Personnel Motivation

Decent employee remuneration is the foundation of the Company’s HR management system. In 2010, like in the previous years, the salaries paid by the Company’s subsidiaries usually exceeded the average salary levels in the respective regions.

Rosneft was one of few major Russian companies, which indexed the salaries in 2010. The salaries across the Company were indexed by 5%, although at certain subsidiaries the indexation rate was higher. The corporate business plan for 2011 provides for the indexation of average salary levels at least by 6.5% since April 1.

Social payments and benefits form an integral part of the corporate remuneration system. We are proud that during the crisis period we were able to preserve the full scope of the social package available to our employees, and we are planning to further expand it in the future. In 2010, the Company prepared recommendations for concluding collective agreements at oil and gas production, refining, and gas processing subsidiaries (see Rosneft’s Sustainability Report for 2010 for more details).

The social package applies to all employees of subsidiaries and business units and includes the following:

• healthcare and vacation benefits, including voluntary health insurance, as well as full or partial coverage of recreation, health improvement, and respective travel expenses for employees and their children. These benefits are a core element of the corporate healthcare program;
• monetary allowance to employees in difficult situations;
• retirement allowance.

At some subsidiaries, employees also take advantage of free meals, maternity leave allowance, coverage of accommodation expenses and etc. The range and amount of benefits depend on a subsidiary’s economic capacity and the terms of a collective agreement.

One of special benefits offered by the Company is interest-free education loan – the social aid aimed to help employees and their children get the basic higher education in the Russian universities that have state accreditation.

One of the most attended corporate events aimed at improvement of the Company personnel incentives are the professional skill contests – the Best In Profession.

The “Best in Profession” annual contest of professional mastery has become a corporate tradition serving several important objectives of the corporate HR policy. Being a form of rewarding the best employees, it at the same time serves as a vehicle for sharing best working practices identified at various subsidiaries of the Company.

In August 2010, the final stage of the 6th “Best in Profession” corporate contest was held. A total of 277 employees representing 75 Rosneft subsidiaries competed in the finals. In 2010, the contest dedicated to the 15th anniversary of the Company was organized as a major event contributing to the strengthening of Rosneft’s corporate culture.

The number of contest categories was expanded from 17 to 21, representing all major skill sets within the Company. Best subsidiaries were also identified based on the number of winners and runners-up in individual categories. The winning companies in the main sectors of operations were:

• oil and gas production – OJSC Samaraneftegaz;
• refining – LLC Novokuibyshevsk Oils and Additives Plant;
• petroleum product supply:
• marketing – CJSC Lipetsknefteprodukt;
• terminals – CJSC Voronezh-Terminal.

The participants of the contest finals demonstrated a high level of both theoretical knowledge and practical skills. One should specifically mention representatives of CJSC Voronezh-Terminal who participated in the contest for the first time and became winners in all three categories applicable to the “Terminals” segment.

In 2010, the Company increased the size of monetary prizes awarded to contest winners and runners-up: the winners received RUB 500 thousand each as a prize, those placed second – RUB 150 thousand each, those placed third – RUB 50 thousand each.