6. ANÁLISIS DE RESULTADOS
6.4. Propuestas de mejora
The Board of Directors determines the Company’s devel- opment strategy and is responsible for general manage- ment issues between General Meetings of Shareholders, apart from those considered the sole prerogative of the General Meeting, in line with the federal law “On Joint- Stock Companies”. More details about its powers can be found in the Company Charter and the Resolution on the Board of Directors.
Composition of the Board of Directors
Members of the Board of Directors are elected by the General Meeting of Shareholders for the period until the next Annual General Meeting, and they may be re-elected an unlimited amount of times. Shareholders with a com- bined stake of at least 2% of the voting shares may pro- pose candidates to the Board.
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As per the Company Charter, the Board of Directors con- sists of seven members. All members are non-executive directors.
Shareholders elected a new Board of Directors at the Annual General Meeting on 2 June 2010. Several exist- ing members were re-elected: Aimo Eloholma (Chairman of the Board), Tero Kivisaari, Vladimir Streshinsky, and Dmitry Vozianov. In addition, three new directors were elected – Ardavan Moshiri, Nikolay Krylov, and Jan Rud- berg – all of whom are independent.
Independence of the Board of Directors
As of the end of 2010, MegaFon had three independent di- rectors. In determining their independence, the Company is guided by criteria in both local and international best practice: the federal law “On Joint-Stock Companies”, the Federal Financial Markets Service’s Code of Corporate Conduct, and the Independent Directors’ Code, approved by the Independent Directors Association together with the Russian Institute of Directors with the support of MICEX, the International Financial Corporation, and the US Department of commerce’s Chamber of Commerce. When a candidate for the Board is proposed, MegaFon analyses a survey of board members, which each candi- date completes, about compliance with the Company’s independence criteria. If a candidate meets the criteria and is elected, he or she completes and signs an inde- pendent director’s survey, and the Board approves his or her independent status.
Training and notifying directors
When new directors are elected, MegaFon organizes an introductory presentation to tell them about its business and the specifics of its work, as well as giving an over- view of the management system. The CEO and senior op- erational managers take part in the presentation, while members of the Board are given the Company’s corporate documents in Russian and English. Directors are also of- fered individual meetings with senior operational man- agers, to provide them with any additional information needed in their work. New directors meet with the head of the Internal Audit Department and the independent auditor.
In June 2010 MegaFon completed a Board Manual for directors. The document describes the corporate govern- ance system and internal practices relating to the Board’s work and answers the most frequently asked questions.
The manual is given to new directors immediately after they are elected.
Meetings of the Board of Directors
A meeting of the Board of Directors can be called by the Chairman or members, the Revision Commission, the Management Board, the auditor, the CEO, or share- holders owning at least 5% of voting stock. The quorum needed to hold a meeting is four Board members. Board decisions are made by simple majority voting, apart from cases stipulated in the Company Charter. When making decisions, each Board member has one vote.
Board meetings are held in accordance with the work schedule, which is approved every six months. If required by the business or legislation, a meeting can be held in absentia. MegaFon informs directors about such meet- ings in advance, either at a meeting in presentia or via email. On average, actual meetings take place once every two months.
Information about meetings is distributed at least 10 days before the scheduled time. As a rule, Board members are sent an agenda and a range of material about each point. Board members may ask any questions and request any additional information regarding the agenda. Any ques- tions are analyzed by Company experts before a meeting. In line with the principle of equal treatment, any addi- tional documents or comments requested are sent to all directors.
In 2010, MegaFon carried out work to streamline the cost of preparing for meetings of the Board of Directors and its committees. Notably, it set up a virtual data room to hold all of the documents given to members of the Board and its committees ahead of meetings. The electronic data room is a specially created defensive resource on an ex- ternal server that any director can access at any time via the internet. When information about meetings is placed in the data room, directors are notified.
As a rule, all directors attend Board meetings. If a director cannot be there in person, he or she can participate via a video conference call or send his or her opinion on the agenda items in writing.
