Corporate Governance

MegaFon’s corporate governance principles:

1

Enable shareholders to fully exercise their rights

2

Strategic governance and effective supervision of executive bodies by the Board of Directors, as well as accountability to the General Meeting of Shareholders


3

Appropriate management of MegaFon’s dayto- day operations by its executive bodies and their accountability to the Board of Directors and shareholders

4

Timely disclosure of complete and accurate information about the Company, such as its financial position, performance, ownership and governance structure


5

Effective control of the Company’s financial and business operations

6

Ensure protection of the interests and statutory rights of shareholders, investors, creditors and other stakeholders


7

Commitment to high standards of social responsibility

Corporate Governance Framework

MegaFon’s corporate governance framework is based on Russian and international best practices. Committed to maintaining high standards of corporate governance, the Company is fully compliant with Russian laws on joint stock companies such as Federal Law No. 208-FZ On Joint Stock Companies dated 26 December 1995 (the Federal Law On Joint Stock Companies) and is guided by recommendations of the Corporate Governance Code and other recommendations of the Bank of Russia.

MegaFon’s corporate governance framework has been evolving over several years, and in the past it was significantly affected by the requirements of the Moscow Stock Exchange and the London Stock Exchange for issuers of shares and global depositary receipts.

The Company’s operations are governed by MegaFon’s Charter and other internal documents

A structured corporate governance framework is vital for the successful development of our business as it helps set and achieve goals, and manage the Company’s risks effectively. MegaFon’s welldeveloped corporate governance framework also enables us to build and maintain trust-based relationships with the Company’s counterparties, investors, employees and other stakeholders.

In 2021, the Company intends to maintain the high level achieved, which is embedded in our established practices and formalised in internal documents. In particular, the Company has returned to the “two keys” principle stipulated by the Charter: at the Extraordinary General Meeting on 21 January 2021, shareholders voted to elect Khachatur Pombukhchan the Company’s Executive Director (prior to that, the position had been vacant for several years).

As at 31 December 2020, PJSC MegaFon’s shareholders were USM Group companies – LLC AF Telecom Holding (50% interest) and LLC USM Telecom (50% interest).

Compliance with the Corporate Governance Code

MegaFon’s operations are governed by the recommendations of the Corporate Governance Code approved by the Bank of Russia’s Board of Directors on 21 March 2014. The Corporate Governance Code Compliance Report is presented in the Appendix to this Annual Report.

Interested party transactions

Interested party transactions are regulated by Article 11 of the Federal Law on Joint Stock Companies. Under its provisions, transactions in which the Company’s controlling parties, Board members or members of the Company’s executive bodies are interested parties may be approved by either the Board of Directors or the General Meeting of Shareholders. Interested parties do not vote on any resolution relating to the interested party transaction.

MegaFon pays close attention to identifying and controlling interested party transactions. All counterparties are regularly checked for possible relationships with major shareholders and members of MegaFon’s Board of Directors or executive bodies.

All interested party transactions are subject to preliminary review by the Finance and Strategy Committee of the Board of Directors. In 2020, the Board of Directors approved two interested party transactions; one interested party transaction was included in the agenda for the General Meeting of Shareholders.

The interested party transactions effected by MegaFon in 2020 are listed in the Appendix to this Annual Report.

Major transactions

In 2020, the Board of Directors approved three major transactions with a value of more than 25% but less than 50% of the book value of MegaFon’s assets as at the last reporting date prior to the transaction.

The major transactions effected by MegaFon in 2020 are listed in the Appendix to this Annual Report.

Corporate governance structure

MegaFon’s principal corporate governance bodies are the General Meeting of Shareholders, the Board of Directors, the Management Board (collective executive body), and both the Chief Executive Officer and Executive Director (individual executive bodies). In 2020, there were no changes in the corporate governance structure.

Governing bodies

General Meeting of Shareholders

The General Meeting of Shareholders is MegaFon’s supreme governing body.

