Committees of the Board of Directors
Report of the Audit and Risk Committee
The Audit and Risk Committee is a consultative and advisory body of the Board of Directors, whose resolutions are advisory. The Committee’s primary goal is to assist the Board of Directors’ efficient operation in controlling the Company’s financial and business activities. It is achieved through addressing the matters within the Committee’s authority.
Alla Saltykova
The Committee’s goals and objectives
- Monitor the completeness, accuracy, and integrity of FPC’s accounting (financial) statements; review the material aspects of FPC’s accounting policy; participate in reviewing material matters and judgements relating to FPC’s accounting (financial) statements
- Review external audit results
- Review the rationale behind, and acceptability of, the current accounting methods, accounting (financial) reporting principles, as well as management accounting methods and management reporting principles
- Preview the Company’s draft Annual Report, budget, Investment Programme, Operational Efficiency and Cost Optimisation Programme, and relevant performance reports
- Monitor the risk management and internal control system for reliability and effectiveness
- Review the effectiveness of risk management and internal control procedures; prepare proposals for their improvement
- Review and assess the implementation of the risk management and internal control policy
- Review and assess the implementation of the conflict of interest management policy
- Prepare recommendations on acceptable risk levels (risk appetite, preferred risks)
- Ensure independent and unbiased approach of the internal audit function, and review its effectiveness; review the Company’s internal audit policy and internal audit plan Assess candidates for the Company’s auditor and make proposals on the auditor’s remuneration
- Assess nominees to the position of the Company’s external auditor for independence, objectivity, and absence of a conflict of interest, in particular, assess potential auditors of the Company, make proposals on the auditor’s appointment, re-appointment and dismissal as well as remuneration and terms of engagement, oversee external audits and assess audit quality and auditors’ reports
- Ensure effective interaction between the Internal Audit Unit and the Company’s external auditor
- Monitor the performance of the system of alerting on potential fraud being committed by FPC’s employees or third parties
- Oversee special investigations of potential fraud, misuse of insider or confidential information
- Monitor the implementation of measures taken by the Company in response to reports of suspected fraud or other violations
Statistics on the Committee meetings
In 2019, the Audit and Risk Committee held 17 meetings: 16 meetings in person and one meeting in absentia
In 2019, the Audit and Risk Committee discussed 104 agenda items.
Essential items discussed by the Committee
Reviewed the audit results of FPC’s RAS accounting (financial) statements for 2018
Reviewed a report on the review of FPC’s interim IFRS consolidated financial statements for 6M, significant risks, IFRS accounting policy issues, and the auditor’s recommendations
Reviewed the action plan covering organisational and technical measures to remedy breaches identified by FPC’s Audit Commission when auditing FPC’s financial and business performance in 2018
Reviewed FPC’s Annual Report and accounting (financial) statements for 2018
Reviewed the drafts of JSC FPC’s Budget for 2020–2022, Investment Programme for 2020–2022, and major investment projects for 2020
Reviewed progress on FPC’s anti-corruption and corruption prevention efforts
Reviewed quarterly reports on the operation of FPC’s Control and Audit Centre and Internal Audit Unit
Quarterly, reviewed reports on the Company’s financial and business activities prepared by FPC’s General Director
Reviewed organisational matters related to the Internal Audit Unit, specifically, its activity plan for 2019 and KPIs
Reviewed the reliability and effectiveness assessment results of the risk management and internal control systems
Reviewed the results of the assessment of on-board services against KPIs
Reviewed the Risk Management and Internal Control Policy of JSC FPC
The Committee’s plans for 2020
Preview the Audit Commission’s 2019 report and the results of follow-up activities to remedy breaches identified by FPC’s Audit Commission in the previous periods
Approve the nominee to the position of an external auditor and material terms of the relevant agreement, including the service fee
Review the report on the performance of the risk management system in 2019, including risk occurrence, financial risks, loans, liquidity management, and compliance with the Audit and Risk Committee’s recommendations
Review FPC’s RAS accounting (financial) statements for 2019, IFRS consolidated financial statements for 2019, and relevant audit reports and recommendations
Review the report on the performance of the system to prevent and combat corruption and other malpractice at FPC
Preview FPC’s Annual Report for 2019
Changes in the Committee’s membership in 2019Positions as at the date of election to the Committee.
