Achieving ExcellenceSharing leading practices with directors and executive managementIssue No. 1

http://www.pwc.ru/en/CGCentre

2

I am pleased to present the first issue of Achieving Excellence, a publication issued by our recently created Russian Corporate Governance Centre.

Today’s business environment is complex and volatile. Board members, executive management and those responsible for governance are facing rapidly evolving situations that require timely and nuanced responses. The consequences of getting it wrong are significant. Geopolitics, emerging technologies, new rules and regulations, and changing risks such as cyber and financial management amongst others are testing the most robust Board and management teams. As a result, the expertise, experience, and diversity of perspectives in the Boardroom and management team play a more critical role than ever in ensuring effective oversight and strategy execution.

That is why we created the Russian Corporate Governance Centre. It is designed to assist directors, executives and those responsible for governance meet the challenges of operating in today’s business environment. Our aim is to strengthen the bridge between investors, directors and executives and

help them to successfully navigate and execute against the evolving expectations and regulations. Beyond governance, we help directors, executives and investors to understand better new rules, regulations and risks and to help them make enhanced oversight, management and investment decisions. We do this by meeting with boards of directors, institutional investors, and corporate executives to share and discuss best practices, by publishing practical thought leadership on hot topics, and by holding forums on current governance issues. This publication is designed to inform interested parties of those emerging topics we feel are of high relevance to directors, executives and investors at this time. We will publish it every quarter.

For the first issue we have selected four topics that are receiving a lot of attention and publicity: cybersecurity, working capital management, IFRS and the results of our 2017 Russian Boards Survey.

We hope that you find this publication useful and it provides you with practical and actionable insights, perspectives and ideas. If you do have feedback or any questions please do not hesitate to get in contact.

Best regards Tim Clough Partner, Risk Assurance Leader

Achieving Excellence Issue No. 1

Introduction

Introduction

Subscribe to our mailing list to stay up to date with the latest corporate governance news: www.pwc.ru/en/CGCentre

33

Achieving Excellence Issue No. 1

Seven key questions boards should ask about cybersecurity

Cybersecurity

As the cyber threat landscape evolves, boards are continuing to look for ways to get a better handle on overseeing cybersecurity risk. Boards understand the potential damage a breach can cause, but there is often a knowledge deficit to overcome. Boards are not expected to have all the answers related to cyber risk, but they do need to talk with management and ask the right questions so they can stay on top of this complex and dynamic risk. Here are seven key questions that boards should be asking about cybersecurity.

3. How do we protect sensitive information shared with our counterparties?

4. Do we have cyber insurance?

5. Do we have the right data governance strategy to minimise our exposure?

1. Do we know which of our information assets are exposed to cyber risks?

2. How effective is our cybersecurity strategy at addressing the risks that the business faces?

6. How do we stay current on the threat landscape around the industry and market?

7. Do we have a tested cyber incident response plan?

3. How do we protect sensitive information shared with our counterparties?

4. Do we have cyber insurance?

5. Do we have the right data governance strategy to minimise our exposure?

1. Do we know which of our information assets are exposed to cyber risks?

2. How effective is our cybersecurity strategy at addressing the risks that the business faces?

6. How do we stay current on the threat landscape around the industry and market?

7. Do we have a tested cyber incident response plan?

3. Как мы защищаем конфиденциальную информацию, которой мы обмениваемся с контрагентами?

4. Есть ли у нас договор киберстрахования?

5. Есть ли у нас правильная стратегия управления данными, направленная на минимизацию рисков?

1. Знаем ли мы, какие из наших информационных активов наиболее подвержены киберрискам?

2. Насколько эффективна наша стратегия кибербезопасности и управления киберрисками?

6. Как оставаться в курсе того, какие угрозы существуют в отрасли и на рынке?

7. Есть ли у нас проверенный план реагирования на киберинциденты?

3. Как мы защищаем конфиденциальную информацию, которой мы обмениваемся с контрагентами?

4. Есть ли у нас договор киберстрахования?

5. Есть ли у нас правильная стратегия управления данными, направленная на минимизацию рисков?