Its activities are governed by the Regulations on the General Meeting of Shareholders

In 2020, due to the spread of COVID-19, the Annual General Meeting of Shareholders was held by absentee voting. The meeting was held on 8 June 2020. The total number of votes held by the meeting participants was 620,000,000 (100% of the total number of votes).

Resolutions passed at the 2020 annual General Meeting of Shareholders:

  • Approval of MegaFon’s 2019 Annual Report
  • Approval of MegaFon’s accounting (financial) statements for 2019
  • Distribution of the FY 2019 profits and losses, including dividend payout (declaration)
  • Election to MegaFon’s Board of Directors
  • Approval of the size of MegaFon’s Management Board and election of its members
  • Approval of MegaFon’s auditor
  • Election to MegaFon’s Revision Commission
  • Approval of a new version of the Regulations on the General Meeting of Shareholders of MegaFon
  • Approval of a new version of the Regulations on the Management Board of MegaFon
  • Approval of a new version of the Regulations on the Revision Commission of MegaFon
  • Approval of a related party transaction
  • Determination of the size of additional remuneration of members of MegaFon’s Board of Directors

Detailed information on the annual General Meeting of Shareholders and items on its agenda

On 12 August 2020, the only Extraordinary General Meeting of Shareholders in the reporting period was held, also by absentee voting. The total number of votes held by the meeting participants was 620,000,000 (100% of the total number of votes).

The shareholders approved the terms of, and procedure for, payment of remuneration and compensation to members of the Company’s Board of Directors.

Detailed information on the extraordinary General Meetings of Shareholders held in 2020 and items on their agenda

Board of Directors

The Board of Directors is MegaFon’s collective executive body exercising general control over its activities. The Board’s main duties include enhancing the effectiveness and transparency of MegaFon’s risk management and internal controls, and improving the framework for monitoring and ensuring the accountability of its governing bodies while protecting and promoting the rights of all shareholders.

The powers of the Board are set out in the Charter and the Regulations on the Board of Directors

The well-balanced composition of the Board of Directors reflects the scope and scale of MegaFon’s business. Nominees to the Board of Directors are elected based on their expertise, experience, business reputation and personal skills. Board members have extensive experience in the Russian telecommunications industry, excellent managerial skills and expertise in finance, strategic planning, technologies and risk management.

Following the annual General Meeting of Shareholders dated 8 June 2020, the following directors stepped down from the Board:

  • Aleksandr Esikov
  • Igor Ivanov
  • Anton Rybalkin
  • Anna Serebryanikova
  • Natalya Chumachenko

At the same time, the following directors joined the Board:

  • Emin Antonyan
  • Johan Dennelind (Independent Director)
  • Khachatur Pombukhchan
  • Ivan Streshinsky (Chairman)
  • Anton Cherepennikov
Composition of the Board of Directors over the course of 2020
Board member From 1 January to 8 June From 8 June to 31 December
Ivan Streshinsky  
Chairman
Maksim Anipkin
 
 
Emin Antonyan  
 
Evgeny Bystrykh
Chairman
 
Johan Dennelind  
 
Aleksandr Esikov
 
 
Igor Ivanov
 
Khachatur Pombukhchan  
 
Anton Rybalkin
 
Anna Serebryanikova
 
Anton Cherepennikov  
 
Natalya Chumachenko
 

Johan Dennelind was recognized as an independent member of the Board of Directors. All other Board members in 2020 were non-executive directors but were not independent.

Ivan Streshinsky

Born in 1969.

Graduated from the Moscow Institute of Physics and Technology.

Principal place of employment: LLC USM Holding Company – CEO, member of the Board of Directors.

Mr Streshinsky is also CEO of LLC USM Telecom, Chairman of the Board of Directors at JSC Kommersant and LLC Management Company Metalloinvest, member of the Board of Directors at PJSC CITY, LLC Centre for the Development of Advanced Technologies, and JSC Udokan Copper Holding Company1.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares held: nil.

