The Company’s day-to-day business is directed by its sole executive body and collective executive body, i.e. the CEO and the Management Board. Executive bodies report to the Board of Directors and General Meeting of Shareholders. The CEO is also the Chairman of the Management Board. Appointment and early termination of the authorities of the Management Board are subject to decision by the Board of Directors.
The Management Board acts on the basis of the Company Charter and the Statute on the Management Board, approved by the General Meeting of Shareholders.
The Management Board of JSC Aeroflot held 23 meetings in 2013, three of which were held in the form of absentee voting by members of the Management Board. Issues discussed at the meetings included:
- Design of key performance indicators (KPIs) for the CEO of JSC Aeroflot in 2013;
- Remuneration system and KPIs for aircrew;
- Approval of the Code of Ethics of JSC Aeroflot;
- Design of strategy for Aeroflot Group and subsidiary airlines;
- Development of strategic partnerships between JSC Aeroflot and foreign airlines;
- Ancillary revenue from passenger traffic;
- Flight safety at JSC Aeroflot and subsidiary airlines;
- Launch of the low-cost subsidiary airline, Dobrolet, and of Aurora Airlines;
- Functioning of the Company’s back-up data processing centre;
- Pilot training at civil aviation schools, overcoming shortages of pilots;
- Strategy for raising the Company’s capitalisation and increasing the liquidity of JSC Aeroflot shares;
- Operational issues (sale of air transport services, management of subsidiaries and merged companies, developing the aircraft fleet and route network, opening of regular flights, functioning of JSC Aeroflot branches and representative offices, introduction of a new scale of commission and bonus payments for agents in Russia);
- Innovative technologies, including the development of in-flight Internet service;
- Mid-term plan for implementing the Company’s Innovative Development Programme in 2013-2015;
- Inventory procurement for JSC Aeroflot;
- Programme for improvement of product quality in 2013 (based on NPS research);
- Service development at the Company;
- Aeroflot advertising concepts in Russia and abroad;
- Charity activities and social responsibility;
- Sponsorship of the Volleyball Federation of Russia and CSKA Moscow football club;
- Naming of aircraft after eminent citizens of Russia;
- Painting a Sukhoi Superjet aircraft in the CSKA team colours, painting a Sukhoi Superjet aircraft to mark Aeroflot’s 90th birthday, printing the official logo of Ekaterinburg as an Expo 2020 applicant city on aircraft;
- Sale of Aeroflot-branded souvenirs at sales offices.
Members of the JSC Aeroflot Management Board as of December 31, 2013
Chairman of the Management Board, Chief Executive Officer
Born in 1954
Graduated from Leningrad Polytechnical Institute and from the Palmiro Togliatti Engineering and Economics Institute.
Doctoral Candidate in Economic Science.
From 2004 to 2007: Deputy Minister for Economic Development of the Russian Federation.
From 2007 to 2009: First Vice-President, Head of the Telecommunication Asset Development Division (Sistema Telecom). First Vice-President and Head of the Telecommunication Asset business unit of JSFC Sistema.
From 2009 to present: Chief Executive Officer of JSC Aeroflot, Chairman of the Management Board of JSC Aeroflot.
Does not own shares in JSC Aeroflot.
First Deputy CEO for Aviation Security
Born in 1953
Graduated from the Moscow Railway Engineering Institute.
From 1995 to 2011: Deputy CEO of Aeroflot for Economic and Flight Security, Deputy CEO for Aviation Security, Vice-President for Aviation Security, Deputy CEO for Aviation and Operating Security, First Deputy CEO for Operations.
From 2011 to present: First Deputy CEO for Aviation Security at Aeroflot.
Owns 0.000425% of the shares in JSC Aeroflot.
Deputy CEO for Administration
Born in 1954
Graduated from the Dzerzhinsky Higher Fleet Engineering Institute.
From 1997 to 2013: Head of Administration of Aeroflot, Director of the Department of General Affairs, Deputy CEO and Managing Director of Aeroflot.
From 2013 to present: Deputy CEO for Administration at JSC Aeroflot.
Owns 0.0000002% of the shares in JSC Aeroflot.
Deputy CEO for Information Technology
Born in 1963
Graduated from Leningrad Polytechnic Institute.
From 2004 to 2007: Executive Director of Ramaks International.
From 2007 to 2009: Director of the Development and Control Department of the Telecom Assets business units of Sistema Financial Corporation.