1. Знаем ли мы, какие из наших информационных активов наиболее подвержены киберрискам?

2. Насколько эффективна наша стратегия кибербезопасности и управления киберрисками?

6. Как оставаться в курсе того, какие угрозы существуют в отрасли и на рынке?

7. Есть ли у нас проверенный план реагирования на киберинциденты?

Do we know which of our information assets are exposed to cyber risks?

Boards can keep up to speed with the company’s security program by reviewing cybersecurity issues and reports prepared by the chief information officer (CIO) and the chief information security officer (CISO) at their meetings. Holding regular meetings between the company’s CEO, CIO and CISO to discuss the current state of affairs and key business initiatives is also good practice.

Boards may also want to consider meeting with outside experts to get additional insights on the latest cyber trends and risks. During these discussions, boards should request information about their company’s threat environment and its resistance to cyberattacks, as well as related security metrics.

Only 36% of CISOs are very comfortable with the level of reporting that management provides on security metrics.1

1 PwC, Annual Corporate Directors Survey, 2016.

How effective is our cybersecurity strategy at addressing cyber risks?

Many companies are investing in core safeguards to better defend against evolving threats. Some are increasing their cybersecurity budgets, while others are incorporating strategic security initiatives, such as cloud-based and third-party cybersecurity services, data analytics to identify threats and more sophisticated firewalls. Boards should ask management and the CISO about their company’s comprehensive strategy for addressing data security, whether it is effective and creates synergies with business development goals, and whether the program includes advanced technologies to monitor, identify and respond to cyber threats or incidents.

44

Achieving Excellence Issue No. 1

Cybersecurity

How do we protect sensitive information shared with our counterparties?

A company’s third parties (suppliers, contractors, service providers and others) may have access to sensitive information that could create cybersecurity and/or privacy breaches. Boards should understand how their company selects, vets and monitors third parties, along with how these parties protect the company’s sensitive information. They will also want to understand the company’s legal rights related to the third party, particularly if there is a cyber breach.

While employees remain the most cited source of security breaches, incidents attributed to business partners have climbed by 22%.2

2 PwC, Global State of Information Security Survey, 2016.3 Ibid.4 PwC, Insurance 2020 & beyond: Reaping the dividends of cyber resilience, 2016.

Do we need cyber insurance?

The frequency and severity of cyberattacks has many companies considering cyber insurance. This is a new and evolving industry in Russia, making it important that companies thoroughly understand the policies – what is covered, and more importantly, what is not.

Boards will want to understand their company’s insurance policy (if one is purchased) and how the cyber insurance market is changing, particularly as underwriters become more sophisticated.

The cyber insurance market is expected to triple in size from $2.5 billion in 2015 to $7.5 billion in 2020.3

Do we have the right data governance strategy to minimise our exposure?

Companies today create a vast amount of data and information about their business. With this information comes risk. Companies will want to have effective policies, processes, and controls to manage and remove information and data proactively, that is, pre-breach. Boards will want to discuss with management and the CISO whether the company’s data strategy is updated and effective in improving big data storage and processing as well as in minimising security risks.

Only 51% of organisations report having an accurate inventory of data.4

55

Achieving Excellence Issue No. 1

Cybersecurity

How do we stay current on the threat landscape around the industry and market?

Information sharing is one way to learn more about how other companies are addressing cybersecurity and threats. Some companies today are moving toward a more collaborative approach, where intelligence on new cyber threats and response techniques is shared with other market players on a regular basis, and robust data analytics and correlation are used to identify and prevent complicated cyberattack schemes.

It is important that boards ask what their company is doing to learn from others to improve their own resilience and cybersecurity.

Do we have a tested cyber incident response plan?

A security breach can cause serious damage to a company’s reputation and financial position. Boards should discuss with management the company’s incident response plan, what it involves around cybersecurity, how management tests the plan and if it could be improved and more effective.

Only 29% of directors say they are very comfortable with the level of testing of their company’s cyber incident response plan.5

Cybersecurity needs to stay on the agenda of boards. They need to actively talk with management about what they have done to protect their company’s information assets in our increasingly digital world.

