Board of Directors and Committees

In the reporting year, our Company took one more important step towards bringing the corporate governance system to a new level by significantly reshuffling its Board of Directors. In June 2012, six independent directors were appointed, the total number of directors was raised to eleven, and as much as one third of the Board was replaced with new members. Mukhadin Eskindarov and Geoffrey Townsend stepped down as Board members, having served on the Board for the maximum period during which directors can be deemed independent according to the Regulations on the Board of Directors and the Corporate Governance Code of TMK. Both actively contributed to implementing corporate governance best practices and chaired Board committees. Thomas Reeve Pickering also stepped down, having been a director since 2009. The Annual Meeting of Shareholders held on 26 June 2012 elected four new independent directors, Ruben Aganbegyan, Peter O’Brien, Bob Foresman, and Oleg Schegolev.

Six independent directors were appointed, the total number of directors was raised to eleven, and as much as one third of the Board was replaced with new members

Following the Annual General Meeting of Shareholders, the Board of Directors of OAO TMK is composed as follows:

Dmitry Pumpyanskiy
Chairman of the Board of Directors,
non-executive director.

Born in 1964. Graduated from the Sergey Kirov Urals Polytechnic Institute in 1986. PhD in Technical Sciences, Doctor of Economics. Founder and beneficial owner of TMK. Has been with TMK since foundation, Chairman of TMK’s Board of Directors since 2004.

In 2011, he was pronounced the winner of the 6th Director of the Year National Award in the Chairman of the Board of Directors in Furtherance of Corporate Governance nomination.

Relevant experience:
Chairman of the Supervisory Board of Russian Agricultural Bank, Member of the Board of Directors at Rosagroleasing and SKB-Bank, President of the Sverdlovsk Regional Manufacturers and Entrepreneurs Association, President and Chairman of the Board of Directors of Sinara Group, Board member at various industrial and financial companies, member of the Management Board of the Russian Union of Industrialists and Entrepreneurs, CEO at TMK, CEO at Sinara Group, top executive at Russian metallurgical and pipe companies.

Holds 0.007% in the authorised capital of OAO TMK

 

Ruben Aganbegyan
Independent director,
member of the Board of Directors
since 2012.

Born in 1972. Graduated from the Moscow State Law Academy in 1995.

Relevant experience:
Member of the Board of Directors, Chairman of the Management Board and CEO at Otkritie Financial Corporation, CEO, President, member of the Supervisory Board at Moscow Exchange MICEXRTS, Board member at various stock exchange infrastructure companies and self-regulated financial market players, member of the Management Board of the Russian Union of Industrialists and Entrepreneurs. Previously held executive positions at investment companies and banks (Renaissance Capital, Troika Dialog, Credit Suisse First Boston) and worked for PricewaterhouseCoopers, Clifford Chance, Credit Suisse Financial Products.

Holds no shares in OAO TMK

 

Mikhail Alekseev
Independent director,
Chairman of the Nomination
and Remuneration Committee,
member of the Audit Committee.
Member of the Board of Directors
since 2011.

Born in 1964. Graduated from the Moscow Finance Institute in 1986. Doctor of Economics.

Relevant experience:
Chairman of the Management Board of UniCredit Bank, Chairman of the Board and President of “Rossiysky Promyishlenny Bank” (Rosprombank), Senior Vice President and Deputy Chairman of the Management Board of Rosbank, Deputy Chairman of the Management Board of ONEXIM Bank, Board member at Intersectoral Commercial Bank (Mezhkombank), Deputy Head of the General Directorate of the Ministry of Finance of the USSR.

Holds no shares in OAO TMK

 

Andrey Kaplunov
Executive director.
Has been with TMK
since foundation.

Born in 1960. Graduated from the Moscow Finance Institute in 1982. PhD in Economics.

Relevant experience:
First Deputy CEO and member of the Management Board of TMK, Board Chairman at TMK’s Russian pipe plants and TMK Trade House, member of the Board of Directors of Sinara Group, Deputy Chairman of the Board of Directors of OAO SKB-Bank, Board member at the “Bolshoy Pensionny Fond” Interregional Non-Profit Social Welfare NGO, member of the Board of Trustees of the Sinara Mini-Football Club (Sverdlovsk Regional Sports Non-Governmental Fund), Director of the HR and Corporate Development at Inkombank and Rosbank, Vice President of Guta-Bank, Deputy Head of the Currency and Finance Department at Zarubezhneft Foreign Trade Enterprise, Assistant Professor at the Economic Theory Department of the Moscow Finance Institute.