  1. Until 19 March 2021 – JSC BMC Holding Company.

Member of the Board of Directors since 8 June 2020

Non-Executive Director

Chairman of the Board of Directors since 25 June 2020

Chairman of the Remuneration and Nominations Committee since 25 June 2020

Maksim Anipkin

Born in 1981.

Graduated from the Plekhanov Russian University of Economics.

Principal place of employment: LLC USM Management – Corporate Governance Director.

Mr Anipkin is also Chairman of the Revision Commission at LLC Centre for the Development of Advanced Technologies.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares held: nil.

Member of the Board of Directors since 19 January 2018

Non-Executive Director

Member of the Audit Committee

  • since 22 January till 21 December 2018
  • since 25 June 2020

Chairman of the Audit Committee from 7 October 2019 to 8 June 2020

Member of the Remuneration and Nominations Committee from 21 December 2018 to 8 June 2020

Emin Antonyan

Born in 1982.

Graduated from Moscow Automobile and Road Construction State Technical University, the O.E. Kutafin Moscow State Law University, as well as from the Moscow Academy of Entrepreneurship under the Moscow Government, and the International School of Business (Institute) of the Financial University under the Government of the Russian Federation.

Principal place of employment: PJSC MegaFon, Commercial Director for corporate and government segments2.

He is also CEO of LLC Kryptonite and LLC ESforce Rus, and serves as Director of Global Sales at LLC USM Telecom.

Mr Antonyan is General Secretary and Chairman of the Management Board at Russian Esports Federation, a member of the Management Board at the European Esports Federation (EEF), as well as a member of the Board of Directors at JSC Kryptonite Scientific and Production Company, LLP X-Holding Kazakhstan and LLC NEDRA – New Digital Resources of Industrial Assets.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares held: nil.

  1. Since 30 March 2021. Previously the principal place of employment of Mr Antonyan was LLC ESforce Rus, where he serves as CEO.

Member of the Board of Directors since 8 June 2020

Non-Executive Director

Member of the Audit Committee since 25 June 2020

Evgeny Bystrykh

Born in 1976.

Graduated from the Financial University under the Government of the Russian Federation.

Principal place of employment: LLC USM Holding Company – Deputy CEO for Economics and Finance. экономике

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares held: nil.

Chairman of the Board of Directors from 22 January 2018 to 25 June 2020, since then – Non-Executive Director

Member of the Finance and Strategy Committee since 22 January 2018

Member of the Remuneration and Nominations Committee

  • since 22 January 2018 till 23 September 2019
  • since 25 June 2020

Chairman of the Remuneration and Nominations Committee from 7 October 2019 to 8 June 2020

Johan Dennelind

Born in 1969.

Graduated from Örebro University, Sweden.

Principal place of employment: PJSC MegaFon – Deputy Chairman of the Board of Directors, Chairman of the Audit Committee.

Mr Dennelind is also an independent member of the Board of Directors at the World Childhood Foundation and Chairman of the Board of Directors at Tyréns AB, member of the Board of Directors at Polarium AB.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Member of the Board of Directors since 8 June 2020

Independent Director

Chairman of the Audit Committee since 25 June 2020

Khachatur Pombukhchan

Born in 1974.

Graduated from Kuban State University and the All-Russian Distance Learning Institute of Finance and Economics.

Principal place of employment: PJSC MegaFon – Executive Director and the member of the Management Board2.

Mr Pombukhchan is also a Commercial Director at the Retail Directorat at LLC USM Telecom and a member of the Supervisory Board at DTS Retail.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares held: nil.

  1. Since 22 January 2021 after being elected Executive Director of the Company and included in the Management Board by resolution of the Extraordinary General Meeting of Shareholders on 21 January 2021.
  2. Since 22 January 2021. Previously the principal place of employment of Mr Pombukhchan was LLC USM Telecom where he serves as Commercial Director at the Retail Directorat.

Member of the Board of Directors since 8 June 2020

Executive Director1

Member of the Finance and Strategy Committee since 25 June 2020

Anton Cherepennikov

Born in 1983.

