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Supervisory Board

The Supervisory Board is a key element in OJSC ALROSA’s system of corporate governance, and conducts strategic management of OJSC ALROSA’s activities on behalf of and in the interests of OJSC ALROSA. The Supervisory Board is elected by the Annual General Meeting of shareholders to serve until the next Annual General Meeting of shareholders. The Supervisory Board’s remit includes issues relating to the overall management of OJSC ALROSA’s activities, with the exception of issues legislation and the Company’s Charter places within the remit of the Annual General Meeting of shareholders.

Under the Company’s Charter, 15 people are elected to the Supervisory Board. The chairman of the Supervisory Board is elected by the members of their Supervisory Board from their number, and must attract the votes of 75% of the members of the Supervisory Board in attendance at the meeting.

In 2012, the Supervisory Board conducted its activities with two different line-ups of personnel.

The composition in operation until 30 June 2012 is set out in the following table:

Name
1. Yuzhanov, Ilya Arturovich
2. Alexeev, Gennady Fedorovich
3. Andreev, Fedor Borisovich
4. Akhpolov, Alexandr Alikhanovich
5. Barsukov, Sergey Vladimirovich
6. Borisov, Yegor Afanasyevich
7. Grigoryeva, Yevgenia Vasilyeva
8. Danchikova, Galina Innokentyevna
9. Demyanov, Ivan Kirillovich
10. Dzhabrailova, Lyubov Konstantinovna
11. Dubinin, Sergey Konstantinovich
12. Yefimov, Viktor Petrovich
13. Rybkin, Vladimir Borisovich
14. Tikhonov, Anatoly Vladimirovich
15. Urinson, Yakov Moiseyevich

From 30 June 2012 until the end of the reporting period, the Supervisory Board operated with the following line-up:

1

YUZHANOV Ilya Arturovich
Chairman of the Supervisory Board

Born: 1960.

A member of ALROSA’s Supervisory Board since 2009, Chairman since 2011. Also a member of the Board of Directors of the Otkrytiye financial corporation and a member of the Supervisory Board of OJSC NOMOS BANK. Between 2000 and 2011, Mr Yuhanov was a member of the Boards of directors of companies such as OJSC RAO UES of Russia, OJSC Uralkali, OJSC Novatek, OJSC Kirovsky Zavod, OJSC Polymetal and OJSC MRSK Holding. Mr Yuhanov previously held various posts in the Leningrad/St. Petersburg city administration, as well as serving as Chairman of the Russian Federation State Committee for Land Resources and Land Management, the Russian government minister for land policy, construction and housing and utilities infrastructure and the Russian government minister for anti-monopolies policy and enterprise support.

Graduated from the Faculty of Economics at Leningrad State University in 1982.

Does not own any shares in OJSC ALROSA.

2

ANDREEV Fedor Borisovich
Member of the Supervisory Board

Born: 1966.

President of OJSC ALROSA since 2009. Between 2005 and 2009, Mr Andreev was senior Vice-president of OJSC Russian Railways, where he was responsible for the Company’s economic and financial policy. Between 2003 and 2005, he was Vice-president of OJSC Russian Railways. Between 2002 and 2003, Mr Andreev was first Vice-president of ALROSA, where he was in charge of financial and economic issues. Between 1999 and 2001, he served as chief executive of OAO BaltoneximBank. Between 1997 and 1999, he was deputy Chief executive of OJSC Baltoneximbank. Between 1992 and 1996, Mr Andreev worked at the St. Petersburg branch of Tveruniversalbank as an economist in the fund department, senior economist in the securities department, head of the liabilities management department and director. In 1991 and 1992 he was leading specialist and chief specialist in the marketing and development department of the Tver-based commercial trading and industrial company Tverkommertsiya Ltd. From 1989 to 1991, Mr Andreev worked as an economist and then leading economist in the department of finance and lending at the Tver commercial bank.

Graduated from Leningrad State University in political economy in 1989.

Owns 0.1142% of ordinary ALROSA shares.

3

BARSUKOV Sergey Vladimirovich
Member of the Supervisory Board (deputy chairman of the Supervisory Board as of 6 July 2012)

Born: 1971.