Holds 0.0116% in the authorised capital of OAO TMK

 

Peter O’Brien
Independent director,
Chairman of the Audit Committee.
Member of the Board of Directors
since 2012.

Born in 1969. Graduated from Duke University (USA) in 1991 and obtained an MBA from Columbia University Business School in 2000. Took a course in AMP (Advanced Management Program) at Harvard Business School in 2011.

In 2007, he won the National Award of the Independent Directors’ Association as the Director of the Year.

Relevant experience:
Member of the Management Board, Vice President, Head of the Group of Financial Advisors to the President of Rosneft, Co-Head of Investment Banking, Executive Director of Morgan Stanley in Russia, Vice President at Troika Dialog Investment Company, Press Officer at the US Treasury.

Holds no shares in OAO TMK

 

Sergey Papin
Non-executive director.
Member of the Nomination and
Remuneration Committee.
Has been with TMK
since 2002.

Born in 1955.
Graduated from the Donetsk Polytechnic Institute in 1977.

Relevant experience:
Vice President, member of the Board of Directors of Sinara Group, Board member at various companies, Deputy CEO for External and Special Projects at TMK, Vice President of Inkombank and Guta-Bank.

Holds 0.012% in the authorised capital of OAO TMK

 

Robert Mark Foresman
Independent director,
member of the Nomination and
Remuneration Committee.
Member of the Board of Directors
since 2012.

Born in 1968. Graduated from Bucknell University (USA) in 1990 and Harvard University Graduate School of Arts & Sciences in 1993. Obtained a certificate from the Moscow Power Engineering Institute in 1989.

Relevant experience:
Head of Barclays Capital in Russia, Deputy Chairman of the Management Board at Renaissance Capital, Chairman of the Management Committee for Russia and CIS at Dresdner Kleinwort Wasserstein, Head of Investment Banking for Russia and CIS at ING Barings. Worked for the International Finance Corporation on private equity transactions and project financing.

Holds no shares in OAO TMK

 

Igor Khmelevski
Non-executive director.
Member of the Audit Committee.
Has been with TMK
since 2003.

Born in 1972.
Graduated from the Urals State Law Academy in 1995.

Relevant experience:
Vice President and member of the Board of Directors of Sinara Group, Board member at various financial institutions and TMK companies, Deputy CEO for Legal Practice at TMK, Head of the Legal Department at Sinara Group.

Holds 0.01% in the authorised capital of OAO TMK

 

Oleg Schegolev
Independent director,
member of the Strategy Committee.
Member of the Board of Directors
since 2012.

Born in 1962.
Graduated from the Moscow Finance Institute in 1984.

Relevant experience:
First Vice President at Russneft, First Deputy Chairman of the Management Board and First Deputy CEO at Itera, Executive Director at Slavneft, chairman and Board member at various oil & gas companies, Deputy Head of the Department for Longterm Planning of the Fuel and Energy Complex at the Ministry of Energy of the Russian Federation, chief officer, deputy director, department head at Sibneft.

Holds no shares in OAO TMK

 

Alexander Shir yaev
Executive director.
Member of the Strategy Committee.
Has been with TMK
since 2003.

Born in 1952.
Graduated from the Sverdlovsk Institute of National Economy in 1991.

Relevant experience:
CEO, Chairman of the Management Board of OAO TMK, Board member at TMK’s Russian pipe plants and TMK Trade House, Deputy CEO for Development, CEO and subsequently member of the Board of Directors at Sinara Group, Chief Financial Officer at TMK, CEO at Uralshina.

Holds 0.017% in the authorised capital of OAO TMK

 

Alexander Shokhin
Independent director,
Chairman of the Strategy Committee.
Member of the Board of Directors
since 2008.

Born in 1951. Graduated from the Lomonosov Moscow State University in 1974. PhD, Doctor of Science, Professor.