Graduated from Bauman Moscow State Technical University and the Moscow State University of Civil Engineering.

Principal place of employment: LLC X-Holding – CEO.

Mr Cherepennikov is also a Chief Operating Officer at LLC USM Telecom, an adviser to the CEO of LLC Citadel, a member of the Board of Directors at JSC Kryptonite Scientific and Production Company, JSC Kryptonite Investment Company and LLC USM Holding Company.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares held: nil.

Member of the Board of Directors since 8 June 2020

Non-Executive Director

Chairman of the Finance and Strategy Committee since 25 June 2020

Member of the Remuneration and Nominations Committee since 25 June 2020

In 2020, the Board of Directors also included the following members1:

Aleksandr Esikov

Born in 1963.

Graduated from Moscow Engineering Physics Institute.

Principal place of employment: LLC USM Holding Company – Director for Telecommunications Infrastructure Projects.

Mr Esikov was also a Board member at LLC Forpost.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Member of the Board of Directors from 19 January 2018 to 8 June 2020

Non-Executive Director

Member of the Audit Committee from 22 January 2018 to 8 June 2020

Igor Ivanov

Born in 1967.

Graduated from the Moscow Institute of Physics and Technology.

Principal place of employment: LLC USM Holding Company – Deputy Executive Director.

Mr Ivanov was also a Board member at PJSC Gornozavodskcement and LLC Yuzhno-Uralskaya GPK.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Member of the Board of Directors from 28 June 2019 to 8 June 2020

Non-Executive Director

Member of the Finance and Strategy Committee from 12 July 2019 to 8 June 2020

Anton Rybalkin

Born in 1976.

Graduated from the Moscow State Institute of International Relations.

Principal place of employment: LLC USM Management – CEO.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Member of the Board of Directors from 28 June 2019 to 8 June 2020

Non-Executive Director

Member of the Remuneration and Nominations Committee from 7 October 2019 to 8 June 2020

Anna Serebryanikova

Born in 1974.

Graduated from Lomonosov Moscow State University and Manchester University (Great Britain).

Principal place of employment: LLC USM Management – Deputy CEO for Digital Projects and Government Relations.

Ms Serebryanikova was also Head of the Information Infrastructure working group at Independent Non-Profit Organisation Digital Economy, the President of the Big Data Association, a member of the Coordinating Council on Digital Transformation of the Russian Union of Industrialists and Entrepreneurs (RSPP), Board Chairwoman and Director at LLC Forpost.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Member of the Board of Directors from 21 December 2018 to 8 June 2020

Non-Executive Director

Member of the Audit Committee from 21 December 2018 to 8 June 2020

Natalya Chumachenko

Born in 1972.

Graduated from Voronezh State University.

Principal place of employment: LLC USM Management – adviser to the CEO.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Member of the Board of Directors from 19 January 2018 to 8 June 2020

Non-Executive Director

Chair of the Finance and Strategy Committee from 22 January 2018 to 8 June 2020

  1. As of June 2020.

Summary of the Board’s activities in 2020

The Board of Directors was fully involved in MegaFon’s key processes in the reporting year. The Board held 16 meetings in 2020, including five meetings in person and 11 meetings held by absentee voting. The Board considered a wide range of agenda items at its meetings, such as MegaFon’s participation in major projects, including international ones; the impact on MegaFon’s business from changes to Russian legislation, determining the value of assets (services) involved in interested party transactions and approving such transactions, approving transactions with a cumulative value in excess of US$ 50 million; and HR decisions and strategic decisions concerning the directions of further development of the Company.

Management reports reviewing quarterly business performance of the Company were presented at the meetings of the Board of Directors.

Starting from March 2020, a regular report on the management’s response and steps taken to prevent the spread of COVID-19 is presented to the Board of Directors.

Meetings of the Board of Directors in 2018–2020

Remuneration of the Board of Directors

Members of the Board of Directors are remunerated for the performance of their duties. The amount of remuneration is approved by the General Meeting of Shareholders and depends on the actual hours worked during the reporting period.