| Committee’s membership from January to February | Committee’s membership from July to December |
|---|---|
| Alla Saltykova, Chairwoman of the Committee, Chairwoman of the Committee | Alla Saltykova, Chairwoman of the Committee, Chairwoman of the Committee |
| Alexander Ananyev – Deputy Head of the Department of Economics, Russian Railways | Mikhail Beskhmelnitsyn – Head of the Control and Analytical Service of the CEO – Chairman of the Management Board, Russian Railways; Deputy Chairman of the Committee |
| Mikhail Beskhmelnitsyn – Head of the Control and Analytical Service of the CEO – Chairman of the Management Board, Russian Railways; Deputy Chairman of the Committee | Alexander Biryukov, Head of Management Accounting and Reporting at the Economics Department, Russian Railways |
| Olga Gladysheva, Head of the Centre for Risk Management Coordination and Internal Control System Development, Russian Railways | Olga Gladysheva, Head of the Centre for Risk Management Coordination and Internal Control System Development, Russian Railways |
| Olga Kabanova, First Deputy Head of the Main Control Department of the City of Moscow | Olga Kabanova, First Deputy Head of the Main Control Department of the City of Moscow |
| Fyodor Kuzin – Head of the Subsidiary Relations Unit at the Subsidiaries and Affiliates Management Department, Russian Railways | Fyodor Kuzin – Head of the Subsidiary Relations Unit at the Subsidiaries and Affiliates Management Department, Russian Railways |
| Alexander Muslovets, Deputy General Director, FPC | Inna Lennik, Deputy Head of Zheldoraudit Internal Audit Centre, a business unit of Russian Railways. Mandate terminated early on 5 September 2019 |
| Elena Filatova, Advisor to Deputy CEO – Chairman of the Management Board, Russian Railways | Irina Petrushina, Deputy Head of Unit at Zheldoraudit Internal Audit Centre, a business unit of Russian Railways. Elected to the Committee on 5 September 2019 |
| Olesya Chernysheva, Head of the Accounting Department, Russian Railways | Elena Filatova, Advisor to Deputy CEO – Chairman of the Management Board, Russian Railways |
| Olesya Chernysheva, Head of the Accounting Department, Russian Railways |
In 2019, remuneration paid to the members of the Audit and Risk Committee of FPC’s Board of Directors totalled RUB
Report of the Human Resources, Remuneration, and Corporate Governance Committee
The Human Resources, Remuneration, and Corporate Governance Committee of FPC’s Board of Directors is a consultative and advisory body of the Board of Directors. The resolutions of the latter are advisory. The Committee’s primary goal is to assist the Board of Directors’ efficient operation in developing corporate governance, efficient HR planning, and effective and transparent remuneration practice at FPC. It is achieved through addressing the matters within the Committee’s authority.
Mikhail Beskhmelnitsyn
The Committee’s goals and objectives
- Develop and regularly review the Company’s policy on remuneration of members of the Board of Directors, the Company’s executive bodies, and other key managers
- Control the implementation of the Company’s policy on remuneration and implementation of incentive programmes, evaluate the performance of the Company’s executive bodies and other key managers, in particular, review the reports on their performance against KPIs
- Preview the material terms of employment contracts with the Company’s executive bodies and other key managers as well as bonuses for executive bodies and other key managers, and make relevant recommendations to the Board of Directors
- Pre-assess the Corporate Secretary’s performance in the reporting year
- Assess members of the Company’s Board of Directors in terms of their professional skills, experience, independence and involvement in the Board’s work, review all nominees to the Board of Directors for professional qualifications and independence
- Develop recommendations on evaluating the performance and improving the procedures of the Board of Directors and its Committees
- Develop recommendations on designing an induction programme for newly elected members of the Board of Directors
- Analyse the Company’s current and anticipated needs regarding the professional qualifications of members of its executive bodies and other key managers
- Plan succession, develop recommendations on nominees to positions in the Company’s executive bodies and other key management positions
- Control the Company’s corporate governance practice
- Analyse the alignment of the Company’s corporate governance system with the Company’s goals and objectives, the scale of operations and acceptable risks
- Develop proposals to improve the corporate governance practice
Statistics on the Committee meetings
In 2019, the Committee held seven meetings:
- Three meetings in absentia and one meeting in person in the first half of 2019
- Three meetings in person in the second half of 2019.