Director of the department of financial policy at the Russian Finance Ministry since 2010. Between 2008 and 2010, he served as an aide to the deputy prime minister and finance minister of the Russian Federation. Between 2007 and 2008, Mr Barsukov was first deputy Chief executive of OJSC AIZhK. Between 2005 and 2007, he was managing director of the OAO KITFinance investment bank. Between 2004 and 2005, he was deputy head of the Russian Transport Ministry’s Federal Highway Agency.

Graduated from the A.F. Mozhaysky Red Banner Military Space Engineering Academy in 1993, specialising in “mathematical support for automated systems for the collection and processing of information”. Graduated from St. Petersburg State University in 2005, specialising in state and municipal management.

Does not own any shares in OJSC ALROSA.

4

BORODIN Pavel Andreevich
Independent member of the Supervisory Board

Born: 1971.

Vice-president of OJSC VimpelCom since 2010. Between 2008 and 2010, he was deputy Chief executive of the Federal Fund for Assistance in the Development of Housing Construction. Between 2007 and 2008, he was deputy director of the Russian Government Staff’s department for regional development and the agro-industrial complex. Between 2004 and 2007, Mr Borodin served as Deputy director of the Russian Government Staff’s regional monitoring department.

Graduated from the Faculty of History at Lomonosov Moscow State University in 1994 and from the Faculty of Law at Lomonosov Moscow State University in 1999. Graduated from the Faculty of International Relations at the Russian Foreign Ministry’s Diplomatic Academy in 2005. Ph.D. in History (2000).

Does not own any shares in OJSC ALROSA.

5

GURYEVA Natalya Filippovna
Independent member of the Supervisory Board

Born: 1952.

Deputy head of the Verkhnevilyuysky District in Sakha Republic (Yakutia) since 2009. Between 2006 and 2009, Ms Guryeva served as Head of the economic development and finance department in the administration of the Verkhnevilyuysky District in Sakha Republic (Yakutia).

Graduated from the Kemerovo State Institute of Culture in 1975, graduated from the Khabarovsk Academy of Culture and Art in 1995 and graduated from the Sakha Republic (Yakutia) President’s Institute of Management in 2005. Specialist disciplines: economics and social services management, manager and economist, municipal administration.

Does not own any shares in OJSC ALROSA.

6

DEMYANOV Ivan Kirillovich
Member of the Supervisory Board

Born: 1942.

Vice-president of OJSC ALROSA since 1995.

Graduated from the Khabarovsk Higher Party School in 1982.

Owns 0.0007% of ordinary OJSC ALROSA shares.

7

DZYUBENKO Valery Viktorovich —
Independent member of the Supervisory Board

Born: 1956.

Deputy chief executive of the Sakha Republic (Yakutia) Committee for Precious Metals and Precious Stones state unitary enterprise since 2008. Between 2005 and 2008, Mr Dzyubenko worked as head of the planning and economic department at ALROSA’s Mirny MPD.

Graduated from the Dnepropetrovsk mining institute in 1978, specialising in “the economics and organisation of the mining industry”.

Does not own any shares in OJSC ALROSA.

8

DUBININ Sergey Konstantinovich —
Independent member of the Supervisory Board

Born: 1950.

Chairman of the Supervisory Board of OJSC VTB Bank.

Member of the Supervisory Board of OJSC ALROSA since 2009. Also a member of the M\Boards of directors at the OJSC Otkrytiye financial corporation, CJSC VTB Capital, CJSC VTB Capital Holding and VTB Capital IB Holding LLC. Between 2008 and 2012, he was a member of the Board of Directors at VTB Capital Plc. Between 2005 and 2008, Mr Dubinin was financial Director and a member of the Executive board of OJSC RAO UES of Russia.

Graduated from the Lomonosov Moscow State University specialising as an economist and a tutor in political economy, doctor of economics (1990).

Does not own any shares in OJSC ALROSA.

9

YEFIMOV Viktor Petrovich —
Member of the Supervisory Board (first deputy chairman of the Supervisory Board since 6 July 2012)

Born: 1956.

Chief executive of the OJSC Republican Investment Company since 2012. In 2011 and 2012, he served as Deputy Chief-of-staff to the president and government of Sakha Republic (Yakutia). Between 2007 and 2011, Mr Yefimov served as minister of property relations in Sakha Republic (Yakutia).