As at 1 January 2020, the terms and procedures for payment of remuneration to members of the Board of Directors approved by the resolution of the Extraordinary General Meeting of Shareholders dated 12 March 2018 were in force.

The Extraordinary General Meeting of Shareholders held on 12 August 2020 resolved to approve the new terms and procedures for payment of remuneration to the Chairman of the Board of Directors and non-independent members of the Board of Directors, as well as the terms and procedures for payment of remuneration and compensation to Independent Director Johan Dennelind.

In addition, following the resolution of the Annual General Meeting of Shareholders dated 8 June 2020, an additional bonus was paid to the Board members elected at the Extraordinary General Meeting held on 23 September 2019.

The total amount paid to Board members in 2020 was RUB 241 million.

Aggregate remuneration to members of the Board of Directors in 2018–2020, RUB mn
Remuneration to members of the Board of Directors in 2020
  Remuneration, RUB mn
  Chairman of the Board of Directors Independent members of the Board of Directors Non-independent members of the Board of Directors
Remuneration for service on a governing body 47 84 110
Salary 0 0 0
Benefits 0 0 0
Reimbursement of expenses 0 0 0
Bonuses and long-term incentives 0 0 0
Pension plan contributions 0 0 0
Total remuneration 47 84 110

Board Committees

Three committees of MegaFon’s Board of Directors provide oversight and strategic planning on matters related to the Board’s areas of responsibility:

  • Audit Committee
  • Finance and Strategy Committee
  • Remuneration and Nominations Committee

Committee members are selected following each election of a new Board of Directors. In 2020, members of the committees were approved at the meeting of the Board of Directors on 25 July 2020. Activities of the Board Committees are regulated by internal documents.

Audit Committee

The Board’s Audit Committee is responsible for all matters relating to internal and external audits of MegaFon’s financial and business operations and, in particular, for making recommendations as to the appointment of external auditors, resolving issues that arise during audits, analysing the effectiveness of internal controls and assessing risk management performance.

In 2020, the Audit Committee held six meetings, including four meetings in person and two meetings held by absentee voting, and covered a wide range of matters, including:

  • review of regular financial statements and press releases disclosing MegaFon’s financial and business operations
  • risk management and internal controls enhancement together with compliance related matters
  • approval of the internal audit plan and internal audit reports
  • review of litigation reports.

The Committee members as at 31 December 2020 were:

  • Johan Dennelind (Chairman)
  • Maksim Anipkin
  • Emin Antonyan

Finance and Strategy Committee

The Finance and Strategy Committee exercises control over MegaFon’s strategic development, business planning, budgeting and investment processes. The Committee’s principal responsibilities include determining MegaFon’s strategic direction and approving its annual budgets, reviewing and approving proposed M&A and general business transactions, and reviewing the terms of borrowing and other financing options.

In 2020, the Finance and Strategy Committee held 11 meetings, including four meetings in person and seven meetings held by absentee voting, and covered a wide range of matters, including:

  • approval of MegaFon’s budget and business plan for 2020
  • reviews of interested party transactions and transactions with a cumulative value exceeding US$ 50 million
  • reviews of MegaFon’s M&A activities.

The Finance and Strategy Committee regularly reviewed reports on the progress of MegaFon’s key strategic projects and provided relevant comments and recommendations.

The Committee members as at 31 December 2020 were:

  • Anton Cherepennikov (Chairman)
  • Evgeny Bystrykh
  • Khachatur Pombukhchan

Remuneration and Nominations Committee

The Remuneration and Nominations Committee is responsible for the development and regular review of the remuneration policy, including reviewing and determining base salaries, bonuses and other compensation, as well as setting target KPIs for top management, making recommendations to the Board regarding candidates for key management positions and carrying out a formalised annual performance evaluation of the Board, its members, and its committees.

