least one-third of the board should be independent8, a recommendation met by 66% of the companies in our sample. All boards except one have at least two independent directors — a threshold often considered the absolute minimum under any circumstances for a board to efficiently protect shareholder interests.

THE BROADER VIEW: Independent directors Russia Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland Turkey UK USA Percent % 38.1 49.2 77.1 80.8 58 60 51 86 75.8 45 45 69.1 83.2 33.1 61.3 85

8 Article 2.4.3 of the Code

2018 Russia spencer stuart board index 7 Board size and composition

GENDER DIVERSITY Women remain underrepresented on the boards of Russian companies, occupying a mere 7.8% of board seats across all companies in this year’s survey, down from 8.1% last year. There are few signs that the gender imbalance on Russian boards is being corrected: boards maintained roughly the same share of female members (8%) in 2014. Of new appointments in the past 12 months, the share of women is only slightly higher than the 9.3% level of overall female representation.

As in former years, most female directors are concentrated on the boards of a handful of companies; nearly half of Russian boards have no female board members.

Female directors

Number of female directors Percentage of companies None 50% 1 31% 2 12% 3 2% 4 5%

The share of female non-executive directors is 9.4%, a slight decrease on last year’s 10.2%. Among the 66 executive directors, the share of women is even lower, with only three female executive board directors (4.5%) across our entire sample.

There are currently no female chairs in our survey of RTS companies. At Pik Group a female chair was appointed during 2017 but left the position just before our cut-off date. Neither of our two last surveys saw a female chair in the RTS. The gender of chairs in Russia previously was not included in our study; however, drawing upon alternative sources, it appears that we must go back to 2010–2011 to find another female chair of an RTS company9.

The question remains if it is realistic to expect a substantial increase in the proportion of female directors on Russian boards, in the absence of a social agenda supporting such change. Unlike most other European countries, there is no legal quota or soft target in place to achieve more equal representation among board level positions. As seen in Norway and France — which continue to lead Europe in regard to the representation of women on boards — the introduction of legal quotas has largely corrected the gender imbalance that previously characterised boardrooms. In the absence of any regulations or incentives for Russian businesses to rethink the issue, and value, of diversity, the proportion of female directors may remain static, as it has for the past five years.

9 Source: BoardEx. Polyus had a female chair in 2010–2011.

8 spencer stuart THE BROADER VIEW: Women on the board Russia Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland Turkey UK USA Percent % 7.8 32 27.6 33.3 42.5 32 32.3 27.7 45.6 15.2 19.5 39 24.0 17.1 27.5 24.0

While gradual progress has been made in increasing the share of women on boards across Europe, corresponding increases at executive committee level have not followed, which has resulted in most European countries in a gap between the share of women on boards versus women on executive committees.

Russia is the only country in our European sample where there are more women on executive committees than on boards. There are 54 female executive committee members across our sample, making up 13% of the total — not far behind the average across Europe (15.6%). Denmark, Germany, Switzerland, and Turkey all have a smaller proportion of women on executive committees than Russia. However, this is not to say that Russia is leading those countries: the higher proportion of women on executive committees reflects their low share on Russian boards, as well as slow progress across Europe in getting more women on to executive committees.

No country is close to achieving gender parity on executive committee and top management level. Norway and Sweden are the only countries that have reached above 20% female members.

THE BROADER VIEW: Women on executive committees/management boards Russia Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland Turkey UK USA Percent % 13.3 18.5 11.5 19.2 16 10 14.6 15.3 24.4 13.4 - 24.7 10.1 9.2 18.6 -

2018 Russia spencer stuart board index 9 Board size and composition

FOREIGN DIRECTORS The share of foreign directors10 serving on Russian company boards rose to 25.8%, from last year’s 22.8%, but the level remains lower than that observed in 2016, when 28.2% of directors were foreign nationals.

Almost three-quarters of all foreign directors are independent, accounting for more than half of all independent directors.

Foreign directors and independence

73% Independent 27% Not independent foreign independent directors Foreign 50% directors Not foreign 50%

The average number of foreign directors per board is 2.7. However, when looking at individual company level, foreign representation is not distributed evenly across companies: ten companies have no foreign directors and six companies have more than five. It is worth noting, however, that among these six are X5 Retail and Yandex, both RTS listed companies of Dutch nationality. If we exclude non-Russian companies from the analysis, the rate of foreign representation is closer to that of last year, at 23.6%.

In total, 30 different nationalities are represented among the company directors in our analysis. British and American directors account for the largest share of foreign members, with 20.5% and 19.5%, respectively. The next largest group are German nationals, with 14%.

10 Foreign is defined as having a different nationality than the company nationality (headquarter), where dual nationals with one nationality that is the same as the company in question are not included. Directors with dual nationality where neither corresponds to the nationality of the company are counted as half X nationality and half Y nationality.

10 spencer stuart Nationalities of foreign directors11

26% Other European 20% US 20% British 14% German 12% FSU/Eastern Europe 4% South African 4% Other

There are 12 foreign chairs in this year’s survey. This is an increase from the nine recorded last year, but on a par with our 2016 analysis. Among executive board directors (66 in total), only three are foreign.

Of all new directors appointed in the past 12 months, 21.6% were of a foreign nationality.

THE BROADER VIEW: Foreign directors Russia Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland Turkey UK USA Percent % 25.8 30.5 39.4 33.8 35.0 25.3 10.1 42.6 28.2 26.8 19.8 33.6 58.2 17.1 33.3 8.2

11 Sample size: 106. Russian nationals who are foreign (seven directors) are not included in the chart. “Other” includes Australian (1), Brazilian (1), Chinese (1), and Qatari (1).

2018 Russia spencer stuart board index 11 Board size and composition

AGE The average age for all directors is unchanged from last year, at 54.5 years. Russian boards are again the youngest in Europe, although the average age has increased gradually since 2014, when it was as low as 52.5 years.

FIVE-YEAR PERSPECTIVE: Average age of directors

58.4 52.5 53.1 53.6 54.3 54.5

2014 2015 2016 2017 2018 European average 2018

The young age of Russian board directors is mirrored in the high number of board members with a current full-time executive position in addition to their board mandate. As many as 71% of non-executive directors in our sample have a full-time job, such as an executive, a state official, or in academia, as opposed to being portfolio directors. The average age of directors who are considered full-time executives is 47.8, while the average 51% Internal evaluation age of the “portfolio” directors is 57.2 years. 19% External evaluation 14% No evaluation Whether Russian companies prefer to appoint individuals who are in current full-time roles — a consequence of the smaller pool of professional board members — or possibly the 16% Not disclosed result of a relatively high number of state representatives, Russian boards have one of the highest proportions of full-time executives in Europe. Only Poland has a higher proportion, at 75% (and also has the second-youngest boards in Europe, with an average age of 55.6). The Netherlands has Europe’s most senior boards in terms of age, with an average of 61.5, and Europe’s lowest proportion of current executives on boards, at 39%.

12 spencer stuart As one would also expect, the average age of executive directors is also below the average across all directors, at 52.3 years. This is almost two years younger than non-executive directors 54.412. The average age of Russia’s CEOs is even lower, at 51.8 years, down from an average of 54.9 in 2017.

The average age of chairs is higher, at 59.3 years, having risen by more than a year. The oldest chair, 88 years old at our cut-off date, leads the board at Lukoil, a role he has held for nearly two decades.

