Remuneration of Members of the Board of Directors

The Federal Law on Joint-Stock Companies stipulates that, by decision of the General Meeting of Shareholders, members of the Board of Directors may be paid remuneration and/or compensation of their costs associated with exercise by them of their functions during the period when they are in office. The scale of such remuneration and compensation is established by decision of the General Meeting of Shareholders.

Criteria for levels of remuneration

Criteria for setting remuneration to members of the Board of Directors are established by the Regulation on the Procedure for Calculation and Payment of Remuneration to Members of the Board of Directors and Compensation of their Expenses, which was approved by the Rosneft Board of Directors on April 28, 2009 (Minutes ¹4).

In accordance with this Regulation, remuneration is paid to members of the Board of Directors who have ‘independent’ status, and to members of the Board of Directors who are authorized representatives of the interests of the Russian Federation in the Board of Directors, except for members of the Board of Directors who are state officials and for the Chief Executive Officer (President).

The maximum possible level of remuneration during the reporting period is set for members of the Board of Directors, and this level is approved by the Board of Directors of the Company.

Factors taken into account in setting the final amount of remuneration for work in the reporting period are:

• factual participation in work as a member of the Board of Directors;
• factual participation in work of a Board Committee as Chairman of that Committee;
• factual participation in work of a Board Committee as member of that Committee.

The Board of Directors of Rosneft can recommend lowering the final amount of remuneration to members of the Board of Directors taking account of the financial situation of the Company. The Board of Directors also decides on whether remuneration will be paid in the form of cash or shares of Rosneft.

Rosneft compensates all expenses:

• associated with execution by members of the Board of Directors of their functions. Such expenses include accommodation, meals, travel (including VIP lounge services), and other payments and tariffs for air and (or) rail transport services;
• arising for a member of the Board of Directors in connection with proceedings brought by third parties (including expenses for defense in court, etc.) as a result of actions by the Board member if the actions which caused the proceedings to be brought were carried out by the Board member in the interests of the Company. The Company also compensates expenses which may be incurred by a member of the Board of Directors in connection with administrative, criminal or other court action arising from his or her activities as a member of the Board.

The General Meeting of Shareholders on June 10, 2011, decided:

• to approve remuneration for their period of service to independent members of the Board of Directors Andrey Kostin, Alexander Nekipelov and Hans-Joerg Rudloff, by transfer to each of them of 25,238 shares in Rosneft;
• to approve remuneration for their period of service to members of the Board of Directors Andrey Reus and Nikolay Tokarev, by transfer to each of them of 20,821 shares in Rosneft;
• to approve remuneration for their period of service to member of the Board of Directors Vladimir Bogdanov by transfer of 18,928 shares in Rosneft, to member of the Board of Directors Sergey Bogdanchikov by transfer of 14,021 shares in Rosneft
• to approve compensation of the expenses incurred by independent members of the Board of Directors in connection with exercise by them of their functions, specifically expenses for: accommodation, meals, travel (including VIP lounge services), and other payments and tariffs for air and (or) railway transport services.