In 2020, the Remuneration and Nominations Committee held nine meetings, including four meetings in person and five meetings held by absentee voting. In these meetings, the Committee covered a number of matters, including:

  • approval of key HR projects for 2020 and review of the status of their implementation
  • short-term and long-term bonus programmes for the Company’s top management
  • recommendations to the Board of Directors regarding approval of candidates for the positions of CEOs of key subsidiaries
  • recommendations on the terms and procedures for payment of remuneration to members of the Board of Directors.

The Remuneration and Nominations Committee members as at 31 December 2020 were:

  • Ivan Streshinsky (Chairman)
  • Evgeny Bystrykh
  • Anton Cherepennikov

Management Board1

The Management Board is MegaFon’s collective executive body managing the Company’s day-today operations together with the individual executive bodies. It is responsible for all operational management matters, apart from those which fall within the remit of the General Meeting of Shareholders, the Board of Directors and MegaFon’s individual executive bodies.

The size and composition of the Management Board are approved by the General Meeting of Shareholders based on the CEO’s recommendation. The CEO is the Chairman of the Management Board.

Gevork Vermishyan

Chairman of the Management Board, CEO

Vlad Wolfson

Chief Commercial Officer

Nikita Orlov

Chief Financial Officer

Sergey Pereverzev

Chief Legal Officer

Valentina Vatrak

Corporate Development and Human Resources Director

Elena Martynova

Director for Strategic Communications and Brand Development

Aleksandr Sobolev

Director for Strategy and Business Development

  1. After the reporting date, Khachatur Pombukhchan and Pavel Korchagin joined the Management Board by the resolution of the Extraordinary General Meeting of Shareholders dated 21 January 2021.

The Management Board members as at 31 December 2020 were:

  • Gevork Vermishyan (Chairman)
  • Valentina Vatrak
  • Vlad Wolfson
  • Nikita Orlov
  • Elena Martynova
  • Aleksandr Sobolev
  • Sergey Pereverzev

Changes to the composition of the Management Board during 2020 were as follows:

  1. Sergey Pereverzev joined the Management Board
  2. Frederic Vanoosthuyze stepped down from the Management Board

Management Board members as at 31 December 2020

Gevork Vermishyan

Born in 1978.

Graduated from the Financial University under the Government of the Russian Federation.

Principal place of employment: PJSC MegaFon – CEO.

Mr Vermishyan is also Board Chairman at CJSC Aquafon-GSM, CJSC Ostelecom and CJSC TT Mobile; he serves on the Supervisory Board at DTS Retail, Independent Non-Profit Organisation Digital Economy, Digital Transport and Logistics Association, is a Board member at LLC Alibaba.com (RU), a Director at AliExpress Russia Holding Pte. Ltd, member of the Board of Trustees of the Polytechnic Museum, and Telecoms Director at LLC USM Telecom.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Chairman of the Management Board

Valentina Vatrak

Born in 1974.

Graduated from Voronezh State University, Moscow Open Social University, and the Diplomatic Academy of the Russian Ministry of Foreign Affairs.

Principal place of employment: Corporate Development and Human Resources Director at PJSC MegaFon.

Ms Vatrak is also a member of the Board of Trustees of the Charitable Foundation for the Development of the Graduate School of Management at Saint Petersburg State University and a member of the Board of Polytechnic Museum Development Foundation.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Vlad Wolfson

Born in 1977.

Graduated from the Kyiv National University of Trade and Economics (Ukraine) and the University of Haifa (Israel).

Principal place of employment: PJSC MegaFon – Chief Commercial Officer.

Mr Wolfson also serves on the Supervisory Board at DTS Retail.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Vlad Wolfson

Elena Martynova

Born in 1978.

Graduated from Lomonosov Moscow State University and Stanford Graduate School of Business (USA).

Principal place of employment: PJSC MegaFon – Director for Strategic Communications and Brand Development.

Ms Martynova is also Deputy CEO at LLC USM Management and a member of the Board of Directors of JSC Kommersant.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Nikita Orlov

Born in 1969.

Graduated from Lomonosov Moscow State University.

Principal place of employment: PJSC MegaFon – Chief Financial Officer.