5 PwC, Annual Corporate Directors Survey, 2016.

Contacts

Tim Clough Partner, Risk Assurance Leader Tel.: + 7 (495) 967 6018 tim.clough@ru.pwc.com

Roman ChaplyginDirector, CybersecurityTel.: +7 (495) 967 6056roman.chaplygin@ru.pwc.com

For a deeper dive on Cybersecurity, please see: http://www.pwc.ru/en/services/audit/riskassurance/technology.html

66

Achieving Excellence Issue No. 1

Managing working capital

Working capital

According to the Russian Central Bank, at the beginning of February 2016, defaulted loans exceeded the peak levels of 2010. As such many Russian companies are focused on ensuring a balance between the turnover rates for receivables and payables to avoid increased financing costs. The main market tools used to deal with liquidity gaps are factoring and financing supply chains (reverse factoring). However, factoring in Russia is a costly affair, and not every company can afford to give away a portion of its profits to receive payments on the second or third day after shipments. Before using factoring, a company needs to make sure that all possible resources are being used.

Reporting Automation

OrganisationStrategy

Reporting Automation

OrganisationStrategy

Strategy• Assessing how management decision-

making affects working capital. The effect on working capital indicators is taken into account when making management decisions and entering into transactions. This effect is estimated based on a methodology developed and approved by the company.

• The KPI system is aligned and built in a manner such that personal employee development goals support the overall strategic goals of the company.

Organisation• Segregation of duties. Responsibility

is distributed between functions and decision-making levels in accordance with the basic principles of segregation of duties.

• Consistent credit policy. Payment terms are assigned depending on the category and credit rating of the counterparty and

We identified four main areas key to affective working capital management:• Strategy;

• Organisation;

• Reporting; and

• Automation.

In each of the identified areas, market leaders are using a variety of tools and techniques:

in accordance with general policy. This policy is developed with the help of all stakeholders in a manner that speeds up the procedures stipulated under the policy and regulates the approval of any exceptions to the policy.

Reporting• Dashboards with working capital KPIs.

A transparent reporting system has been built that enables tracking KPIs to manage receivables, visualise the obtained data and determine deviations from targets.

• Credit ratings. Counterparties working with companies on deferred payment terms are regularly checked for any signs of financial distress. Based on the results of these checks, counterparties are assigned credit ratings used to adjust payment terms, enforce collaterals and calculate the total credit risk.

77

AutomationERP systems. Available automation tools for working capital management are adequately used. Such tools can include:

• Automation of procurement requests;

• Contract cards;

• Automated suspension of shipments; and

• Calculation of minimum warehouse inventories.

Debt notices based on Big Data analysis. The debt notice process is built in line with the categories of counterparties and takes account of the efficiency of previous collection measures.

Achieving Excellence Issue No. 1

Working capital

For a deeper dive on Treasury and Commodities, please see: http://www.pwc.ru/en/services/ audit/riskassurance.html

Contacts

Konstantin SuplatovDirector, Treasury and CommoditiesTel.: +7 (495) 967 6106 konstantin.suplatov@ru.pwc.com

Alexey SizovManager, Treasury and CommoditiesTel.: +7 (495) 967 6000, ext. 3094alexey.sizov@ru.pwc.com

Effective financial management should be a key focus for the Board and we recommend they ask the following questions relating to the management of working capital.

1. What working capital improvement targets are set in the company and how are they cascaded to the working level?

2. How is the potential impact on working capital considered in management decision-making?

3. How does the company’s IT landscape development strategy consider working capital management improvement targets?

4. Do the analytics available in the current IT system and configured reporting facilitate prompt identification of factors that change the working capital management efficiency trends?

5. How efficient are internal controls over compliance with policies and procedures related to working capital management improvement?

