Sberbank - Annual Report 2010 - Fundamentals

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# The Fundamentals of Our Corporate Governance System

The Bank’s corporate governance principles and procedures are defined by the Charter and a number of publicly available documents, including the Code of Corporate Governance. The Code’s requirements are aimed not only at improving the Bank’s reputation among its shareholders, customers and employees but also at controlling and reducing risks, maintaining stable growth in the Bank’s financial performance and ensuring that activities envisioned in the Bank’s Charter are performed effectively.

The provisions of the Code are based on current legislation and the Bank’s Charter. They also take into account the OECD Principles of Corporate Governance, the Code of Corporate Conduct issued by the Federal Commission for the Securities Markets of Russia and the Code of Ethical Principles for the Banking Industry approved by the Association of Russian Banks.

The Code defines the general principles of our corporate governance and our approaches toward shareholder, customer and employee relations, as well as the principles for appointing management bodies and governing their operations. It also includes our disclosure policy.

According to the Code, the Bank’s shareholder and investor relations are based on the principle of equal treatment and transparency of information. All shareholders have access to reliable means for registering ownership of shares and may participate in the Bank’s governance through discussions and voting at General Shareholders’ Meetings.

The General Shareholders’ Meeting is Sberbank’s supreme governing body. By participating in it, shareholders are able to influence decision-making on key issues in the Bank’s operations and development and take part in the election of the Supervisory Board, CEO and Chairman of the Management Board and the Audit Committee by cumulative voting. Sberbank’s management uses the General Shareholders’ Meeting as a platform to inform shareholders about its activities, achievements and plans.

Members of the Bank’s Supervisory Board represent its shareholders and are accountable to them for the successful development of the Bank. The Supervisory Board is responsible for general management matters and oversight of the Bank’s executive bodies. The Board is chaired by the Chairman of the Bank of Russia. There are three independent directors on the Board to ensure decisions are made objectively. In 2011, we plan to being evaluating the performance of independent directors.

The Supervisory Board has three commit tees responsible for preliminary consideration of the most important matters and the preparation of recommendations to the Board. Each committee includes independent directors. The Audit Committee is responsible for selecting the auditor and overseeing the Bank’s financial and economic activities. The HR and Remuneration Committee prepares recommendations on attracting highly skilled senior managers and providing incentives for high performance. The key objective of the Strategic Planning Commit tee is improving the Bank’s long-term performance. The Supervisory Board is responsible for appointing the collective executive body of Sberbank, the Management Board, which provides day-to-day management and administration of Sberbank’s activities and is chaired by the CEO and Chairman of the Management Board. The committees of the Management Board are working bodies contributing to the formulation and implementation of common policies in various areas of the Bank’s operations. The Supervisory Board does not interfere with the day-to-day activities of the Management Board, but controls its performance by regularly reviewing reports on the Bank’s results.

To facilitate dialogue between the Bank and its minority shareholders, in 2008 Sberbank created the Minority Shareholders’ Committee, the first such body in Russian corporate governance practice. Members of this advisory body are appointed by the CEO and Chairman of the Management Board, while the chair of the Committee needs to be approved by the Supervisory Board. Minority shareholders can be nominated to the Committee by other shareholders or may nominate themselves. The Committee’s plans and results are reviewed by the Supervisory Board.

The Audit Committee is elected by shareholders each year and oversees the Bank’s compliance with relevant legislative and other requirements and internal control procedures as well as the legality of the Bank’s transactions.

A new collective body, the Tribunal, has been functioning within Sberbank since 2008. It comprises members of the Management Board, the heads of Sberbank’s regional banks and subsidiary banks and the heads of the Central Head Office’s key subdivisions. The body provides a platform for discussing strategic issues in the Bank’s development and for making decisions while taking into account the geographical extent of the Bank’s operations.

More information on the Bank’s governance and management bodies, their functions and composition is available in the Annual Report and on the Bank’s website.

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