During the period, the Committee discussed 37 agenda items.
Essential items discussed by the Committee
Reviewed all nominees to the Board of Directors for professional qualifications
Assessed nominees to FPC’s Board of Directors against the independence criteria
Approved the terms of the employment contract with FPC’s General Director
Provided recommendations on the incentives for FPC’s General Director
Approved the updated Regulations on Preparing and Holding the General Shareholders Meeting of JSC FPC, Regulations on the Board of Directors of JSC FPC, and regulations on the Board of Directors’ Committees
Reviewed the results of the Board of Directors’ performance evaluation results and self-assessment of the Board members
Reviewed the assessment results of FPC’s corporate governance practice in 2018
The Committee’s plans for 2020
Review the General Director’s report on FPC’s performance in 2019 and Q1 2020
Review JSC FPC’s Code of Ethics for Internal Auditors
Consider the payment of quarterly bonuses to FPC’s General Director and review the terms of his employment contract as regards salary indexation
Review the updated Regulations on Incentives for JSC FPC’s Sole Executive Body
Consider actions to be taken in preparation for the annual General Shareholders Meeting, including assessment of nominees to FPC’s Board of Directors proposed by shareholders
Review the report on the Committee’s performance in the 2019/2020 corporate year
Resolve on the expedience of engaging an external advisor to conduct an independent performance evaluation of FPC’s Board of Directors, its Committees, and individual Board members
Review the Board of Directors’ performance evaluation and self-assessment results for the 2019/2020 corporate year
Review the updated Regulations on Remuneration and Reimbursement to Members of the Human Resources, Remuneration, and Corporate Governance Committee of FPC’s Board of Directors
Changes in the Committee’s membership in 2019Positions as at the date of election.
| Committee’s membership from January to June | Committee’s membership from July to December |
| Sergey Zemlyansky, Independent Director, FPC; Chairman of the Committee | Mikhail Beskhmelnitsyn, Head of the Control and Analytical Service of the CEO – Chairman of the Management Board, Russian Railways; Chairman of the Committee |
| Mikhail Beskhmelnitsyn, Head of the Control and Analytical Service of the CEO – Chairman of the Management Board, Russian Railways; Deputy Chairman of the Committee | Yana Vorobyova, Deputy Head of the Subsidiaries and Affiliates Management Department, Russian Railways |
| Elena Vorobyova, Head of Unit at the Subsidiaries and Affiliates Management Department, Russian Railways | Nikolay Zakharov, First Deputy Head of the Personnel Management Department, Russian Railways |
| Vladimir Gaponko — Head of the Economics Department, Russian Railways; Mandate terminated early on 5 March 2019 | Sergey Zemlyansky, Independent Director, FPC |
| Nikolay Zakharov, First Deputy Head of the Personnel Management Department, Russian Railways | Natalya Panisheva, Deputy Head of the Economics Department, Russian Railways |
| Natalya Panisheva, Deputy Head of the Economics Department, Russian Railways Elected to the Committee on 5 March 2019 | Andrey Tikhomirov, First Deputy Head of the Employment, Remuneration and Motivation Department, Russian Railways |
| Lyudmila Paristaya, Deputy General Director, FPC | Irina Shytkina, Independent Director, FPC |
| Andrey Tikhomirov, First Deputy Head of the Employment, Remuneration and Motivation Department, Russian Railways |
In 2019, remuneration paid to members of the Human Resources, Remuneration, and Corporate Governance Committee of FPC’s Board of Directors totalled RUB
Report of the Strategic Planning Committee
The Strategic Planning Committee is a consultative and advisory body of the Board of Directors, set up to enable the Board of Directors to improve the Company’s long-term performance, whose resolutions are of an advisory nature.