THE BROADER VIEW: Average age of directors Russia Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland Turkey UK Average 54.5 57.7 58.9 58.5 58.9 58 58 61.5 57.3 55.6 60.3 58.9 60 58.7 59

NEW DIRECTORS In total, 97 of the directors sitting on the boards covered in our survey at the cut-off date were appointed during the past year. This represents a 14% increase from 2017, with 12 additional new board director appointments (equating to almost 0.3 new directors per board).

Of the new appointees, 91% are non-executive directors, 36% of whom are deemed independent — just below the sample’s overall independence rate.

About one-third of companies made no new appointments during the year; 29 companies recruited between one and 11 new directors to their boards. Of these, one company, PhosAgro, appointed two women to the board, and seven companies had at least one woman among their new members: FCG, Lukoil, MegaFon, Polymetal, Polyus, RussNeft, and Sistema.

The share of women appointed — nine directors representing 9.3% of new members13 — is lower than last year, when the proportion was 11.9% of new board members. More female board members left than were appointed during the year, which is driving the slight decrease in overall representation of women seen on Russian boards this year.

12 Both figures excluding chairs 13 The sample size for new directors age is to 89; age not disclosed for nine directors

2018 Russia spencer stuart board index 13 Board size and composition

Nearly 22% of new directors in our sample are of a foreign nationality, a smaller share than the overall 25.8% of foreign directors.

The average age of all new directors is 50.1, which is well below the average across all board members (54.5 years). The two youngest directors appointed are only 29 years, and only 18% of the new directors are older than 6014. At the same time, the average age of outgoing directors is approximately 53, which may suggest that the rising average age of Russian boards observed over past years might not be sustained, or could even be reversed, in the future15.

Among the new directors we find eight new chair appointments; 19% of the RTS companies analysed appointed a new chair from outside the board. These eight new appointments replaced eight outgoing chairs, whose average tenure had been approximately 3.7 years16. In addition, two chairs were appointed from within the board, bringing the proportion of new chairs in the RTS up to 24%.

THE BROADER VIEW: New directors Russia Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland Turkey UK USA Percent % 22.1 10.4 12.9 14.1 13.5 20 15.4 14 16.1 23.2 11.4 15 13.5 20.0 13.6 8.4

LENGTH OF SERVICE Although tenure has decreased for non-executive directors, from 4.3 years in 2017 to four years, the average tenure of executive directors has increased, from 6.8 to 7 years. In the same period, the average tenure of chairs has decreased slightly, from 5.4 to 5.3 years. These two results mean that overall tenure is unchanged from last year, at 4.7 years.

From a five-year perspective, the average tenure of chairs has declined by 9% since 2014, while tenure has increased for both non-executives and executives, driving the 9% increase from 2014 in overall board tenure.

14 The sample size for new directors age has fallen from 96 to 88; age not disclosed for eight directors 15 Figures also vary with sample of companies from year to year, and therefore the age of outgoing vs. incoming directors do not fully account for the change in average age across the full sample on last year 16 When the exact date of departure is unknown/not disclosed, tenure is approximated

14 spencer stuart Average tenure of directors

2018 2017 2016 2015 2014 5Y change Chairs (in role) 5.3 5.4 4.2 4.7 5.8 -9% Non-executive directors (on board) 4 4.3 3.1 3.8 3.8 5% Executive directors (on board) 7 6.8 6.1 6.3 6.3 13% All (on board) 4.7 4.7 3.9 4.2 4.3 9%

THE BROADER VIEW: Average tenure Russia Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland Turkey UK USA Average 4.3 5.1 5.3 4.8 5.7 5.7 6.5 4.5 4.3 4.3 6.3 5.7 5.9 5.3 4.6 8.1

EXTERNAL COMMITMENTS Non-executive directors in Russia sit on an average of 1.7 listed company boards, a figure unchanged now for three years running. On average, chairs sit on slightly more quoted boards (1.9). This is despite the fact that most chairs do not sit on a second board: more than half of the chairs have no other public board engagements; seven chairs serve on three additional boards.

Among the executive directors in our analysis, 15 of them (22.7%) sit on one or more additional public boards.

2018 Russia spencer stuart board index 15

Board meetings and evaluation

BOARD MEETINGS Russian boards in this year’s sample reported an average number of 21.4 meetings, including those held in absentia, during the 2017 financial year. Again, this is the highest frequency in Europe. But when in absentia meetings are excluded, that average drops to 6.4, which is the lowest average across all European countries surveyed.

Although in some cases the number of board meetings can serve to indicate how well a board is fulfilling its duties, high numbers of meetings, as observed in Russia and Turkey, do not necessarily point towards better governance — especially if meetings are frequently held in absentia. It is important that a board meets a certain number of times each year, but other factors, such as the quality of discussion and the length of the meetings, must also be considered.

Board meetings in person

<4 4 5 6 7 8 >9 Unknown Number of 3 8 6 5 7 2 7 4 companies

Board meetings in absentia + in person

<5 5–9 10–14 15–19 20–24 25–29 30–39 40–59 Unknown Number of 1 6 4 10 9 2 5 4 1 companies

THE BROADER VIEW: Scheduled board meetings Russia Belgium Denmark Finland France Germany Italy Netherlands Norway Poland Spain Sweden Switzerland Turkey UK USA Average 6.4 8.4 8.2 10.8 9.1 6.8 11.2 7.4 8.5 8.7 11.1 10.3 8.3 19.7 7.3 8

16 spencer stuart BOARD EVALUATION Annual self-evaluations and external assessments are seen as essential for a high- performing board and company. These should review, as a minimum, board composition, including diversity in skillset and the alignment of directors’ experience and expertise with the strategy of the company, working dynamics and long-term succession planning. It is often recommended, and in certain countries is required by law, that an externally facilitated evaluation is carried out by an independent third party every three years. The Russian Code of Corporate Governance recommends this, and also that an annual self-assessment is conducted of both the board as a whole and of directors on an individual level.

Our findings over the past years suggest that an increasing share of Russian companies is striving to meet this criterion of their governance code, as well as international standards and investors’ expectations — 40% of companies have conducted an external board evaluation in the past three years or are scheduled to do so before the three-year period elapses. Seven companies (17%) reported that they had conducted an externally facilitated board evaluation for the financial year 2017, many for the first time. Although this is lower than last year (19%), it is significantly higher than in both 2015 (11%) and 2015 (6%).

Nearly 60% of companies report that they have conducted an internal assessment of the board for the 2017 financial year, while an additional 10% report partial compliance with the governance principle, having conducted an internal assessment of the board, although not at individual director level.

In the case of eight companies, no internal or external assessment was conducted. In other cases it was reported that a self-evaluation would be carried out next year. Three companies did not disclose any information regarding the topic of board evaluations.

Board evaluations by type17

57% Internal (with full or partial compliance) 17% External 19% No external or internal 7% Not disclosed

17 “Internal” includes companies that comply fully and partially.

2018 Russia spencer stuart board index 17

Board committees

The Russian Corporate Governance Code recommends that companies form audit, nomination, compensation and other committees if appropriate, for example strategy, corporate governance, ethics or risk18.

The average number of committees per board is 3.3, on a par with previous years. Two companies in our sample (Ros Agro and Surgutneftgas) have established only one committee (audit).

