Remuneration for Members of the Board of Directors and Management Board

REMUNERATION FOR MEMBERS OF THE BOARD OF DIRECTORS AND MANAGEMENT BOARD

The Company has a clearly structured and objective remuneration programme for top and senior executives that ensures a connection between short-term goals and the amount of bonus payments. In addition to bonuses tied to short-term results, the Company has a motivation system based on the dynamics of the Company’s market capitalisation over a three-year period.

The Board of Directors approved a remuneration programme that is based on the appreciation of share value (SAR). The programme is an integral component of the Company’s long-term growth strategy and envisages the payment of remuneration to management for increasing the value of Gazprom Neft for shareholders over a certain period. The Company’s value is determined on the basis of its market capitalisation. Remuneration depends on certain market conditions and responsibilities that are taken into account when determining the amount payable to such employees. The remuneration is assessed at fair value at the end of each reporting period and paid at the end of the programme term.

Gazprom Neft provides directors and officers liability insurance. The policy covers all errors and omissions by directors and officials except for deliberate violations of legislation, fraud and other criminal activities. The total combined limit for all insurance policies and extensions is EUR 41 mn. The coverage territory includes the entire world.

REMUNERATION FOR MEMBERS OF THE BOARD OF DIRECTORS

The amount of remuneration for members of the Board of Directors depends on the Company’s financial results and is approved annually by shareholders. The ability of shareholders to engage in discretionary intervention eliminates the risk of potential abuse of the remuneration programme.

In accordance with the decision of the general meeting of shareholders, members of the Board of Directors who do not hold positions within the Company’s executive bodies (who are not executive directors) were paid remuneration in the amount of 0.005% of EBITDA for 2013 according to the consolidated financial statement of Gazprom Neft in accordance with IFRS standards for 2013.

Besides the base portion of remuneration, members of the Board of Directors were paid additional remuneration for performing the functions of Chairman of the Board of Directors (50% of the remuneration for a member of the Board of Directors), a member of the Board of Directors (10% of the remuneration for a member of the Board of Directors) and Chairman of a committee under the Board of Directors (50% of the remuneration for a committee member).

The total amount of remuneration paid to members of the Board of Directors in 2014 based on the results of 2013 amounted to 203 mn RUB (remuneration includes the income tax of individuals). No compensation was paid to members of the Board of Directors for expenses related to participation on the Board of Directors in 2014.

REMUNERATION FOR MEMBERS OF THE MANAGEMENT BOARD

Income accrued for members of the Management Board totalled 903 mn RUB in 2014. Payments included salary for the reporting period, taxes charged for such salary and other mandatory payments to the relevant budgets and extra-budgetary funds, the payment of annual paid leave for work during the reporting period and payment for treatment and medical care.

No additional remuneration is paid to members of the Management Board for work in the governing bodies of Gazprom Neft or its subsidiaries and affiliates. Members of the Management Board may be paid additional remuneration based on the decision of the Board of Directors.

Total remuneration for 2014 with a breakdown by each type of payment, RUB
Board of Directors Management Board Total
Payments reflected in the 2-PIT statement 203,013,414.0 875,947,367.5 1,078,960,781.5
A. Remuneration for participation in governing bodies 203,013,414.0 0.0 203,013,414.0
B. Salary 0.0 451,549,134.5 451,549,134.5
C. Bonuses 0.0 424,398,233.0 424,398,233.0
Other payments 0.0 27,112,735.0 27,112,735.0
TOTAL 203,013,414.0 903,060,102.5 1,106,073,516.5

The Company did not issue any loans (credits) to members of the Board of Directors or Management Board.