Relevant experience:
President of the Russian Union of Industrialists and Entrepreneurs, President of the Higher School of Economics State University, Board member at Lukoil, Russian Railways, Baltika Breweries, Fortum, TNK-ВР Limited, member of the Public Chamber of the Russian Federation, Chairman of the Supervisory Board at Renaissance Capital Investment Group, member of the State Duma (three convocations), Minister of Labour and Employment and Minister of Economic Affairs, Head of the Russian Agency for International Cooperation and Development, twice appointed as Deputy Head of the Russian Government, Russia’s representative to IMF and World Bank.

Holds no shares in OAO TMK

 

Maxim Kurbatov
Secretary of the Board of Directors.

Born in 1967. Graduated from the Sergey Kirov Urals Polytechnic Institute, the Academy of National Economy under the Government of the Russian Federation and the Moscow State Law Academy.

Has been with TMK since 2002. Subsequently headed the CEO’s Executive Office and the Corporate Governance function at TMK. Has been Secretary of the Board of Directors since 2005.

 

As of 31 December 2012, the members of the Board of Directors held no interests in affiliated companies.

We have built a cutting-edge corporate governance system which is regulated by Company’s internal documents available on the TMK’s web site (www.tmk-group.com) and generally described in the Corporate Governance Code of TMK (www.tmk-group.com).

The corporate governance practices of the Company in 2012 were in full compliance with the Corporate Governance Code.

Remuneration

In accordance with the Regulations on the Board of Directors, only directors who are not executives of TMK are entitled to remuneration. Prior to the Annual General Meeting of Shareholders, the Board of Directors had 5 independent directors, 3 non-executive directors and 2 executive directors. As of 26 June 2012, the Board of Directors is comprised of 6 independent directors, 3 non-executive directors and 2 executive directors.

The remuneration to be paid includes:

  • a fixed base remuneration of Chairman or member of the Board payable on a monthly basis in the amount of 1/12 of the fixed annual amount
  • дadditional remuneration for the performance of the duties of Chairman or member of a Board Committee payable every six months in the amount of 1/2 of the annual additional remuneration.

In 2012, the members of the Board of Directors received a total of USD 2.42 m as remuneration1.

The Board of Directors is comprised of 6 independent directors, 3 nonexecutive directors and 2 executive directors

Committees of the Board of Directors

The Board of Directors has three standing committees: Audit Committee, Nomination and Remuneration Committee and Strategy Committee

The committees have been formed in full compliance with the Code which specifically requires that the Audit Committee and the Nomination and Remuneration Committee include independent directors only or, if reasonably impossible, independent directors and non-executive directors only.

Participation of Board Members in Board and Committee Meetings in 2012.

Board of Directors (32 meetings, including 16 post- AGM meetings)Audit Committee (8 + 6 joint meetings)Nomination and Remuneration Committee (8 meetings)Strategy Committee (3 + 6 joint meetings)
Pumpyanskiy, D.A.
(Chairman)
32
Aganbegyan, R.A.14
Alekseev, M.Yu.32341
Kaplunov, A.Yu.32
O’Brien, Peter156
Papin, S.T.325
Pickering, T.16
Townsend, G.1683
Foresman, R.M.153
Khmelevskiy. I.B.3214
Shiryaev, A.G.329
Shokhin, A.N.327
Schegolev, O.A.165
Eskindarov, M.A.1644
Board of Directors (32 meetings, including 16 post- AGM meetings)Audit Committee (8 + 6 joint meetings)Nomination and Remuneration Committee (8 meetings)Strategy Committee (3 + 6 joint meetings)
Pumpyanskiy, D.A.
(Chairman)
32
Aganbegyan, R.A.14
Alekseev, M.Yu.32341
Kaplunov, A.Yu.32
O’Brien, Peter156
Papin, S.T.325
Pickering, T.16
Townsend, G.1683
Foresman, R.M.153
Khmelevskiy. I.B.3214
Shiryaev, A.G.329
Shokhin, A.N.327
Schegolev, O.A.165
Eskindarov, M.A.1644

Audit Committee

On 26 June 2012, Peter O’Brien and M. Alekseev were elected to the Committee to replace G. Townsend and M. Eskindarov who left the Board of Directors. The Audit Committee is composed as follows:

O’Brien, PeterChairman of the Audit Committee, independent director
Alekseev, M.Yu.Member of the Audit Committee and Chairman of the Nomination and Remuneration Committee, independent director
Khmelevskiy, I.B.Member of the Audit Committee, non-executive director