Committees of Russian boards

Number of committees 1 2 3 4 5 6 Percentage of companies 4.8% 9.5% 54.7% 16.6% 9.5% 4.8%

AUDIT COMMITTEE All companies in our sample have formed an audit committee, in 88% of the cases as a stand-alone committee. In a few cases the audit committee is combined with another, most often risk, and in one example with sustainable development.

As with last year, only one company (Alrosa) has a female audit committee chair, although 12 companies had one or more women members on their audit committee.

For the second year, we have looked at the backgrounds of audit committee chairs. Across our sample, only six audit chairs have CFO experience, while an additional four have audit experience, together making up 24% of audit committee leaders. In contrast, in the UK, 65% of audit chairs are former CFOs and 24% have a background as an audit partner. Most audit chairs in Russia — 50% of our total sample — come from a general management background19. Six audit chairs have a background as rector, minister or other function within government.

18 Article 2.8.1–2.8.4. 19 General management background includes CEO roles, managing director, partner, general director, president and vice- president roles that are not specific to any function. The function recorded is judged to be a director’s core function.

18 spencer stuart When looking at experience by sector rather than function, we find that nearly 50% of audit chairs have some experience gained in financial services in their executive career, and 14% have worked in professional business services companies, typically consulting firms. An equal share of 14% per cent come from an education and/or government background.

Primary background and experience of audit chairs

Primary Sector functional experience background

50% GM 48% Financial services 24% CFO/Audit 14% Education/government 7% Rector 14% Prof. business services 7% Minister/other govt. position 17% Other 4% Legal 7% Not available 7% Not available

OTHER COMMITTEES Most companies in this year’s sample have established a remuneration and nomination committee. In most cases these committees are combined under the title “human resources and remuneration” (HRR) or “personnel and remuneration”, but they carry out the same duties as those of a compensation/remuneration committee.

Other committees established include budget, risk and strategic planning. Only one company has formed an ethics committee; four companies have a committee that deals with health, safety and environment/sustainability.

2018 Russia spencer stuart board index 19 Board committees

COMMITTEE MEETINGS As with the board meeting landscape, the number of committee meetings reported tends to be higher than elsewhere in Europe. The average number of audit committee meetings disclosed during the financial year 2017 was eight20. However, as it is not always reported how many meetings were held in person versus in absentia, this average becomes less meaningful. As for board meetings, and as is evident from those companies that do specify both measures in their reporting, figures for the number of the meeting tend to drop significantly when only in-person meetings are counted.

Among the companies that do make the distinction, we find that the audit committee of VTB reported that it held 14 meetings, of which five were in person. The highest number of in-person meetings was at Credit Bank of Moscow, where 10 out of 11 were in person. United Wagon Company held only three audit committee meetings during the year, the lowest number reported across our sample and the only company for which all meetings were held in absentia.

20 Audit committee meetings not disclosed for three companies

20 spencer stuart Remuneration

Publicly available information regarding director remuneration in Russia remains less transparent than in most other countries in Europe, despite the governance code’s recommendations.

Most companies, with few exceptions, disclose some measure of remuneration, whether it is the total fee, retainer fees, or individual compensation. However, while the standard across Europe is to report on the board’s compensation on an individual level, only 13 out of the 42 RTS companies disclose such information21.

All companies, except three, report the total monetary amount paid to the board of directors during the year. Two of these three reported only the number of restricted share units (RSUs), and the third disclosed only the combined compensation to senior management and board.

Many companies calculate the directors’ compensation based on a fixed formula, including a base depending on a firm performance measure, such as revenue, and a discount factor based on the directors’ meeting attendance rate. Remuneration is often paid only to independent board members or, alternatively, the independent board members receive significantly higher amounts than non-independent directors. Several companies also report that they may pay additional fees for attending board and committee meetings or, in some cases, that directors lose their right to receive remuneration if they fail to attend a certain percentage of meetings.

Actual remuneration is most often reported in rubles, but fees are often set in US dollars and in some cases also in euros. Thirteen companies report on remuneration in a currency other than rubles; mostly in US dollars, but also in euros and British pounds.

The remuneration itself, and indeed the quality of reporting, varies greatly between companies. While NMTP pays its directors a retainer fee of ₽40,000 per year, Rosneft pays its (independent) directors $500,000 (₽29,149,100 using average 2017 exchange rates).

21 Two additional companies disclose individual compensation, but only in number of Restricted Share Units. It is not reported what this translates to in cash.

2018 Russia spencer stuart board index 21 Remuneration

CHAIRs The average fee for chairs for the financial year 2017 is₽ 13,373,635 (€202,537), which is a slight decrease on both the 2016 and 2015 averages in ruble terms22. Although this may be an indication that remuneration levels for chairs are decreasing in Russia, other factors may be driving the trend: the sample of companies varies from year to year with changes to the RTS index, the disclosure level is inconsistent from year to year,23 and the US$-reported compensation amounts vary with fluctuations in the RTS/$ exchange rate.

Among the companies for which information was available prior to our cut-off date, the highest chair retainer fee is again paid to the leader of the Nornickel board, who received $1 million. While this sum is unchanged from last year, it translated into ₽58,298,200 in 2017 — a 13% decrease on last year’s compensation in ruble terms. The lowest fees for chair duties were awarded at RusHydro and FGC UES, each paying a chair retainer fee of ₽1,170 000, representing a 30% premium on their ordinary non-executive director fee.

At the nine companies for which total actual fees paid to chairs were available at our cut-off date, the average is higher, at ₽15,720,536 (€238,080), due to additional variable components, attendance fees, reimbursements, and compensation relating to additional roles on the board. At the Credit Bank of Moscow, the chair retainer fee is $150,000 although the chair received $260,000 in total remuneration. At Rusal, the retainer fee is set to $400,000; the actual payment to the chair was $465,000.

THE BROADER VIEW: Average fees for chairs

Country Average fees Country Average fees Russia €238,080 Norway €71,854 Belgium €121,100 Poland €47,468 Denmark €210,682 Spain €374,845 Finland €141,358 Sweden €250,179 France €627,954 Switzerland €1,796,868 Germany €291,226 UK €477,176 Italy €903,000 USA €389,540 Netherlands €134,769

22 In ruble terms compensation has fallen, compared with 2016 and 2015. In euro terms the average fee is higher than 2016 (€185,342), but lower than in 2015 (€209,834). 23 The sample size was 26 out of 42 companies last year; six companies did not disclose a chair retainer fee. This year the sample size is 27 out of 42; five companies did not disclose a chair retainer fee.

22 spencer stuart NON-EXECUTIVE DIRECTORS Remuneration for non-executive directors is often determined by a formula that includes a base rate that is linked to company revenue for the financial year and so may vary, and a component representing individual directors’ attendance at meetings. In other instances, no retainer fee is paid if a predetermined percentage of meetings are not attended. In this sense, the retainer is not fixed in advance of the reporting period but is rather determined ex post on an individual level. In the many cases where individual director compensation is not reported, the retainer fee represents the maximum possible retainer fee for the director, rather than the fixed fee. In two other cases, remuneration is awarded in restricted share units RSUs; no fee is reported in cash.