In 2010, the Board of Directors held 17 meetings, of which six were in presentia and 11 in absentia.
Directors’ invested interest
MegaFon observes best practices regarding Board mem- bers’ interests: directors who are related parties in trans- actions do not vote. If a director has a conflict of interest regarding any issue on the agenda, he or she must inform the Chairman of the Board of Directors and the Corporate Secretary. In such cases, the director refrains from voting on the issue in question.
In line with Russian legislation, all related-party transac- tions must be approved by the Board of Directors or the General Meeting of Shareholders.
Directors’ remuneration
For carrying out their duties, Board members are paid re- muneration and reimbursed for expenses relating to their work. The amount of remuneration for non-independent directors is set at the Annual General Meeting, and they are paid based on the results for the year.
The amount of remuneration for independent directors is set at an Extraordinary General Meeting, once they have been elected and their independent status has been ap- proved. It is paid in advance in two parts: two and six months after their election. At the discretion of a General Meeting of Shareholders, independent directors can also be compensated for expenses relating to their work. In 2010, the overall amount paid to directors was 26 mln RUB, including 25 mln RUB in remuneration and 0.4 mln RUB in compensation for expenses.
Corporate Secretary
To ensure that the corporate governance system works ef- fectively, MegaFon has put in place a Corporate Secretary, who monitors the compliance of all management bodies with the rules and procedures that serve to protect share- holders’ rights and interests. The Corporate Secretary or- ganizes General Meetings of Shareholders and facilitates the work of the Board of Directors and its committees. The Corporate Secretary is elected by the Board of Direc- tors and reports to it.
MegaFon places high demands on a person elected to the position. Alongside having the requisite knowledge needed for the role, the Corporate Secretary must have an unblemished reputation.
The current Corporate Secretary is Anna Goriainova.
> Current directors
Aimo Eloholma
Chairman of the Board of Directors
Aimo Eloholma has been a member and Chairman of the Board of Directors since June 2003. He left TeliaSonera in December 2009 and now works as a consultant to the firm. Before this, he was responsible for TeliaSonera Eurasia’s international business. Mr Eloholma has also been Deputy CEO and an Executive Director at Sonera Corporation, President at TeliaSonera International, and Executive Vice President of the Fixed Line business at Sonera Corporation. He graduated from the Helsinki University of Technology and holds a degree in Electri- cal Engineering.
Mr Eloholma is Chairman of the Remuneration Commit- tee and a member of Finance Committee.
Tero Kivisaari
Member of the Board of Directors
Tero Kivisaari has been a Board member since April 2008. He is also President of TeliaSonera Eurasia, where he was also Finance Director and Vice President previ- ously. He has degrees from the Helsinki University of Technology and the Helsinki School of Economics and Business Administration.
Mr Kivisaari is a member of the Audit Committee.
Vladimir Streshinskiy
Member of the Board of Directors
Vladimir Streshinskiy has been a Board member since June 2008. He is also the CEO of Telecominvest, CEO of COALCO, and a member of the Board of Directors at the Metalloinvest holding, the Kommersant publishing house, and the MUZ TV and 7 TV channels. Previously, Mr Streshinskiy helped set up Metalloinvest, held man- agerial positions at COALCO, and was CEO of Gazmetall. He is a graduate of the Moscow Institute of Physics and Technology (MFTI).
Mr Streshinskiy is Chairman of the Finance Committee.
Nikolay Krylov
Independent member of the Board of Directors
Nikolay Krylov has been a Board member since June 2010 and is a partner at law firm Winston & Strawn LLP. He has also been a director at the Kommersant pub- lishing house since 2006. He is a graduate of Yale Law School.
Aimo ELOHOLMA
Chairman of the Board of Directors
Tero KIVISAARI
Member of the Board of Directors
Vladimir STRESHINSKY
Member of the Board of Directors
Jan RUDBERG
Independent member of the Board of Directors
Ardavan MOSHIRI
Independent member of the Board of Directors
Nikolay KRYLOV
Independent member of the Board of Directors
Dmitry VOZIANOV
Member of the Board of Directors