88

Achieving Excellence Issue No. 1

Changes in the International Financial Reporting Standards (IFRS)

Accounting & IFRS

The latest IFRS standards, including IFRS 15 (Revenue), IFRS 16 (Leases), and IFRS 9 (Financial Instruments), are causing plenty of debate in the professional community. In more than a decade as the International Accounting Standards Board (IASB) has not adopted any standards leading to such drastic conceptual changes. We witnessed a similar wave of debate only when IFRS 8 (Operating Segments) was adopted. This new requirement to disclose management accounting data in IFRS financial statements seemed a no-go area before its adoption. Once again, IFRS is entrenching upon the inner workings of companies and is directly affecting long-standing business processes that require close interaction between various departments and desks not only within the finance function, but also within the front office (i.e. the sales and the real estate functions, which up until now were withdrawn from any IFRS

very different than in Europe and ready-made methodological and IT solutions may require substantial adaptation. At the same time companies have six months to implement projects on revenue recognition and financial instruments and eighteen months for the leases project.

A new revenue recognition standard: IFRS 15, Revenue from Contracts with Customers

The new revenue recognition standard developed by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) for the convergence of revenue recognition under IFRS and the United States Generally Accepted Accounting Principles (US GAAP) will come into force on 1 January 2018.

Changes in revenue recognition that will be required with the adoption of the new standard go beyond information disclosures.

matters). IFRS 9 introduces some projections through the expected credit loss and moves away from the approach exclusively based on historical data. IT departments, which are probably already accustomed to the continuously changing requirements of the finance function, will need to be more involved in working with the finance staff than ever before to improve and may be even replace the IT systems that support IFRS calculations. The performance of expert methodologists as well as the efficiency of the entire project team are critical to successful implementation in this case. Bearing in mind the importance of the IT component, what is peculiar to these new standards is that Russian companies will be unable to fully rely on the experience of their international counterparts and copy solutions developed in Europe or purchase a new ERP module. The IT landscape and contracts with counterparties in Russia are

The impact of these changes will depend on the nature of a company's operations and accounting practices. Companies have to consider the need to introduce changes in IT systems, business processes and internal control systems to collect new data and deal with the issues related to the changes in financial statements.

Based on our experience, the following areas may be a subject of Board's interest.

99

Achieving Excellence Issue No. 1

• Revenue is the primary indicator that investors use to assess the performance of a company. Moreover, many companies use this indicator for various management purposes, as well as for setting KPIs. The accounting model under the new standard

may seriously affect revenue. Adopting the new standard may require the recalculation and preparation of comparative data depending on selected transition method. This will affect the comparability of financial statements data against prior reporting

period data and may change the existing trend. Attention should be paid to events that will definitely lead to differences between recognised revenue and invoices issued, including discounts, amendments to contracts, etc.

• To analyse and implement the new standard, a company needs effective teamwork among various departments (sales, finance and operations) and a general understanding of the revenue recognition approach provided in the new standard.

• Coordinated efforts of various departments will enable the company to choose the best accounting method: each individual contract or a group of similar contracts (a portfolio method) may be accounted.

• Revenue recognised under the new rules may be different from the amounts in invoices issued to clients. Companies need to assess these differences and implement an automated algorithm of settlements in their IT systems.

• Data from IT systems required for analysis and accounting are not always available (contract timing, proposed services, changes, etc.).

• Stricter requirements on information disclosures in financial statements may require

companies to reconfigure their IT systems. In some cases, companies may decide to replace software, which entails additional expenses.

• Analysing and introducing changes into existing systems may take from a few months to two years.

• To assess what changes need to be made to accounting, reporting, IT systems, business processes and internal control systems starting from 1 January 2018, all companies need to

analyse and assess the implications of adopting the new revenue recognition standard. Boards must discuss with

management the findings of this analysis and the action plan for the transition to the new standard.

Do we know how the implementation of the new standard will affect our company?1

2

3

Are we ready to take on the challenges of adopting the new standard?

Do we have a reliable system for managing change and implementing new standards?