For the 2017 reporting year, the average basic retainer fee for non-executive directors was ₽7,081,261 (including the maximum retainer fee for the companies with a variable policy), which translates to €107,242. As with remuneration for chairs, this is slightly below last year’s level, at ₽7,858,26224 in ruble terms. Among those companies that reported on individual compensation, the average total fee for non-executive directors was ₽9,838,620 (€149,001).

THE BROADER VIEW: Average fees for non-executive directors

Country Average fees Country Average fees Russia €107,242 Norway €34,030 Belgium €29,847 Poland €33,872 Denmark €52,263 Spain €73,380 Finland €58,436 Sweden €64,844 France €24,449 Switzerland €193,946 Germany €75,507 Turkey €60,633 Italy €59,000 UK €77,887 Netherlands €56,987 USA €110,229

The company reporting the highest fee for non-executive directors is Rosneft, where directors receive $500,000 (₽29,149,100). The dollar sum is unchanged from last year, but converted to rubles the amount has dropped, from ₽33,472,735. The lowest retainer fee for NEDs, as last year, was paid by NMTP, at 40,000₽. The total fees reported as paid to this board are ₽313,635, compared with total fees of ₽132,336,914 at Rosneft.

24 As with the chair fee, when converted to euros, average remuneration is higher than last year (€106,203)

2018 Russia spencer stuart board index 23 Remuneration

No independent directors were identified on the NMTP board at the cut-off date. The total fees paid to the Rosneft board were shared between only four independent board directors, three of which are foreign. It may be the case that companies that offer a higher remuneration do so to attract and retain independent, and often foreign, directors to their boards. In some cases, affiliated directors are not remunerated at all.

AUDIT, REMUNERATION AND NOMINATION COMMITTEE In last year’s sample an additional fee for the role of audit committee chair was identified at just over half of the companies. This year a fee for chairing the audit committee was specified by 24 companies; the remaining 18 in the sample either did not specify or paid no additional fee for carrying out this important board position. In most cases, the fee is specified as a multiplier of the non-executive director retainer fee.

The average audit committee chair fee for 2017 was ₽2,337,772, (€35,404), which is in addition to the regular non-executive director fee. In many cases the fee was subject to an independence criterion. The average additional fee for committee membership was ₽1,023,595 (€15,502).

The remuneration committee chair was paid, on average, an additional ₽2,189,508 (€33,159); a committee member received ₽1,081,607 (€16,380). Nomination committee fees are identical to those of the remuneration committee; in many cases these committees are combined. Where they are separate, most companies apply the same multiplier to determine remuneration for chair role and membership of the two committees25.

25 The average audit committee membership fee is lower than that of the nomination and remuneration committee due to a difference in the sample size: a few companies specify additional remuneration for the audit committee only; two companies have an audit committee only. On an individual company basis, for the companies that pay additional remuneration to audit, remuneration and nomination committee members, the additional fee for the audit committee chair and members is always higher.

24 spencer stuart Comparison Tables

russia board index 2017 25 International Comparison

In the 2018 Russia Spencer Stuart Board Index we provide two sets of tables. In addition to the detailed data for Russian Trading System Index companies (beginning on page 32), we are publishing a chart comparing aggregated data from 16 countries (pages 28–31).

All data is taken from individual country Board Indexes published by Spencer Stuart in 2018.

Visit the Spencer Stuart website and discover “Boards Around the World”, a visual tool that compares the composition, diversity, compensation and board evaluation practices of different countries.

Composition information

BELGIUM BeL20 + BelMid DENMARK OMX Copenhagen (25 companies) FINLAND OMX Helsinki (25 companies) FRANCE CAC40 GERMANY DAX30 ITALY 37 (FTSE MIB) + 63 (Mid Cap, Small Cap, Other) NETHERLANDS AEX (21 companies) + AMX (21 companies) + eight further large listed companies NORWAY OBX (25 companies) POLAND WIG 20 RUSSIA Russian Trading System Index SPAIN IBEX-35 + top companies by market cap SWEDEN OMX Stockholm (25 companies) SWITZERLAND SMI (20 companies) TURKEY BIST 30 UK Top 150 FTSE companies excluding investment trusts USA S&P 500

26 spencer stuart International comparison footnotes

General N/A = Not applicable. A blank cell denotes that either the information is not available or we did not include it our research. Belgium Russia 1 7% did not disclose 42 Excluding Unipro PAO from sample 2 One company did not disclose 43 Average in-person board meetings. Average number of meetings 3 Based on six companies only including meetings held in absentia: 20.8. 4 Two chairs are not paid 44 Three companies do not disclose. 5 Nine companies do not pay audit co members 45 Excludes 15 directors (age not disclosed) 6 10 companies do not pay rem co fees 46 Excludes 2 chairs (age not disclosed) 7 14 companies do not pay nom co fees 47 Excludes one CEO (age not disclosed) Denmark 48 Excludes 9 directors (age not disclosed) 8 All calculations exclude employee representatives 49 Excludes 4 directors (age not disclosed) 9 One executive director in the sample 50 Magnit appointed a female CEO after cut-off date 10 Six companies did not disclose 51 Nine companies do not disclose specified amounts 52 28 companies do not disclose individual figures Finland 53 35 companies do not disclose, or figure is not available for the year 11 Only one CEO in sample 54 32 companies do not disclose, or figure is unavailable for the year France 55 Includes 24 companies only 12 75% of CAC 40 companies conduct an external evaluation at least every 56 Includes 22 companies only three years; in 2017, 75% of these were conducted by Spencer Stuart 57 All 12 exco members of one Dutch company are foreign 13 According to Afep/Medef corporate governance code 58 Annual rate set by the Central Bank of the Russian Federation: RUB/EUR = 14 Non-executive chairs only 66.0305, RUB/USD = 58.2982, RUB/GBP = 75.2038 15 47.5% of rem and nom cos are merged, with an average fee of €17,254 Spain Germany 59 Top 50 companies only 16 Average minimum proportion of members that should be independent 60 Includes both executive and non-executive directors 17 Shareholder representatives only 61 The average additional fee paid to the SID was €31,645 18 Remuneration committees are very rare in Germany 62 Only 14% of companies in Spain have separated nominations & 19 Except for banks, German nominations committees only deal with remunerations (N&R) committee into two. Average fee for N&R co non-executive director nominations and committee membership is rarely members is €23.632 compensated Turkey 20 Supervisory Board only 63 Excludes Koza Altin and Koza Anadolu Metal Italy 64 Three companies held over 40 meetings per year, one held 92. Seven 21 Includes some CEOs who are also chairs companies do not disclose Netherlands 65 Excludes 17 directors (age is not disclosed) 22 Includes executive board members 66 Excludes one chair (age is not disclosed) 23 Non-executives only 67 Excludes one CEO (age is not disclosed) 24 Includes executive directors on two-tier boards 68 Turkish dual nationals not counted as foreign 25 Includes directors of executive boards 69 Four companies do not disclose, or not available 26 Seven companies did not disclose the information 70 Conversion at av. 2017 annual rate: TRY/EUR = 4.120 Norway UK 27 Seven companies did not disclose 71 Four companies did not have a SID either due to a recent retirement 28 Only one executive director and an ongoing search for a replacement or the application of a foreign 29 Excludes one Executive chair corporate governance code. 72 The exchange rate used is 1 EUR = 1.141317 GBP Poland 73 SIDs only; those who served the full year 30 Six companies have employee representatives (ER) on the board. ERs are 74 Includes 140 part-time chairs. Eight chairs are full-time and paid on a excluded from subsequent figures different basis. Two chairs receive no fee. 31 One board does not disclose; all directors are therefore classified as non- 75 FTSE 100 only independent 32 Excludes 141 out of 302 directors (age not disclosed) USA 33 Excludes 16 chairs (age not disclosed) 76 Percentage of S&P 500 boards that disclose 34 Excludes 15 CEOs (age not disclosed; two are co-CEOs) and two 77 All CEOs sit on the company board companies with no CEO 78 Top 200 only of S&P 500 companies 35 Excludes 125 out of 265 directors (age not disclosed) 79 CEOs only 36 Excludes two companies: one had no chair and one chair could not be 80 Average tenure of independent directors only identified 81 Non-executive chairs only 37 Includes one company where all directors (8) were appointed during the year, due to formation of a new board/company. 38 Five companies do not disclose 39 Figure unavailable for 24 companies: year not served in full (9); person not remunerated (6); no vice chair (9) 40 Insufficient disclosure 41 Conversion at av. 2017 annual rate: PLN/EUR = 4.257