Dmitry Pegov
The Committee’s goals and objectives
Determine strategic goals of FPC’s activities; participate in the development of the Company’s Strategy, and monitor its implementation; make recommendations to the Board of Directors on adjustments to the Company’s existing Strategy
Determine the Company’s business priorities
Preview, and make recommendations to the Board of Directors on:
- the Company’s dividend policy
- the Company’s investment policy, including the establishment of key principles for the development of the investment policy
- the Company’s membership in other entities (including direct or indirect acquisition and disposal of interests in the share capitals of such entities and imposing a charge on shares or interests)
- approval of, and adjustments to, the Company’s annual budget and investment programme, and approval of the relevant performance report
- determining the amount of dividend on shares
- approval of the Company’s material transactions
- when considering material issues of subsidiaries and affiliates
Assess voluntary and mandatory offers for the Company’s securities, Assess the Company’s long-term performance
Review the Company’s financial model and a model for the valuation of its business and business segments
Consider reorganisation or liquidation of the Company and its controlled entities
Consider changes to the organisational structure of the Company and its controlled entities
Consider reorganisation of business processes in the Company and its controlled entities
Statistics on the Committee meetings
In 2019, the Committee held six meetings in person and discussed 21 agenda items.
Essential items discussed by the Committee
Reviewed FPC’s Annual Report for 2019 and proposals on the payout (declaration) of the full year dividend for 2018
Reviewed JSC FPC’s Investment Programme for 2020–2022 and a major investment project for 2020
Reviewed the report on monitoring passenger satisfaction
Reviewed JSC FPC’s Innovative Development Programme for 2019–2025
Reviewed the results of, and effects from, the measures under the Passenger Service Improvement Programme for 2017–2019
Reviewed JSC FPC’s draft IT Strategy for 2020–2025
Considered the feasibility of FPC’s membership in associations and other unions
The Committee’s plans for 2020
Review the General Director’s quarterly reports on FPC’s performance
Review FPC’s draft Annual Report for 2019
Consider payment of the full year dividend for 2019
Committee’s membership in 2019
| Committee’s membership from January to June | Committee’s membership from July to December |
|---|---|
| Dmitry Pegov, Deputy CEO – Chairman of the Management Board, Russian Railways; Chairman of the Committee | Dmitry Pegov, Deputy CEO – Chairman of the Management Board, Russian Railways; Chairman of the Committee |
| Mikhail Beskhmelnitsyn, Head of the Control and Analytical Service of the CEO – Chairman of the Management Board, Russian Railways | Mikhail Beskhmelnitsyn, Head of the Control and Analytical Service of the CEO – Chairman of the Management Board, Russian Railways |
| Pavel Burtsev, Head of the Passenger Services Management Department, Russian Railways | Elena Vilchinskaya, Head of Unit at the Central Directorate for Motorised Carriages, a branch of Russian Railways |
| Elena Vilchinskaya, Head of Unit at the Central Directorate for Motorised Carriages, a branch of Russian Railways | Vladimir Gaponko, Head of the Economics Department, Russian Railways |
| Vladimir Gaponko, Head of the Economics Department, Russian Railways | Vera Evsegneeva, Head of the Subsidiaries and Affiliates Management Department, Russian Railways |
| Vera Evsegneeva, Head of the Subsidiaries and Affiliates Management Department, Russian Railways | Petr Ivanov, General Director, FPC |
| Petr Ivanov, General Director, FPC | Vladimir Maksimushkin, First Deputy Head of the Economic Environment and Strategic Development Department, Russian Railways |
| Vladimir Maksimushkin, First Deputy Head of the Economic Environment and Strategic Development Department, Russian Railways | Alla Saltykova, Independent Director, FPC |
| Alla Saltykova, Independent Director, FPC |
In 2019, remuneration paid to members of the Strategic Planning Committee of FPC’s Board of Directors totalled RUB