Committees

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 7 Board members: V. Evtushenkov (Committee Chairman), S. Boev, A. Dubovskov, F. Evtushenkov, R. Kocharyan, M. Shamolin, D. Iakobachvili, as well as representatives of the management of Sistema Group companies.

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 $100m;
  • all projects of the Sistema Group related to entering new markets;
  • all projects of the Sistema Group with significant government participation.

In 2015, 11 meetings of the Committee were held where 16 items related to the development of Sistema's portfolio companies were considered.

Audit, Finance and Risk Committee

The Audit, Finance and Risk Committee includes 4 Board members: R. Munnings (Committee Chairman), P. Clanwilliam, J. Krecké, D. Iakobachvili.
R. Munnings, the Chairman of the Committee, is an expert in finance and audits and has an extensive experience in the field.

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;
  • 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 2015 the Audit, Finance and Risk Committee held 16 meetings at which 66 items were reviewed, including the following:

  • 32 items related to appraisal of individual transactions submitted for consideration by the Sistema Board of Directors;
  • 13 items related to the preparation and audit of financial reports and control of such processes;
  • 7 items related to the processes of financial planning and risk management;
  • 6 items related to interaction with external auditors, their selection and assessment of their work;
  • 5 items related to internal control and audit processes and the whistleblowing system;
  • 3 housekeeping and other matters.

In 2014 the Corporation's Board of Directors approved a new version of the Committee's Terms of Reference whereby the powers of the Committee were adjusted to conform to the new listing rules of the Moscow Stock Exchange.

Nomination, Remuneration and Corporate Governance Committee

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

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;
  • corporate governance systems of the Corporation and portfolio companies, protection of the shareholders' interests and rights.

In 2015 the Nomination, Remuneration and Corporate Governance Committee held 8 meetings at which 28 items were reviewed, including the following:

  • 10 items related to corporate governance in Sistema Group;
  • 10 items related to human resources and preliminary consideration of candidates to the top management of Sistema and to CEO positions and Boards at Sistema Group companies;
  • 7 items related to the incentives system and evaluation of Sistema employees;
  • 2 items related to internal documents of the Corporation.

In 2014 the Corporation's Board of Directors approved a new version of the Committee's Terms of Reference whereby the powers of the Committee were adjusted to conform to the new listing rules of the Moscow Stock Exchange.

Ethics and Control Committee

The Ethics and Control Committee includes 5 Board members: S. Boev (Committee Chairman), F. Evtushenkov, R. Kocharyan, P. Mandelson, 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);
  • corporate security function;
  • monitoring compliance with the requirements of the Ethics Code of the Corporation;
  • corruption prevention system at the Corporation and the companies within Sistema Group.

In 2015 the Ethics and Control Committee held 7 meetings at which 21 items were reviewed, including the following:

  • 5 items related to internal audits conducted by the internal control and audit department and to the quality of control environment;
  • 4 items related to the functional strategy and internal regulation in the area of internal control and security;
  • 4 items related to the efficiency of the corruption prevention system;
  • 2 items related to corporate security and fraud prevention and detection;
  • 4 housekeeping items;

Investor Relations and Dividend Policy Committee

The Investor Relations and Dividend Policy Committee includes 5 Board members: D. Iakobachvili (Committee Chairman), P. Clanwilliam, J. Krecké, R. Munnings, M. Shamolin.

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

  • maintaining effective relations with the financial community and government agencies, as well as increasing the appeal of Sistema's shares to investors;
  • Sistema's dividend policy, including the development of recommendations for the Corporation's Board of Directors with respect to the amount of payable dividends;
  • protection of the rights and interests of Sistema's shareholders.

In 2015, 8 meetings of the Investor Relations and Dividend Policy Committee were held where 11 items were considered.

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