2018 Russia spencer stuart board index 27 International comparison

BELGIUM DENMARK FINLAND FRANCE GERMANY ITALY NETHERLANDS NORWAY POLAND RUSSIA SPAIN SWEDEN SWITZERLAND TURKEY UK USA Size of sample 59 25 25 40 70 100 50 25 40 4242 100 25 20 2863 150 485 Supervisory board/unitary board 1/58 25/0 0/25 7/33 70/0 1/99 44/6 25/0 40/0 6/36 0/100 0/25 0/20 0/28 1/149 0/485 of directors Average number of board meetings 8.4 8.2 10.8 9.1 6.8 11.2 7.4 8.5 8.7 6.543 11.1 10.3 8.3 19.764 7.3 8 per year % companies that conducted an 5.1%1 8.3% 17.4% 30%12 17% 38% 30% 22.2%27 N/A 17%44 34% 16.7% 12.5% N/A 44% 9%76 external board evaluation

GENERAL INFORMATION Combined chair and CEO 1.7% 0% 0% 52.5% 0% 17% 0% 0% 0% 0% 54% 4% 0% 10.7% .7% 49.9% % boards with senior independent 1.7% 0% 0% 52.5% 0% 34% 6% 0% 0% 17.1% 68% 4% 25% 0% 97.3%71 80% director (SID) % of boards with vice/deputy chairs 20.3% 100% 92% 35% 100% 49% 74% 56% 80% 34.1% 67% 48% 90% 96% 14.7% - Average board size (total) 10 9.88 8.1 13.7 13.8 11.5 9.322 8.1 8 10.4 10.9 10.6 10.4 9.8 10.1 10.8 Average board size (excl. 10 6.8 7.9 12 7.5 N/A 9.322 6 7.630 N/A N/A 8.8 N/A N/A 10.1 N/A employee representatives) Average number of independent 4.5 5.2 6.4 7 N/A 5.9 5.7 4.5 3.431 4 4.8 6.1 8.7 3.3 6.2 9.2 board members BOARD % independent board members 49.2% 77.1% 80.8% 58% 60%16 51% 87.1%23 75.8% 45%31 38.1% 45% 69.1% 83.2% 33.1% 61.3% 85% Average number of non-executive directors 7.7 5.8 6.8 11 6.517 8.8 6.5 5 6.6 7.9 8.6 7.2 9.1 7.9 6.6 9.2 Average number of executive directors 1.4 0.04 0.1 1 N/A 2.3 2.824 0.04 N/A 1.6 1.8 0.6 0.4 1.1 2.5 1 Average age: all directors 57.7 58.9 58.5 58.9 58 58 60.7 57.3 55.632 54.545 60.3 58.9 60 58.765 59 - Average age chairs 61.8 62 61.3 61.4 66 65 66.9 62.3 53.833 59.346 63.8 63.6 63.5 58.366 65.4 - Average age CEOs who sit on the board 53.8 N/A 58.411 59 N/A 57 59 N/A N/A 52.3 54.759 54.9 55.6 55.2 55 57.6

AGE Average age all CEOs, including those not 54 55 56.7 57.9 55 N/A 56 55.5 50.435 51.847 - 54.1 54.5 54.667 55.3 57.677 on the board Average age: non-executive directors 57.7 58.5 58.2 59 6017 61 60.7 56.3 55.935 54.448 - 58.7 59.9 59.4 60 63 Average age: executive directors 54.5 47.69 51.5 57.8 53.2 60 54.225 6628 N/A 52.349 - 53.9 55.3 54.4 54.2 - % foreign board members (all) 30.4% 39.4% 33.8% 35% 25.3% 10.1% 39% 28.2% 26.8% 25.8% 19.8% 33.6% 58.2% 17.1%68 33.3% 8.2%78 % foreign chairs 15.3% 28% 16% 17.5% 13% 5.7% 18% 16% 18.4%36 28.6% 7% 12% 30% 10.7% 21.3% - % foreign non-executive directors 32.7% 39.6% 36.8% 37% 26%17 8.1% 42.6% 30.6% 28% 29.7% 21.6% 38.3% 60.8% 19% 39% -

FOREIGN % foreign executive directors 27.2% 0% 0% 2% N/A 5.6% 30.4%25 0% N/A 4.5% 7.7% 12.5% 75% 6.3% 25.1% - Average # nationalities represented on 3.1 3.4 2.9 4.3 2.517 2.2 3.1 2.3 2 3.2 - 3.6 6.2 2 3.7 - the board % female board directors (all) 32.1% 27.6% 33.3% 42.5%13 32%20 32.3% 21.3% 45.6% 15.2% 7.8% 19.5% 39.1% 24% 17.1% 27.5% 24% % female chairs 5.1% 0% 0% 2.5% 4% 9% 4% 16% 15.8% 0% 7% 12% 5% 10.7% 3.9% 4.1% % female CEOs 7.9% 0% 4.2% 2.5% 0% 6% 6% 4.2% 5.6% 0%50 2% 8% 0% 0% 5.3% 5.4%

17 GENDER % female non-executive directors 38.6% 27.8% 38.6% 45.3% 32% 39% 27.3% 51.6% 15.2% 9.4% 21.3% 45% 27.1% 19.9% 38.6% - % female executive directors 14.5% 0% 0% 0.3% 10.4% 9% 7.2%25 0% N/A 4.5% 7.2% 12.5% 0% 6.3% 8.4% - % boards with at least one female director 100% 88% 100% 100% 99% 99% 86% 100% 67.5% 50% 92% 100% 95% 82.1% 100% 99.4%

28 spencer stuart BELGIUM DENMARK FINLAND FRANCE GERMANY ITALY NETHERLANDS NORWAY POLAND RUSSIA SPAIN SWEDEN SWITZERLAND TURKEY UK USA Size of sample 59 25 25 40 70 100 50 25 40 4242 100 25 20 2863 150 485 Supervisory board/unitary board 1/58 25/0 0/25 7/33 70/0 1/99 44/6 25/0 40/0 6/36 0/100 0/25 0/20 0/28 1/149 0/485 of directors Average number of board meetings 8.4 8.2 10.8 9.1 6.8 11.2 7.4 8.5 8.7 6.543 11.1 10.3 8.3 19.764 7.3 8 per year % companies that conducted an 5.1%1 8.3% 17.4% 30%12 17% 38% 30% 22.2%27 N/A 17%44 34% 16.7% 12.5% N/A 44% 9%76 external board evaluation

