Committees

The main role of the Committees is to provide assistance to the Board in preparation and adoption of decisions in the respective functional areas, as well as in ensuring a detailed scrutiny of the issues submitted for consideration to the Board of Directors. The Board Committees have considerable procedural powers, have a right to bring in external experts and use other resources of the Corporation.

Sistema PJSFC has five committees of the Board of Directors:

  • Strategy Committee
  • Audit, Finance and Risk Committee
  • Nomination, Remuneration and Corporate Governance Committee
  • Ethics and Control Committee
  • Investor Relations and Dividend Policy Committee

Only members of the Board of Directors may be elected to the Board's Committees, with some rare exceptions. The main role of the Committees is to provide assistance to the Board in preparation and adoption of decisions in the respective functional areas, as well as in ensuring a detailed scrutiny of the issues submitted for consideration to the Board of Directors.

The Board Committees have considerable procedural powers, have a right to bring in external experts and use other resources of the Corporation.

Strategy Committee

The Strategy Committee includes 8 Board members: V. Evtushenkov (Committee Chairman), S. Boev, A. Dubovskov, F. Evtushenkov, D. Iakobachvili, R. Kocharyan, M. Shamolin, R. Sommer.

The Committee discusses and analyzes strategic issues related to the management of the Sistema Group, and monitors the strategic management cycles of Sistema PJSFC and its subsidiaries, including the following:

  • reviewing the strategy planning methodology;
  • preliminary approval of the strategy and strategic goals of the Corporation;
  • consideration of M&A transactions and large investment projects.

The Committee is responsible for mandatory consideration of:

  • all M&A transactions in the Sistema Group with a value exceeding $100mn;
  • all projects of the Sistema Group related to entry into new geographies or industries;
  • all projects of the Sistema Group with significant state ownership

In 2017 the Strategy Committee held 9 meetings where a number of items related to the investment projects and value creation at Sistema's portfolio companies were considered.

Audit, Finance and Risk Committee

The Audit, Finance and Risk Committee includes 5 Board members: R. Munnings (Committee Chairman), A. Belova, D. Iakobachvili, J. Krecké, R. Sommer. 

Roger Munnings, the Chairman of the Committee, is an expert in finance and audits and has an extensive experience in the field. J. Krecké also has an extensive background in finance.

The Committee conducts a detailed discussion and analysis of the issues related to managing Sistema in the following areas:

  • preparing and auditing financial statements of the Corporation and monitoring these processes;
  • interaction with external auditors;
  • assessing the quality of audit services based on the audit of Sistema's financial statements and making preliminary recommendations to the Board of Directors with respect to selecting RAS and IFRS auditors for the Corporation;
  • assessment of the risk management system and compliance with the applicable legal requirements in financial reporting, audit and planning;
  • budgeting and financial modelling;
  • internal audit;
  • whistleblowing system for reporting potential cases of wrongdoing;
  • preliminary assessment of major and related party transactions.
  • .

In 2017 the Audit, Finance and Risk Committee held 12 meetings at which the following items were reviewed:

  • assessment of the quality of audit services;
  • results of the tender for provision of audit services;
  • recommendations for the Board of Directors on appointing an external auditor;
  • review and approval of the Corporation's quarterly and annual financial statements, annual report, annual budget and report on performance against the budget;
  • review of management's reports on risk management at Sistema and the risk map;
  • preliminary review of transactions submitted to Sistema's Board of Directors.

Nomination, Remuneration and Corporate Governance Committee

The Nomination, Remuneration and Corporate Governance Committee includes 5 Board members: R. Kocharyan (Committee Chairman), S. Boev, D. Iakobachvili, R. Munnings, R. Sommer.

The President of Sistema attends Committee meetings as a permanent invitee and does not vote on matters submitted for consideration of the Committee.

The purpose of the Committee is to facilitate the preparation and implementation of the Corporation's HR policy and to support and develop an efficient corporate governance system that would meet international standards and make it easier to improve the quality of governance processes. The Committee conducts a detailed discussion and analysis of the issues related to managing Sistema in the following areas:

  • preliminary review of candidates:
    - to the Board of Directors of Sistema PJSFC;
    - to the top management positions at the Corporation and portfolio companies;
    - to the boards of directors of portfolio companies;
    - to the position of the Corporation's Corporate Secretary;
  • incentive and remuneration policy for the employees of the Corporation;
  • assessment of the management's performance and setting parameters for remunerating the Corporation's employees;
  • organising the procedure of assessment of the Board of Directors' performance;
  • corporate governance systems of the Corporation and portfolio companies, protection of the shareholders' interests and rights.

In 2017 the Nomination, Remuneration and Corporate Governance Committee held 8 meetings at which the following items were reviewed:

  • development of corporate governance at Sistema and Sistema Group companies, consideration of candidates for Sistema’s Board of Directors;
  • incentive system, performance assessment and bonuses for key managers and employees;
  • HR process and preliminary review of candidates for top management positions at Sistema and nominees for the boards of directors of the key portfolio companies.

Ethics and Control Committee

The Ethics and Control Committee includes 5 Board members: S. Boev, A. Belova, F. Evtushenkov (Committee Chairman), R. Kocharyan, R. Munnings.

The Committee conducts a detailed discussion and analysis of the issues related to managing Sistema in the following areas:

  • internal control and audit (jointly with the Audit, Finance and Risk Committee);
  • forming an efficient system of economic and corporate security;
  • monitoring compliance with the requirements of the Ethics Code of the Corporation;
  • introducing a system for prevention of corruption and fraud and other misconduct related to violations of applicable laws at Sistema Group companies.

In 2017 the Ethics and Control Committee held 6 meetings at which the following items were reviewed:

  • performance of the Internal Control and Audit Department in 2016 and work plan for 2018;
  • results of ethics assessment of the Corporation's employees;
  • system for preventing and curbing fraud and corruption at Sistema.

Investor Relations and Dividend Policy Committee

The Investor Relations and Dividend Policy Committee includes 4 Board members: D. Iakobachvili (Committee Chairman), A. Belova, J. Krecké, R. Munnings.

In 2017 the Investor Relations and Dividend Policy Committee held 6 meetings at which the following items were considered:

  • amount of dividends and changes in the Corporation's dividend policy;
  • the Corporation's charity strategy;
  • market analysis and monitoring, perception of Sistema by the investment community.

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