From 2009 to present: Deputy Director of the Department of Information Technologies at JSC Aeroflot, Adviser to the CEO, Deputy CEO for Information Technology.
Does not own shares in JSC Aeroflot.
Advisor to the Deputy CEO for Finance and Network and Revenue Management
Born in 1963
Graduated from the Ordzhonikidze Institute of Management (Moscow).
From 1988 to the 2013: Manager, Deputy Head, Head of the Internal Audit Service, Director of the Internal Audit Department at Aeroflot.
From 2013 to present: Advisor to the Aeroflot Deputy CEO for Finance and for Management of the Network and of Revenues.
Owns 0.000003% of shares in JSC Aeroflot.
Deputy CEO for Customer Service
Born in 1970
Graduated from St. Petersburg University of Economics and Finance.
Doctoral Candidate in Economic Science.
From 2001 to 2008: Deputy Director of the Department for Government Regulation of Foreign Trade Activity at the Russian Ministry for Economic Development and Trade.
From 2008 to 2009: Director of the Government Relations Department at JSFC Sistema.
From 2009 to 2012: Advisor to the CEO, Deputy CEO for Customer Relations, Deputy CEO for Operations and Quality Management at Aeroflot.
From 2012 to present: Deputy CEO for Work with Clients at JSC Aeroflot.
Does not own shares in JSC Aeroflot.
Deputy CEO for Strategy and Alliances
Born in 1959
Graduated from Turin Polytechnical University (Turin, Italy).
From 1990 to 2011: Sales Manager, Vice-President for Sales, Vice-President for Business Development, Vice-President for Alliances, Business Development and International Relations, Deputy Vice-President for Alliances and Strategy of Alitalia.
From 2011 to present: Deputy CEO of Aeroflot for Strategy and Alliances.
Does not own shares in JSC Aeroflot.
First Deputy CEO for Operations
Born in 1973
Graduated in 1996 from the Moscow State Institute of Radio Technology, Electronics and Automation.
From 2006 to 2007: Commercial Director, CEO of LLC SunExpress Travel.
From 2007 to 2008: CEO of Sunrise Asset Management.
From 2008 to 2010: Assistant to the Minister of Transport of the Russian Federation.
From 2010 to 2012: Deputy CEO for Commerce, Deputy CEO for Operations and Commerce, First Deputy CEO for Operations and Commerce at Aeroflot.
From 2012 to present time: First Deputy CEO for Operations at JSC Aeroflot.
Does not own shares in JSC Aeroflot.
Deputy CEO for Finance and Network and Revenue Management
Born in 1978
Graduated from the Moscow State Institute of International Relations.
Doctoral Candidate in Economic Science.
From 2004 to 2007: Deputy CEO for Finance and Investment at JSFC Sistema.
From 2007 until 2009: Director of the Investment Department, Deputy Head of the Finance and Investment Division of JSFC Sistema Telecommunications.
From 2009 to 2013: Advisor to the CEO, Deputy CEO for Finance and Investment, Deputy CEO for Commerce and Finance at Aeroflot.
From 2013 until present: Deputy CEO for Finance and for Management of the Route Network and of Revenues at JSC Aeroflot.
Does not own shares in JSC Aeroflot.
Director of the Flight Safety Department
Born in 1953
Graduated from the Academy of Civil Aviation.
Doctoral Candidate in Technical Science.
From 2001 to 2012: Deputy Head of the Flight Safety Inspectorate, Deputy Director of the Flight Safety Department.
From 2012 to present: Director of the Flight Safety Department.
Does not own shares in JSC Aeroflot.
Deputy CEO, Technical Director
Born in 1961
Graduated from the Moscow Institute of Civil Aviation Engineers.
From 2001 to 2011: Head of Programme, Deputy Director of the Aviabusiness Higher Business School.
From 2011 to present: Acting Technical Director, Technical Director, Deputy CEO and Technical Director at Aeroflot.
Owns 0.000007% of shares in JSC Aeroflot
Deputy CEO for Sales and Property
Born in 1974
Graduated from Moscow State Law Academy and as a Master of Law (LL.M) from Cornell Law School, where he also took MBA courses.
Doctoral Candidate in Law.
From 2006 to 2007: CEO of OJSC Moscow Cellular Telecommunications.
From 2007 to 2009: Director of Transaction Support, Deputy Head of the Legal Division of JSFC Sistema.