2018 Russia spencer stuart board index 29 International comparison

BELGIUM DENMARK FINLAND FRANCE GERMANY ITALY NETHERLANDS NORWAY POLAND RUSSIA SPAIN SWEDEN SWITZERLAND TURKEY UK USA % new board members 10.5% 12.9% 14.1% 13.5% 20%20 15.4% 14.7% 16.1% 23.2%37 22.1% 11.4% 15% 13.5% 20% 13.6% 8.4% % women among new 46.8% 22.7% 32.1% 41.9% 26%20 48% 19.5% 45.8% 15.7% 9.3% 31% 36.4% 39.3% 27.3% 35.7% 40% board members

NEW MEMBERS % non-nationals among 32.3% 45.5% 32.1% 36.8% 12%20 9% 49.4% 37.5% 25.7% 21.6% 24% 33.3% 78.6% 20% 37.7% 10.5% new board members Average # quoted boards per director 1.9 1.9 1.8 1.3 N/A 3.2 1.9 1.8 1.3 1.7 1.1 2.5 2 1.8 2.2 2.1 (total) Average # quoted boards per chair (total) 2.3 2 2.1 2.3 2.8 3.6 2 2.2 1.3 1.9 1.3 2.9 2.4 1.3 2.2 1.579 % executive directors with an outside board 28.4% 0% 33.3% 58% 22% 52.7% 37.5% 100%28 N/A 22.7% 10.6% 50% 25% 21.9% 30.4% 40% OTHER BOARDS % non-executives with a full-time executive 63.2% 62.5% 48% 54% 42%17 - 34.8% 71% 74.6% 71.2% - 40% 45.3% 54.8% 36.8% - role % companies with a mandatory 47.5% 63.2%10 0% 45% 88% 4% N/A N/A N/A N/A 21% N/A 37.5% N/A 0% 71% retirement age Average mandatory retirement age 70.6 70.1 N/A 71.6 72 75.5 N/A N/A N/A N/A 71.9 N/A 71.1 N/A N/A 73.5 Average tenure (chair and 5.1 5.3 4.8 5.7 5.7 6.5 4.5 4.3 4.2 4.3 6.360 5.7 5.9 5.3 4.6 8.180 TENURE/RETIREMENT non-executives) Average retainer for non-executive directors €29,8472 €52,263 €58,436 €24,449 €75,507 €59,000 €56,987 €34,030 €33,87241 €107,24251,58 €73,380 €64,844 €193,946 €60,63369,70 €77,88772 €110,229 (excluding chair and vice chair/SID) Average total fees for non-executive directors (excluding chair and vice chair/ €55,623 €83,573 €72,972 €85,165 N/A €90,000 €71,878 €53,910 €31,98438,41 €149,00152,58 €121,020 €78,322 €287,725 N/A €105,89272 €265,124 SID) Average total fee for vice chair (or SID) €98,8173 €133,487 €92,022 €143,509 N/A €452,000 €84,453 €42,280 €25,72439,41 N/A53 €154,52661 €116,821 €387,969 N/A €128,03872,73 - Average total fee for chairs €121,1004 €210,682 €141,358 €627,95414 €291,226 €903,00021 €154,51726 €71,85429 €47,46841 €238,08054,58 €374,845 €250,179 €1,796,868 N/A €477,17672,74 €389,54081

REMUNERATION Average fee for audit committee €11,7625 €23,212 €5,877 €22,642 €31,552 €22,000 €9,895 €7,808 N/A40 €15,50255,58 €30,081 €19,354 €51,802 N/A €17,47272 €12,172 membership Average fee for remuneration committee €8,1746 €20,402 €4,467 €14,54215 N/A18 €17,000 €7,550 €4,773 N/A40 €16,38056,58 €34,73762 €11,046 €45,707 N/A €14,86872 €10,751 membership Average compensation for nomination €8,3657 €21,649 €4,215 €12,29415 N/A19 €17,000 €7,059 N/A N/A40 €16,38056,58 €33,88862 N/A €37,645 N/A €11,18372 €8,359 committee membership Average board size of executive committee 6.3 5.2 9.6 12.5 5.1 4.9 6.6 7.7 5.8 9.7 - 9.4 9.4 9.3 9.975 - % foreigners on the executive committee 34.1% 39.2% 27.1% 32% 25% 5.6% 42.7% 19.2% 14.3% 6.9%57 - 18.3% 60.6% 6.1% 37.6%75 - EXCOM % women on the executive committee 18.5% 11.5% 19.2% 16% 10% 14.6% 14.9% 24.4% 13.4% 13.3% - 24.7% 10.1% 9.2% 18.6%75 -

30 spencer stuart BELGIUM DENMARK FINLAND FRANCE GERMANY ITALY NETHERLANDS NORWAY POLAND RUSSIA SPAIN SWEDEN SWITZERLAND TURKEY UK USA % new board members 10.5% 12.9% 14.1% 13.5% 20%20 15.4% 14.7% 16.1% 23.2%37 22.1% 11.4% 15% 13.5% 20% 13.6% 8.4% % women among new 46.8% 22.7% 32.1% 41.9% 26%20 48% 19.5% 45.8% 15.7% 9.3% 31% 36.4% 39.3% 27.3% 35.7% 40% board members

2018 Russia spencer stuart board index 31 Board composition

NON-EXECUTIVE DIRECTORS NON-EXECUTIVES APPOINTED Chair & CEO Lead Non-Executive (EXCLUDING Chair) 1 JUNE 2017–30 MAY 2018 MANAGEMENT BOARD

TOTAL NUMBER OF TOTAL NUMBER OF THE BOARD (EXCL. Chair ALSO CEO?

FOREIGN Chair EXECUTIVES ON on the boNatiardon alities INDEPENDENT FOREIGN CEO

VICE Chair incl. chair DIRECTOR DIRECTOR SID / Lead Director FOREIGN FOREIGN FOREIGN

WOMEN WOMEN WOMEN Chair)