Mr Orlov also serves as the CEO of LLC MegaFon Finance and JSC MegaFon International, and is a Board member at CJSC Aquafon-GSM, CJSC Ostelecom, CJSC TT Mobile and the World Wide Fund for Nature (WWF).

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Sergey Pereverzev

Born in 1979.

Graduated from Saint Petersburg State University.

Principal place of employment: PJSC MegaFon – Chief Legal Officer.

Mr Pereverzev is also the CEO of LLC N-Logic and a Board member at JSC Sadovoye Koltso.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Aleksandr Sobolev

Born in 1987.

Graduated from Lomonosov Moscow State University.

Principal place of employment: PJSC MegaFon – Director for Strategy and Business Development.

Mr Sobolev also serves as a member of the Management Board and Strategy Committee at the Big Data Association, a member of GSMA CSO group Association, a Director at AliExpress Russia Holding Pte. Ltd., a Board member at LLC Alibaba.com (RU), and Deputy Director at Arctic Link Development Oy.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

As from 22 January 2021, the Management Board also has the following members:

Pavel Korchagin

Born in 1960.

Graduated from Bauman Moscow State Technical University.

Principal place of employment: PJSC MegaFon – Chief Technology and IT Officer.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Khachatur Pombukhchan

Born in 1974.

Graduated from Kuban State University and the All-Russian Distance Learning Institute of Finance and Economics.

Principal place of employment: PJSC MegaFon – Executive Director.

Mr Pombukhchan is also Commercial Director at the Retail Department of LLC USM Telecom, a member of the Supervisory Board at DTS Retail, a member of the Board of Directors and the Finance and Strategy Committee at PJSC MegaFon.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

The Management Board also had the following members in 2020:

Frederic Vanoosthuyze

Born in 1973.

Graduated from the University of Liège, the University of Mons, and the Solvay Business School (Belgium).

Principal place of employment (as at June 2020): PJSC MegaFon – Chief Technology and IT Officer.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares Company: nil.

Chief Executive Officer and Executive Director

The Chief Executive Officer and the Executive Director manage MegaFon’s day-to-day operations alongside the Management Board in all matters excluding those reserved to the Company’s General Meeting of Shareholders or the Board of Directors. According to MegaFon’s Charter, their responsibilities include:

  • managing MegaFon’s day-to-day operations, acting on behalf of the Company without power of attorney, representing MegaFon in its relations with all government authorities, legal entities and individuals, and granting powers of attorney
  • making decisions and issuing orders, instructions, and other documents on matters consistent with their responsibilities, and approving MegaFon’s internal documents with the exception of certain matters.

The CEO’s responsibilities also include:

  • opening settlement accounts and other bank accounts, effecting civil transactions on behalf of MegaFon, with exceptions set out in their employment contracts and/or applicable Russian laws
  • organising the operations of MegaFon’s business units, signing employment contracts with MegaFon employees, making decisions on bonuses, benefits and compensations
  • preparing and presenting information and documents on MegaFon’s operations to the Board of Directors, including for approval of certain documents.

The Executive Director’s responsibilities also include:

  • effecting any civil transactions on behalf of MegaFon and managing MegaFon’s property within the limits established in his employment contract and/or applicable Russian laws
  • implementing steps to ensure the security of information containing state secrets by developing and introducing measures to maintain confidentiality and protect data.

In 2020, Gevork Vermishyan served as the CEO while the position of the Executive Director remained vacant.

On 21 January 2021, the Extraordinary General Meeting of Shareholders resolved to elect Khachatur Pombukhchan the Executive Director.

Remuneration of the Management Board, the Chief Executive Officer and the Executive Director

MegaFon’s senior executives are remunerated for their services to the Company. The Board of Directors determines the structure and amount of such remuneration.

MegaFon operates a long-term incentive programme for its top management, designed to:

  • align shareholder and management interests
  • incentivise MegaFon’s management to support the Company’s share price growth
  • ensure focus on MegaFon’s strategic long-term objectives
  • make management remuneration packages more competitive.