1010

Achieving Excellence Issue No. 1

A new lease accounting standard: IFRS 16, Leases

Under current IFRS accounting rules, tenants recognise lease transactions within operating or financial leases, depending upon a number of IFRS rules and classification tests. This may sometimes lead to recognition or no recognition of assets and liabilities assumed as a result of transactions that are economically similar in the balance sheet. Currently, the majority of lease agreements are classified as operating leases, and assets and liabilities associated with these leases are not recognised in the balance sheet.

To better understand a company’s financial position and assess its lease liabilities, investors and analysts have historically used calculations with correction coefficients that help to estimate the company’s liabilities associated with future lease payments. Such estimations usually do not offer sufficiently accurate information: they are not intended for a wide range of users of financial statements and require additional efforts after the company’s financial statements have been issued.

To deal with this issue and to provide financial statement users with better information about leases and respective liabilities, the International Accounting Standards Board (IASB) developed a new lease standard, IFRS 16, Leases, which was

issued in January 2016. The new lease standard introduces fundamental changes in how lease transactions are treated. These changes will significantly affect all companies that use lease agreements or leasing as a means to gain access to assets. IFRS 16 must be adopted from 1 January 2019.

Under the new rules, tenants (lessees) may no longer recognise leases on off-balance-sheet accounts and must recognise liabilities (and respective assets) under all lease agreements that were earlier recognised as operating leases in the balance sheet. Requirements to information disclosures related to lease agreements are also becoming stricter.

With the release of the new lease standard, boards are busy discussing plans for the transition to IFRS 16. Boards recognise that the introduction of the new standard will have possible tangible implications, but they cannot have answers to all questions associated with the introduction of the new standard and must interact with the management and ask the right questions to stay tuned in to all the details.

The adoption of IFRS 16 will substantially affect many widely used financial indicators. For example, it will lead to increased net debt and EBITDA. As a result, this will significantly impact covenants of credit agreements, credit ratings, borrowing costs and the interpretation of financial indicators by internal and external stakeholders.

The transition to the new lease standard is possible using a simplified method that does not require recalculating comparative 2018 financial data for the 2019 financial statements. However, in this case, the users of the financial information will not be able to compare the 2018 and 2019 financial indicators. Accordingly, boards are considering whether the retrospective method for the transition to the new lease standard should be applied, where comparative 2018 financial indicators recalculated under the new standard are shown in the 2019 financial statements.

How will the new standard affect financial statements and indicators?1

What method for the transition to the new lease standard should we choose?2

11

Как новый стандарт повлияет на финансовую отчетность и финансовые показатели компании?

11Accounting & IFRS

Achieving Excellence Issue No. 1

We believe that internal and external stakeholders will want to understand how the new lease standard will affect them long before 1 January 2019, when it comes into force. A timely evaluation of what agreements and stakeholders will be impacted by the revised financial coefficients and indicators will enable companies to reconsider these agreements in advance and to start their interactions with stakeholders. Companies also need to check whether they have any “frozen” conditions related to accounting principles in their existing or future financial

arrangements in order to avoid any surprises and complex negotiations with creditors.Companies also need to inform all their internal stakeholders in due time. Organising effective teamwork among various departments (for example, finance, IT, real estate, legal and other departments involved in business processes related to leases) is one of the key success factors in implementing the new lease standard.

The introduction of the new lease standard will require making decisions on an increasing number (compared to the current standard) of accounting policy matters and professional judgements (including determining the lease term, determining whether the lease agreement exists, identifying services that are not lease services etc.). At this time, many corporations have launched the process of implementing the new standard, as it requires preliminary planning and accomplishing a number of labour-intensive tasks:

• assessing the impact of IFRS 16 on the lease agreements;

• developing an accounting methodology in accordance with the IFRS 16 requirements;

• choosing and implementing an IT solution (installing a new accounting system module or modifying the existing one) for the accounting treatment of lease agreements;

processing large amounts of data that are currently missing in the accounting system.

The timely planning of IFRS 16 implementation will enable companies to:

• inform all stakeholders about future changes in the financial indicators in advance;

• reduce the risks of unexpected costs and effects on the financial statements;

• introduce controls in a timely manner, when entering into long-term lease and credit agreements with covenants that restrict certain financial indicators (for example, net debt), and assessing the need to review long-term lease and credit agreements.