TOTAL TOTAL

S S * company name

AEROFLOT 10 No No No 0 0 2 8 4 2 0 3 1 0 1 10 0 0

ALROSA 15 No No Yes 2 1 1 12 4 0 4 4 0 0 2 8 1 0

CREDIT BANK OF MOSCOW 10 No Yes No 0 1 5 7 4 5 0 2 1 0 2 10 0 2

DETSKIY MIR 10 No Yes No 0 0 3 8 3 2 1 5 1 0 1 11 0 5

FGC UES 12 No No No 0 0 2 10 3 1 1 3 0 1 1 8 0 1

GAZPROM 11 No No No 1 0 2 7 3 1 0 1 0 0 3 16 0 2

INTER RAO UES 11 No No No 1 1 2 9 6 1 1 0 0 0 1 9 0 1

LUKOIL 11 No No No 1 0 4 7 5 4 2 1 0 1 3 14 1 0

M VIDEO 14 No No No 0 0 3 10 4 2 0 10 2 0 3 8 2 3

MAGNIT 7 No Yes No 1 0 3 6 4 2 0 7 3 0 0 6 0 4

MEGAFON 9 No No No 0 0 2 7 2 2 0 8 2 0 1 8 1 2

MECHEL 9 No No No 1 0 1 6 4 0 0 1 0 0 2 6 0 3

MMK / MISW 10 No No No 0 0 3 6 5 2 2 0 0 0 3 13 0 1

MOSCWO EXCHANGE 12 No No No 1 0 4 11 6 3 2 2 0 0 0 6 0 1

MTS 8 No Yes No 1 0 4 6 4 4 1 1 0 0 1 11 0 1

NORILSK NICKEL 13 No Yes No 1 0 4 10 4 2 0 1 0 0 2 11 0 4

NOVATEK 9 No No No 0 0 4 7 3 3 0 0 0 0 1 10 0 0

NOVOLIPETSK STEEL (NLMK) 9 No No No 0 0 4 8 5 5 0 0 0 0 0 9 1 1

NOVOROSSIYSK COMMERCIAL 7 No No No 0 0 1 5 0 0 0 2 0 0 1 9 0 0 SEA PORT (NMTP)

PHOSAGRO 10 No Yes No 1 0 6 7 6 4 2 4 2 2 2 6 0 0

PIK 9 No No No 0 0 1 7 3 0 1 4 0 0 1 14 0 0

POLYMETAL INT 10 No Yes No 0 1 7 8 5 6 3 3 3 1 1 13 0 3

POLYUS 9 No Yes No 0 0 3 5 3 3 1 2 1 1 3 13 0 1

ROS AGRO 5 No No No 0 0 4 2 2 2 0 0 0 0 2 6 0 2

* In the cases where timely information concerning who held the vice chair position at the cut off date was unavailable, no vice chair has been recorded.

32 spencer stuart NON-EXECUTIVE DIRECTORS NON-EXECUTIVES APPOINTED Chair & CEO Lead Non-Executive (EXCLUDING Chair) 1 JUNE 2017–30 MAY 2018 MANAGEMENT BOARD

TOTAL NUMBER OF TOTAL NUMBER OF THE BOARD (EXCL. Chair ALSO CEO?

FOREIGN Chair EXECUTIVES ON on the boNatiardon alities INDEPENDENT FOREIGN CEO

VICE Chair incl. chair DIRECTOR DIRECTOR SID / Lead Director FOREIGN FOREIGN FOREIGN

WOMEN WOMEN WOMEN Chair)

TOTAL TOTAL

S S * company name

AEROFLOT 10 No No No 0 0 2 8 4 2 0 3 1 0 1 10 0 0

ALROSA 15 No No Yes 2 1 1 12 4 0 4 4 0 0 2 8 1 0

CREDIT BANK OF MOSCOW 10 No Yes No 0 1 5 7 4 5 0 2 1 0 2 10 0 2

DETSKIY MIR 10 No Yes No 0 0 3 8 3 2 1 5 1 0 1 11 0 5

FGC UES 12 No No No 0 0 2 10 3 1 1 3 0 1 1 8 0 1

GAZPROM 11 No No No 1 0 2 7 3 1 0 1 0 0 3 16 0 2

INTER RAO UES 11 No No No 1 1 2 9 6 1 1 0 0 0 1 9 0 1

LUKOIL 11 No No No 1 0 4 7 5 4 2 1 0 1 3 14 1 0

M VIDEO 14 No No No 0 0 3 10 4 2 0 10 2 0 3 8 2 3

MAGNIT 7 No Yes No 1 0 3 6 4 2 0 7 3 0 0 6 0 4

MEGAFON 9 No No No 0 0 2 7 2 2 0 8 2 0 1 8 1 2

MECHEL 9 No No No 1 0 1 6 4 0 0 1 0 0 2 6 0 3

MMK / MISW 10 No No No 0 0 3 6 5 2 2 0 0 0 3 13 0 1

MOSCWO EXCHANGE 12 No No No 1 0 4 11 6 3 2 2 0 0 0 6 0 1

MTS 8 No Yes No 1 0 4 6 4 4 1 1 0 0 1 11 0 1

NORILSK NICKEL 13 No Yes No 1 0 4 10 4 2 0 1 0 0 2 11 0 4

NOVATEK 9 No No No 0 0 4 7 3 3 0 0 0 0 1 10 0 0

NOVOLIPETSK STEEL (NLMK) 9 No No No 0 0 4 8 5 5 0 0 0 0 0 9 1 1

NOVOROSSIYSK COMMERCIAL 7 No No No 0 0 1 5 0 0 0 2 0 0 1 9 0 0 SEA PORT (NMTP)

PHOSAGRO 10 No Yes No 1 0 6 7 6 4 2 4 2 2 2 6 0 0

PIK 9 No No No 0 0 1 7 3 0 1 4 0 0 1 14 0 0

POLYMETAL INT 10 No Yes No 0 1 7 8 5 6 3 3 3 1 1 13 0 3

POLYUS 9 No Yes No 0 0 3 5 3 3 1 2 1 1 3 13 0 1

ROS AGRO 5 No No No 0 0 4 2 2 2 0 0 0 0 2 6 0 2

2018 Russia spencer stuart board index 33 Board composition

NON-EXECUTIVE DIRECTORS NON-EXECUTIVES APPOINTED Chair & CEO Lead Non-Executive (EXCLUDING Chair) 1 JUNE 2017–30 MAY 2018 MANAGEMENT BOARD

TOTAL NUMBER OF TOTAL NUMBER OF THE BOARD (EXCL. Chair ALSO CEO?

FOREIGN Chair EXECUTIVES ON on the boNatiardon alities INDEPENDENT FOREIGN CEO

VICE Chair incl. chair DIRECTOR DIRECTOR SID / Lead Director FOREIGN FOREIGN FOREIGN

WOMEN WOMEN WOMEN Chair)

TOTAL TOTAL

S S * company name

ROSNEFT 11 No Yes No 2 0 6 9 3 6 0 4 3 0 1 11 3 2

ROSSETI 15 No No No 0 0 1 14 5 0 0 1 0 0 0 4 0 1

ROSTELEKOM 11 No No No 0 1 1 9 3 0 0 1 0 0 1 9 0 2

RUSAL 13 No Yes No 0 0 8 10 4 5 4 0 0 0 2 17 1 2

RUSHYDRO 13 No No No 1 0 1 11 3 0 0 0 0 0 1 6 0 0

RUSSNEFT 12 No No No 0 0 3 9 4 2 1 1 0 1 2 10 0 1

SAFMAR FINANCIAL INVESTMENT 11 No No No 0 0 1 8 3 0 1 6 0 0 2 1 0 0

SBERBANK 14 No No No 2 1 4 12 6 3 2 0 0 0 1 10 0 2

SEVERSTAL 10 No No No 0 1 3 5 5 3 0 0 0 0 4 12 1 1

SISTEMA 11 No No No 1 0 6 9 5 5 1 2 1 1 1 11 1 0

SURGUTNEFTEGAS 9 No No No 2 0 1 6 2 0 0 0 0 0 2 1 0 0

TATNEFT 15 No No No 0 0 2 9 3 1 0 0 0 0 5 11 0 0

TMK 12 No No No 0 0 2 9 5 2 0 1 0 0 2 8 1 0

TRANSNEFT 9 No No No 0 0 2 7 2 2 0 4 1 0 1 10 0 1

UNITED WAGON COMPANY 7 No No No 0 0 1 4 3 0 0 0 0 0 2 22 1 2

VTB BANK 11 No No No 0 0 4 9 3 3 0 4 0 0 1 13 1 1

X5 7 No Yes Yes 0 0 5 6 3 6 0 0 0 0 0 2 1 0

YANDEX 7 No Yes Yes 0 0 3 5 3 4 1 0 0 0 1 12 12 2

* In the cases where timely information concerning who held the vice chair position at the cut off date was unavailable, no vice chair has been recorded.