From 2009 to 2013: Deputy CEO of Aeroflot for Legal and Property Issues.
From 2013 to the present: Deputy CEO for Sales and Property Issues at JSC Aeroflot.
Does not own shares in JSC Aeroflot.
Deputy CEO, Commander of Flight Operations
Born in 1957
Graduated in 1979 from the Aktyubinsk Higher Civil Aviation Flying School.
From 1994 to 2011: Second Pilot of an Il-86, Second Pilot, Commander, and Pilot Instructor for А310 aircraft, Deputy Commander of the А310 Flight Detachment of Aviation Detachment № 1, Commander of the А320 Flight Detachment, Commander of the А330 Flight Detachment of the Flight Operations Department, Deputy CEO and Director of the Flight Operations Department.
From 2011 to present: Deputy CEO and Flight Director.
Owns 0.000117% of shares in JSC Aeroflot.
Remuneration of the Management Board
The total remuneration paid during 2013 to members of the Executive Board of JSC Aeroflot was RUB 414,219,581.52.
The system for remuneration of Executive Board members, like the remuneration system for all other Company personnel, is structured in a way that enables Aeroflot to attract and retain highly qualified specialists. The level of remuneration is directly dependent on the overall business results of Aeroflot Group. The incentive component of remuneration to senior managers in 2013 was calculated in compliance with the system of performance-related bonuses, tied to key performance indicators (KPIs), as regulated by the Statute on Bonus Payments to Managers and Specialists of JSC Aeroflot (Order of the CEO № 30 dated 2 February 2011). In accordance with the Statute, the incentive component of salary payment to Executive Board members is determined based on the achievement of key performance indicators approved for the respective reporting period (quarterly and annually).
The key performance indicators for Executive Board members relate to overall financial and economic efficiency of Group business (ROIC, EBITDAR, net income for the Group, etc.). Key performance indicators for Executive Board members include both operating indicators and other quality and efficiency indicators characterising overall business of the Group.
An indicator measuring the ratio of overdue receivables to air transport revenue was introduced as a KPI for members of the Executive Board in 2013 in order to eliminate violations and failures identified by the Accounts Chamber of the Russian Federation when auditing the business of JSC Aeroflot in 2010-2011 and nine months of 2012.
On 29 August 2013 the Board of Directors approved a Statute providing for a long-term stock option programme for management of JSC Aeroflot (relating to about 60 managers). The programme is scheduled to last until the end of 2015.
The Statute calls for the formation of a stock option pool using the following two indicators:
Indicator 1 — Increase of the capitalisation of JSC Aeroflot in the respective year (50% weight).
Indicator 2 — The position of Aeroflot in a group of five peer airlines by growth of market capitalisation in the respective year (50% weight). Indicator 2 is only included in the calculation if the trend in capitalisation has been positive. (Aeroflot was in second place by growth of capitalisation among peers in 2013).
| Indicator 1 for the bonus pool |
Indicator 2 for the bonus pool |
| If capitalisation of JSC Aeroflot at the end of December of the respective year is higher than capitalisation on the first trading day of the same year (million USD) |
% of capitalisation growth, which is directed to the option programme. |
Position of JSC Aeroflot in its peer group by the rate of growth of capitalisation in the respective year: indicator 2 is only applied if there has been growth in capitalisation during the year |
% of capitalisation growth, which is directed to the option programme. |
| >350 |
1.50% |
1st in group |
1.50% |
| 200-350 (inclusive) |
1.13% |
2nd in group |
1.13% |
| 100-200 (inclusive) |
0.75% |
3rd in group |
0.75% |
| 0-100 (inclusive) |
0.38% |
4th in group |
0.38% |
| <0 |
0.00% |
5th-6th in group |
0.00% |
Two thirds of accrued remuneration under the option programme for the respective year are paid to programme participants no later than one month after the publication of Group financial results for the relevant year.
One third of accrued remuneration under the option programme for the respective year is withheld until 2016 and paid as a lump sum, based on a resolution by the General Meeting of Shareholders.
A study by Ward Howell found that annual payments to staff under stock option programmes at multinational companies amount on average to about 10-15% of net income, while the figure at Russian companies is 15-20% of net income.
Payment of the balance under the option programme for management is made from net income of JSC Aeroflot for the financial year, based on a resolution by the General Meeting of Shareholders.
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Vitaly SAVELIEV