Have all stakeholders been informed about the changes?3

What do we need to do to organise the introduction of the new lease standard and to reduce the risks of unexpected costs and their effect on the financial statements?4

Contacts

Anna UzornikovaPartner, Accounting Advisory LeaderTel.: + 7 (495) 967 6323 anna.uzornikova@ru.pwc.com

Kira ErmolovaDirector, Accounting Advisory Tel.: +7 (495) 967 6000 ext. 2896kira.ermolova@ru.pwc.com

For a deeper dive on Accounting & IFRS, please see: http://www.pwc.ru/en/services/audit.html

1212

Achieving Excellence Issue No. 1

2017 Russian Boards Survey – Boards and Top Management: Allies or Rivals

Corporate governance

For the past six years, we have conducted an annual survey of Russian board members to gain a better understanding of how they are dealing with today’s challenges. In 2017, we decided to find out how directors and executive management interact, whether they are allies or rivals, and what decisions they will make to better organise their work and become a truly agile team. The survey findings were revealing.

When asked how they assess their interactions with management, 78% of board members were generally positive. However, when we suggested that the directors assess their interactions on the most concrete and critical areas under the board’s remit, the positive attitude of the majority of respondents dissipated. On average, it turns out that 35% to 55% of board members report that they have been unable to establish constructive dialogue with management in the areas of succession planning, compensation and incentives, ensuring the efficient operation of risk management systems, nurturing key talent, delivering on strategy and developing

technology. Directors have proposed to address this ineffectiveness in a number of different ways. Most directors believe that more frequent and less formal discussions about critical areas that require the attention of both parties could improve the situation.

However, many respondents called for measures that are more drastic. Specifically, replacing some or all of the executive management team with more effective and agile individuals (proposed by 42% of the directors surveyed).

A significant number of those who support the reshuffling of management have good reason to do so. The past year has shown a number of cases (noted by about 40% of respondents) of management’s inability to deliver against the defined strategy. This problem of execution is not so much a product of the excessive ambitiousness of these strategies as it is of the ineffective interactions between boards and management on strategic matters – and of the absence of the “right” managers.

Only 42% of directors believe that their company’s management team is sufficiently competent to deal with the current demands exerted upon their businesses. Furthermore, one out of three directors complain that top managers are inflexible – in an age when flexibility is a critical quality—and believe that managers lack insight on local and global market trends.

Are companies prepared to replace their CEOs?

Half of the directors surveyed believe that top managers have not established

When asked how the board members assess their interactions with management

were generally positive 78%

have been unable to establish constructive dialogue with management in the areas of :

35%

to 55%

succession planning

compensation and incentives

nurturing key talent, delivering onstrategy and developing technology

ensuring the efficient operationof risk management systems

However

1313

sufficient succession plans (if they have made any at all). Moreover, most board members (55%) are struggling to coordinate with top management in this area. Only 5% of the companies surveyed have established KPIs that assess top managers on planning their own succession. Poor board performance concerning succession planning can be attributed to the lack of real authority among boards to appoint top managers and, accordingly, to engage in succession planning themselves.

Additionally there is a real deficit of qualified senior executives on the market (indicated by 72% of Russian CEOs) and only 7% of directors have any idea who would replace their current CEO. Most directors (53%) responded that they “rather do not know” or “have no idea” who would be the next leader of their company.

Given the challenges surrounding succession planning and replacing top managers, the survey also explored how management’s performance is evaluated and compensated. Do companies have the capacity to adopt new incentive structures for top managers as a way of improving operational performance? To what extent do the interests of the new generation

of executives align with the interests and objectives of their company? What we found is that there is a great deal of room for improvement. Almost half (47%) of the directors surveyed believe that they have failed to build an optimal incentive system for managers. Furthermore, the survey revealed that incentive structures for top managers are typically not aligned with to the company’s KPIs. When establishing KPIs for top managers, boards tend to review the company’s past performance, adjusted to the general state of the market (as reported by 61% of respondents), rather than looking to the future. Only 39% of directors reported that their executives’ KPIs are aligned to the company’s strategy and only 25% have established executive KPIs that include metrics related to technological adoption and development. Meanwhile, objectives set by key business partners and competitors are taken into account, respectively, in only 9% and 11% of companies.

