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 capitalization over a three-year period.

The remuneration system for members of the Company’s Management Board includes the base portion of remuneration, which is determined on an individual basis and fixed in the employment contract, an annual bonus and a long-term incentive programme.

The amount of the annual bonus for key senior executives is dependent on the degree to which they fulfilled a fixed set of KPIs and business initiatives. This list of KPIs includes performance indicators with respect to the Company’s strategic goals, corporate, financial, and performance targets as well as indicators demonstrating compliance with industrial safety standards.

In addition to the annual bonus, Gazprom Neft employs a long-term incentive programme based on the dynamics of the Company’s market capitalization over a three-year period. Members of the Management Board are not paid any additional remuneration for work in the management bodies of Gazprom Neft or its subsidiaries. Management Board members received total income of RUB 1.285 billion in 2017. Payments include work remuneration for the reporting period, taxes and other mandatory payments to relevant budgets and extra-budgetary funds, bonuses, the payment of annual work leave during the reporting period, and payment for medical treatment and services.

The amount of remuneration for members of the Board of Directors depends on the Company’s financial results and is annually approved by shareholders, which eliminates the risk of potential abuses of the remuneration programme.

A total of RUB 303.37 million in remuneration was paid to members of the Board of Directors in 2017 (remuneration includes personal income tax). Members of the Board of Directors did not receive compensation for expenses related to their participation on the Board of Directors in 2017.