Today, the Board of Directors of PJSOC Bashneft has approved the Regulations on the Long-Term Employee Incentive Programme for the Period from 2015 through 2019.
'The principal aim of incentives payable to Bashneft’s management is to achieve the goals set out in the Company’slong-term development strategy until 2020 and, consequently, to promote further growth of its shareholder value,' commented Alexey Teksler, Chairman of the Board of Directors. 'The fact that the management’s remuneration is linked to achievement of strategic goals is consistent with best practices in the sphere of corporate governance; this is accomplished through integrated short-term and long-term incentive programmes. The former stipulates that the management must achieve annual financial, operating and project-related key performance indicators and take measures to provide shareholder returns. The latter is focused on sustainable improvement of Bashneft’s performance and growth of its total shareholder return in the medium term.'
The five-year long-term incentive programme, which will account for no less than 50% and 33% of total earnings of Bashneft’s top and middle management respectively, involves annual achievement of a number of strategic targets, including Total Shareholder Return, benchmarked against the performance of the Company’s industry peers. Under the terms of the programme, Bashneft’s top and middle management must use 50% of remuneration payable as part of the programme to buy shares of PJSOC Bashneft, which may not be sold for one year after the date of the purchase. As part of the long-term incentive programme, the Company’s securities will be bought by about 150 employees of Bashneft.
Currently, there is also a link between changes in the Company’s market capitalization benchmarked against the performance of its industry peers and the amount of remuneration payable to independent members of Bashneft’s Board of Directors.