Now let us look at the board themselves. In the 12 months since the previous survey, directors have become more critical of their own performance. Approximately one-third of respondents stated that their board has a long way to go towards establishing a solid

Does your board understand who would succeed the present executive team in the medium or long term, or in case of force majeure?

7% 14%41% 38%

Yes Most likely yes Most likely no No

Does your board understand who would succeed the present executive team in the medium or long term, or in the case of force majeure?

Achieving Excellence Issue No. 1

Corporate governance

1414

Achieving Excellence Issue No. 1

Corporate governance

team capable of making prompt decisions and of reacting appropriately to long-term trends and emerging risks in the market.

A quarter of respondents stated that their board is frequently unable to see the big picture and rarely participates in helping the company to overcome challenges. It is also telling that a third of respondents report that their boards still fail to regularly perform self-assessments and identify areas requiring improvement (both as a collective and individually).

To be successful in coordinating their work with the top management, we recommend that boards should focus on:

1. Start the executive succession planning well in advance.

2. Establish an effective executive motivation and compensation scheme.

3. Engage with top management more frequently, including in less formal settings, and openly discuss what they both consider to be the most important issues.

4. Represent themselves as a cohesive and effective team, carry out regular assessments of their performance, self-assessment and independent assessment.

Contacts

Elena DubovitskayaDirector, Corporate Governance and SustainabilityTel.: +7 (495) 967 6441elena.dubovitskaya@ru.pwc.com

Anna Yakovleva Manager, Corporate Governance CentreTel.: +7 (495) 967 0000anna.yakovleva@ru.pwc.com

International

2015 2016 2017

5847

65

Industry Financial

Risk management

Technology

Знания и опыт кандидатов в каких областях принесут максимальную пользу совету директоров Вашей компании в случае их избрания в состав совета:

Legal Human resourcesMarketing

80

70

60

50

40

30

20

10

0 2015 2016 2017

19 22

46

2015 2016 2017

4334 39

2015 2016 2017

4533

39

2015 2016 2017

19 1522

2015 2016 2017

28

9

24

2015 2016 2017

30 2531

2015 2016 2017

30 3037

80

70

60

50

40

30

20

10

0

2015

19

What expertise and experience among candidates would benefit your company the most, should such candidates be hired?

Russian Boards Survey 2017

Boards and Top Management: Allies or Rivals

42%of board members find it advisable to replace some or all of the top managers

40%of board members say that top management is not able to effectively deliver on strategy

78%of board members assess their interactions with top management positively

www.pwc.ru/russianboards

53%of board members do not know who would succeed the current CEO

For a deeper dive on the survey findings, please see: http://www.pwc.ru/en/russianboards

Helping directors meet the challenge of their critical roles

15

PwC’s Corporate Governance Centre

What we do

Strengthen the bridge between investors and management

Help directors comply with evolving expectations

Conduct meetings with boards of directors and top management

How we can help

Subscribe to our mailing list to stay up to date with the latest corporate governance news: pwc.ru/en/CGCentre

Enhance the oversight arrangements you have in place across a group of companies

Perform a comprehensive assessment of the corporate governance framework or its separate components

Assess the performance of Board of Directors and its committees

Establish corporate governance framework and mechanisms as prescribed by applicable regulations, requirements and standards (i.e. Corporate governance codes, listing rules, methodological guidelines and recommendations, etc.)

Build an effective system of interaction between shareholders and investors

Increase the efficiency of competences among the governing bodies and within the decision-making processes

Enhance the transparency of your business

Reduce the likelihood of corporate conflicts

Prepare your company for a successful IPO

Share research and insights on corporate governance best practices

Organise forums on critical current issues

www.pwc.ru

2017 PwC. All rights reserved.