As a result of its work on the oversight of the external audit, the Audit Committee believes that the audit was performed professionally and that there are no material conflicts of interest

The Committee’s activity in 2012 and from 1 January 2013 to 31 March 2013 to the extent related to the 2012 consolidated financial statements or to the tender for external auditor selection included the following:

  • review of the Company’s financial statements;
  • review of the Company’s standards and procedures for internal control and risk management;
  • review of plans and reports of the Internal Audit Department;
  • cooperation with the Revision Commission;
  • recommendations to the Board of Directors as regards the appointment and/or re-appointment of an external auditor;
  • review of audit plan and scope;
  • active discussion with the external auditor of matters arising out of audit;
  • assessment as regards independence of an external auditor;

Committee oversight of the external audit of the 2012 financial statements

The auditor issued an unqualified audit opinion on TMK’s IFRS consolidated financial statements. The Audit Committee reviewed OAO TMK’s financial statements prepared in accordance with Russian accounting standards and the auditor’s opinion and concluded that the RAS statements are consistent with the IFRS consolidated financial statements given the differences in accounting standards and the fact that the RAS financial statements are unconsolidated and include only OAO TMK accounts.

As a result of its work on the oversight of the external audit, the Audit Committee believes that the audit was performed professionally and that there are no material conflicts of interest and recommends to the Board of Directors that the financial statements and the auditor’s opinion be submitted for the approval of shareholders at the Annual General Meeting.

Nomination and Remuneration Committee

On 26 June 2012, M. Alekseev and R. Foresman were elected to the Committee to replace M. Eskindarov and G. Townsend.

As of 26 June 2012, the Nomination and Remuneration Committee is composed as follows:

Alekseev, M.Yu.Chairman of the Nomination and Remuneration Committee and member of the Audit Committee, independent director
Papin, S.T.Member of the Nomination and Remuneration Committee,
non-executive director
Foresman, Robert MarkMember of the Nomination and Remuneration Committee,
independent director
Alekseev, M.Yu.Chairman of the Nomination and Remuneration Committee and member of the Audit Committee, independent director
Papin, S.T.Member of the Nomination and Remuneration Committee,
non-executive director
Foresman, Robert MarkMember of the Nomination and Remuneration Committee,
independent director

The Committee aims to create a favourable environment for the employment of qualified personnel in the Company and incentives for their efficient performance as well as to improve the corporate governance system in line with best international practices.

In 2012, the Committee reviewed and presented to the Board of Directors recommendations on the following key matters:

  • nominees to the Board of Directors of TMK for 2012 through 2013;
  • establishment of TMK’s Director Club;
  • amendments to the Regulations on the Board of Directors;
  • key performance indicators and incentive scheme for executives and directors of TMK’s main business units;
  • implementation of TMK’s HR policy;
  • changes to the Company’s organisational structure and staff;
  • key indicators in terms of headcount and payroll for TMK’s budget for 2013.

Strategy Committee

In 2012, the Committee membership was changed with O. Schegolev replacing M. Alekseev who was elected as the Chairman of the Nomination and Remuneration Committee and a member of the Audit Committee.

The Committee’s tasks are to develop recommendations on the Company’s business priorities and its growth strategy and present these to the Board of Directors

In 2012, the Committee reviewed and presented to the Board of Directors recommendations on the following key matters:

  • development of TMK’s premium business;
  • logistics management system and TMK’s vision for its further development;
  • implementation of TMK’s Business Plan for 2011 through 2015;
  • amendments to TMK’s Strategy;
  • TMK’s budget for 2013;
  • recommendations on M&A transactions, asset disposal and joint ventures.

As of 26 June 2012, the Strategy Committee is composed as follows:

Shokhin, A.N.Chairman of the Strategy Committee, independent director
Schegolev, O.A.Member of the Strategy Committee, independent director
Shiryaev, A.G.Member of the Strategy Committee, CEO, Chairman of the
Management Board
Shokhin, A.N.Chairman of the Strategy Committee, independent director
Schegolev, O.A.Member of the Strategy Committee, independent director
Shiryaev, A.G.Member of the Strategy Committee, CEO, Chairman of the
Management Board

1 Based on the average exchange rate of 31.093 RUB/USD in 2012

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