The Chief Executive Officer and the Chief Operating Officer, along with the Management Board, manage the Company's day-to-day operations, except for the matters reserved to the Company's General Meeting of Shareholders or the Board of Directors.
The Chief Executive Officer and the Chief Operating Officer are elected by the General Meeting of Shareholders, which also determines their terms of office. The Chief Executive Officer and the Chief Operating Officer are accountable to the Board of Directors and the General Meeting of Shareholders.
The Chief Executive Officer and the Chief Operating Officer act independently from one another.
At the annual General Meeting of Shareholders held on 30 June 2015, Ivan V. Tavrin was re-elected the Company's Chief Executive Officer (he was first elected to this position in April 2012; prior to that, from 2003 to April 2012, the position of MegaFon's Chief Executive Officer had been held by Sergey V. Soldatenkov).
The annual General Meeting of Shareholders held on 30 June 2015 also approved a new position of the Chief Operating Officer, and elected Evgeny N. Chermashentsev to the new position with a term of office until the date of the annual General Meeting of Shareholders in 2018.
The Board of Directors determines the structure and size of remuneration payable to members of the Company's executive management. In 2015, the aggregate payments to members of the Management Board, including remuneration and reimbursement of expenses, totalled RUB 822m.
|Remuneration type||Remuneration amount, RUB mln|
|Reimbursement of expenses||2|
|Bonuses and long-term incentives||580|
|Pension plan contributions||0|
In 2012 and 2013 the Company’s Board of Directors approved two long-term incentive programmes (LTI 2012 and LTI 2013) for certain key executive and senior level employees under which the parties selected to participate are awarded rights to phantom shares. The maximum number of phantom shares which could be awarded under each plan was 1.1% of the share capital of the Company (or 14 m phantom shares in the aggregate) at the base price of US$ 17.86 per share under LTI 2012 and US$ 24.25 per share under LTI 2013.
Each plan had a three year duration and rights to phantom shares vest, and payments due to awardees are settled, in the second and third years. Awardees receive payments on the basis of the difference between the base price and the weighted-average price of the Company’s shares in the period between January 15 and March 15 in the relevant year of vesting (the strike price).
In 2015 the Board of Directors of the Company approved an amendment to the terms of LTI 2012 and LTI 2013 to change the base price and the strike price for the awards outstanding as at 31 December 2014 and 2015 (for which settlement was due in April-May 2015 and April-May 2016) to 555 Rubles per share and 744 Rubles per share, respectively.
In November 2012, the Board of Directors approved a long-term incentive plan for the Company's Chief Executive Officer. Under this plan, Mr Tavrin was granted the right, exercisable before May 2017, to buy from our subsidiary, MegaFon Investments (Cyprus) Limited, shares of MegaFon representing a 5% stake in the Company at the IPO price (US$ 20 per share). Mr Tavrin exercised this right in 2012 and 2013, thereby acquiring shares representing in aggregate 2.5% of the Company's issued shares.
In March 2014 the Board of Directors of the Company agreed unanimously to amend the terms of the CEO long-term incentive plan and to accelerate the vesting of Mr. Tavrin's final two options to acquire a 2.5% interest in the Company, so that all the remaining options became exercisable at any time after 1 May 2014. In addition, the Board agreed to remove a restriction preventing Mr Tavrin from holding more than 5% of the Company's share capital until May 2017. On 30 December 2014, Mr Tavrin exchanged all of the Company shares acquired pursuant to the exercise of his options and his unexercised option for 2.5% of the Company's shares for a stake in USM Group.