In 2020, total payments to members of the Management Board, including remuneration and reimbursement of expenses, amounted to RUB 450 million.

Remuneration to members of the Management Board in 2018–2020, RUB mn
Type 2018 2019 2020
Salary 256 209 255
Benefits 0 0 0
Bonuses and long-term incentives 319 326 192
Reimbursement of expenses 1 1 3
Pension plan contributions 0 0 0
Total remuneration 576 536 450

Corporate Secretary

To ensure the effectiveness of corporate governance, MegaFon has established the position of Corporate Secretary, with the person holding this position being responsible for ensuring compliance with rules and procedures which protect the rights and interests of shareholders. The Corporate Secretary is also responsible for shareholder relations, corporate communications, and ensuring the proper performance by the Board of Directors and its Committees of their functions. The Corporate Secretary is also the Secretary of the Management Board.

The full list of the Corporate Secretary’s functions is set out in the Regulations on the Corporate Secretary

The Corporate Secretary is elected by, and reports to, the Board of Directors.

In 2020, Daria Lizunova was MegaFon’s Corporate Secretary.

Daria Lizunova

Born in 1986.

Graduated from Moscow Pedagogical State University and Russian Foreign Trade Academy.

Principal place of employment: PJSC MegaFon – Corporate Secretary.

Daria combines the duties of Corporate Secretary and the Company’s Controller responsible for insider information control and security.

Percentage ownership in the Company: nil.
Percentage of the Company’s ordinary shares held: nil.

Revision Commission

The Revision Commission is elected annually by the General Meeting of Shareholders to control MegaFon’s financial and business operations. The Commission members may not serve on the Board of Directors or any other governing bodies of the Company. The Revision Commission has three members.

As at 1 January 2020, MegaFon’s Revision Commission comprised:

  • Yuri Zheimo
  • Radik Nasibullin

At MegaFon’s annual General Meeting of Shareholders on 28 June 2020, the following members were elected to the Revision Commission:

  • Yuri Zheimo
  • Radik Nasibullin
  • Stanislav Kiselev

On 12 September 2020, Yuri Zheimo stepped down from the Revision Commission, having voluntarily left the Company.

The Revision Commission’s operating procedures and full list of functions are outlined in the Regulations on the Revision Commission

Internal audit

MegaFon’s Internal Audit team reports to the Board of Directors. Internal Audit operations are guided by MegaFon’s Regulations on the Internal Audit, as well as by the International Standards for the Professional Practice of Internal Auditing.

Internal Audit operations are governed by MegaFon’s Regulations on the Internal Audit

The Internal Audit team assesses the RMICS, as well as the corporate governance framework against performance targets approved by the Board of Directors.

Until 12 August 2020, Yuri Zheimo served as Internal Audit Director. Upon the Audit Committee’s recommendation, on 12 August 2020, the Board of Directors appointed Evgenia Karaoglanova the new Internal Audit Director.

External audit

MegaFon engages independent external auditors to audit its annual financial statements and review its quarterly financial statements. The Audit Committee assesses prospective auditors and makes recommendations to the Board of Directors regarding their appointment and fees. The independent auditor recommended by the Board must be approved by the General Meeting of Shareholders.

The annual General Meeting of Shareholders held on 8 June 2020 approved JSC KPMG as the Company’s external auditor.

The total fees paid to JSC KPMG for its audit services provided during 2020 amounted to RUB 55 million while RUB 35 million was paid for non-audit services in 2020.

Information disclosure

MegaFon ensures that its operations are fully transparent, both in compliance with all applicable laws and regulations and in line with international best practice for disclosure. For each fiscal year ending 31 December, the Company publishes audited consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS). MegaFon also provides unaudited consolidated financial statements at the end of the first, second and third fiscal quarters.

MegaFon’s financial results and notices of upcoming General Meetings of Shareholders, as well as other important information and price sensitive information, are announced through the authorised Russian information agency Interfax.

Press releases are published on MegaFon’s corporate website

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