34 spencer stuart NON-EXECUTIVE DIRECTORS NON-EXECUTIVES APPOINTED Chair & CEO Lead Non-Executive (EXCLUDING Chair) 1 JUNE 2017–30 MAY 2018 MANAGEMENT BOARD

TOTAL NUMBER OF TOTAL NUMBER OF THE BOARD (EXCL. Chair ALSO CEO?

FOREIGN Chair EXECUTIVES ON on the boNatiardon alities INDEPENDENT FOREIGN CEO

VICE Chair incl. chair DIRECTOR DIRECTOR SID / Lead Director FOREIGN FOREIGN FOREIGN

WOMEN WOMEN WOMEN Chair)

TOTAL TOTAL

S S * company name

ROSNEFT 11 No Yes No 2 0 6 9 3 6 0 4 3 0 1 11 3 2

ROSSETI 15 No No No 0 0 1 14 5 0 0 1 0 0 0 4 0 1

ROSTELEKOM 11 No No No 0 1 1 9 3 0 0 1 0 0 1 9 0 2

RUSAL 13 No Yes No 0 0 8 10 4 5 4 0 0 0 2 17 1 2

RUSHYDRO 13 No No No 1 0 1 11 3 0 0 0 0 0 1 6 0 0

RUSSNEFT 12 No No No 0 0 3 9 4 2 1 1 0 1 2 10 0 1

SAFMAR FINANCIAL INVESTMENT 11 No No No 0 0 1 8 3 0 1 6 0 0 2 1 0 0

SBERBANK 14 No No No 2 1 4 12 6 3 2 0 0 0 1 10 0 2

SEVERSTAL 10 No No No 0 1 3 5 5 3 0 0 0 0 4 12 1 1

SISTEMA 11 No No No 1 0 6 9 5 5 1 2 1 1 1 11 1 0

SURGUTNEFTEGAS 9 No No No 2 0 1 6 2 0 0 0 0 0 2 1 0 0

TATNEFT 15 No No No 0 0 2 9 3 1 0 0 0 0 5 11 0 0

TMK 12 No No No 0 0 2 9 5 2 0 1 0 0 2 8 1 0

TRANSNEFT 9 No No No 0 0 2 7 2 2 0 4 1 0 1 10 0 1

UNITED WAGON COMPANY 7 No No No 0 0 1 4 3 0 0 0 0 0 2 22 1 2

VTB BANK 11 No No No 0 0 4 9 3 3 0 4 0 0 1 13 1 1

X5 7 No Yes Yes 0 0 5 6 3 6 0 0 0 0 0 2 1 0

YANDEX 7 No Yes Yes 0 0 3 5 3 4 1 0 0 0 1 12 12 2

2018 Russia spencer stuart board index 35 Board statistics, meetings and committees

TENURE SERVICE ON OUTSIDE QUOTED BOARDS Board Meetings

Non-executives Non-executives A

verage age of all directors

(excl. chair)

Scheduled

(average)

Ad hoc

Chair Chair

CEO CEO company name Number and type of committees Board evaluation1

AEROFLOT 3.3 0.7 9.1 0 0 1.4 50.4 9 16 3: A, PrR, S No

ALROSA 2.8 2.9 1.2 0 1 0.5 48.7 6 17 3: SP, A, HRR No

CREDIT BANK OF MOSCOW 1.9 2.9 2.9 1 0 0.9 54.0 5 30 3: CCGN, SCM, ARi Yes, internal

DETSKIY MIR 0.6 1.3 6.2 0 0 0.1 44.4 4 18 3: A, NR, S Yes, internal

FGC UES 1.7 0.7 4.6 3 2 1.2 44.1 4 36 4: A, HRR, S, I Yes, external

GAZPROM 4.6 10.0 15.9 0 2 1.1 55.6 12 59 2: A, NR Yes, external

INTER RAO UES 4.6 4.9 5.4 1 0 1.1 51.1 5 26 3: A, NR, SI Yes, internal

LUKOIL 4.9 18.0 18.4 0 0 0.3 69.9 10 22 3: A, HRC, SI Yes, internal

M VIDEO 0.8 0.4 5.2 2 0 0.7 49.5 7 22 2: A, NR No

MAGNIT 0.1 0.1 0.3 0 N/A 0.7 46.0 12 12 3: A, PR, S Yes, internal

MEGAFON 0.4 0.4 1.9 0 N/A 0.3 45.5 7 18 3: A, HRR, FS No2

MECHEL 2.4 7.9 3.9 0 0 0.4 63.3 5 45 3: A, NC, ISP No

MMK / MISW 5.6 13.2 4.0 0 0 0.4 51.0 15 15 3: A, NR, SP Yes, external

MOSCWO EXCHANGE 3.2 0.1 5.3 0 N/A 0.8 55.9 5 15 6: A, NR, B, TP, RiM, SP Yes, internal

MTS 4.8 9.0 0.2 1 0 0.4 53.9 6 10 5: A, NR, CG, S, B Yes, internal

NORILSK NICKEL 6.0 5.2 5.5 0 N/A 0.5 49.1 7 42 4: CGNR, ASuD, B, S Yes, internal

NOVATEK 6.4 12.7 10.4 1 1 0.6 66.8 4 9 3: A, NR, S Yes, internal

NOVOLIPETSK STEEL (NLMK) 7.6 13.9 0.2 2 N/A 0.0 60.8 3 6 3: SP, A, HRRSoPo Yes, internal

NOVOROSSIYSK COMMERCIAL SEA PORT 2.6 0.1 0.4 2 0 0.0 55.4 2 21 3: A, HRR, S No (NMTP)

PHOSAGRO 2.5 4.4 4.8 2 0 0.9 55.6 ND 12 5: A, HRR, RiM, S, EnHeSa No2

PIK 2.5 0.4 4.0 0 N/A 0.1 45.5 4 20 3: ARi, PrR, S Yes, internal

Key to committees A Audit EnHeSa Environmental, Health & Safety O Operations B Budget EtCo Ethics & Control Pr Personnel C Compensation F Finance R Remuneration CG Corporate Governance HR Human Resources Ri Risk CM Corporate Management I Investment Re Reliability CSR Corporate Social Responsibility In Innovation RiM Risk Management D Development IRDiP Investor Relations & Dividend RP Related Party DEFE Development of Energy in the Policy S Strategy Far East Mk Marketing SaSu Safety & Sustainability EE Energy Efficiency N Nomination SuD Sustainable Development

36 spencer stuart TENURE SERVICE ON OUTSIDE QUOTED BOARDS Board Meetings