Remuneration of Directors and Management Committee Members
The amount of remuneration and compensation paid to the members of OAO LUKOIL's Board of Directors is determined by a resolution of the Company's General Shareholders Meeting.
The Company has the following types of remuneration established for the Board of Directors members:
remuneration for acting in the capacity of a member of the Board of Directors (paid to each member of the Board of Directors);
remuneration for acting in the capacity of the Chairman of the Board of Directors;remuneration for acting in the capacity of the Chairman of a Committee of the Board of Directors;
remuneration for "in praesentia" attendance of a Board of Directors' Committee meeting;
remuneration for "in praesentia" attendance of meetings of the Board of Directors or a BOD Committee requiring a transcontinental flight;
remuneration for attendance of conferences and other events by a member of the Board of Directors as instructed by the Chairman of the Board of Directors in writing (this provision has been in effect starting 2010).
Remuneration paid in 2008 to each member of the Board of Directors
for acting in the capacity of a member of the Board of Directors amounted to
4,300,000 rubles, and in 2009—2011 — to 4,470,000 rubles; the remuneration
for the members of the Board of Directors elected in 2011 was established at
4,700,000 rubles. For the amounts of other types of remuneration paid to the
members of the Board of Directors as approved by a resolution of the General
Shareholders Meeting of June 23, 2011, please refer to Annual General Shareholder Meeting materials.
Remuneration of the members of the Management Committee comprises the following components:
remuneration in accordance with an agreement signed with members of the Management Committee (equals to each member’s official monthly salary at the primary place of employment depending on the achievement of corporate-wide key performance indicators during the reporting period);
basic remuneration (official salary as set out in the current contract of employment);
annual performance bonuses for the previous year;
annual long-term bonus payments under a long-term incentive program for the employees of OAO LUKOIL and its subsidiaries;
additional social compensations.
The total amount of remuneration paid to all members of the Board of Directors and of the Management Committee was 943.8 million rubles in 2009 and 1,001.6 million rubles in 2010.
The Company has ongoing long-term incentive programs for the employees of OAO LUKOIL and its subsidiaries, also applicable to the Company’s executives, heads of subsidiaries and individual employees as decided by the Company’s Board of Directors.
The program, currently in effect, covers the period of 2010-2012. A certain number of shares is nominally assigned to each person involved in the program.
The long-term bonus payments for those involved in the program comprise two parts:
bonuses in the form of nominal dividends paid annually on the shares nominally assigned to employees;
bonuses payable upon the completion of the program, with the amounts thereof depending upon the number of nominally assigned shares and the share price difference at the beginning and upon the completion of the program. To stimulate the employees’ interest in the Company’s greater capitalization, within 30 days of the bonus payment, a share purchase agreement is concluded between the employee and the Company or its agent for the maximum number of full shares (after withholding income tax and other due payments from individuals). The share price should be determined as the weighted average price on the MICEX Stock Exchange on the date preceding the date of the share purchase agreement.