Graduated from Yakutsk State University in 1980 as a construction engineer, graduated from the Khabarovsk Higher Party School in 1990 as a political scientist, graduated from the Russian President’s State Service Academy in 1997 as an economist and manager.

Does not own any shares in OJSC ALROSA.

10

ZAKHAROV Dmitry Petrovich —
Independent member of the Supervisory Board

Born: 1962.

Chief executive of RIC-Finance LLC since 2008. In 2007 and 2008, Mr Zakharov worked as Deputy Chief executive of RIC LLC.

Graduated from the Faculty of Economics at Novosibirsk Kuybyshev Construction Engineering Institute in 1989.

Does not own any shares in OJSC ALROSA.

11

MESTNIKOV Sergey Vasilyevich —
Member of the Supervisory Board

Born: 1981.

First deputy minister for property and land relations in Sakha Republic (Yakutia) since 2012. Between 2010 and 2012, Mr Mestnikov served as Deputy Head and Head of the sectariat of the prime minister of Sakha Republic (Yakutia). Between 2008 and 2010, he served as Head of the department of agro-industrial, housing and utilities, media and social sector property at the Ministry of Property Relations in Sakha Republic (Yakutia).

Graduated from Ammosov Yakutsk State University in 2003, specialising in law.

Does not own any shares in OJSC ALROSA.

12

MOROZOV Denis Stanislavovich —
Member of the Supervisory Board

Born: 1973.

Since 2011, the Russian Federation’s representative on the Board of Directors of the European Bank for Reconstruction and Development, Executive Director for the Russian Federation, Belarus and Tajikistan. Since 2011, Mr Morozov has also been a member of the Board of Directors of the Russian Agency for Export Loans and Investment Insurance CJSC. In 2010, he worked as President, General Director, Chief executive and member of the Board of Directors of OJSC Uralkali. In 2009 and 2010, he was a member of the Board of Directors of OJSC United Grain Company. In 2006 and 2007, he was a member of the Board of Directors of CJSC Polyus Gold. Between 1999 and 2008, Mr Morozov worked at OJSC Norilsk Nickel, where he served in the following capacities: Head of the corporate entities department, Head of the investors department, Head of the Board of Directors office, Head of the legal department, Deputy chief executive (on corporate and legal issues), Deputy Chief executive, member of the Executive board, General Director, chief executive and member of the Board of Directors at OJSC Norilsk Nickel.

Graduated from the Faculty of Economics at Lomonosov Moscow State University in 1993, specialising in political economy, and from the Faculty of Law at Lomonosov Moscow State University in 1996, specialising in legal studies. Graduated from the Swiss Banking School in 1999, specialising in commercial banking. Ph.D. in Economics (2000). Studied in the US, first at Harvard Business School and then the School of International and Public Affairs at Columbia University.

Does not own any shares in OJSC ALROSA.

13

 OSIPOVA Nina Antoninovna —
Member of the Supervisory Board

Born: 1957.

Since 2007, Deputy Finance Minister of Sakha Republic (Yakutia), with the status of deputy permanent representative of Sakha Republic (Yakutia) to the President of the Russian Federation.

Graduated from the Plekhanov Moscow National Economy Institute in 1978, specialising in the economics of industry.

Does not own any shares in OJSC ALROSA.

14

 TIKHONOV Anatoly Vladimirovich —
Member of the Supervisory Board

Born: 1969.

Since 2008, member of the Executive board and First Deputy Chairman of the Bank for Development and Foreign Economic Affairs (Vnesheconombank) state corporation. Between 2003 and 2008, Mr Tikhonov was Deputy governor of Krasnoyarsk Territory, Head of the territorial administration’s permanent representation at the government of the Russian Federation and Deputy prime minister of Krasnoyarsk Territory.

Graduated from Lomonosov Moscow State University in 1995, specialising in legal studies.

Does not own any shares in OJSC ALROSA.

15

 URINSON Yakov Moiseevich —
Member of the Supervisory Board

Born: 1944.

Deputy Chief executive of OJSC Rosnano since 2011. Between 2008 and 2011, Urinson was Deputy Chief executive of the Russian Nanotechnologies Corporation state corporation. In 2008, he was head of the design centre that completed the restructuring of OJSC RAO UES of Russia and OJSC MRSK Holding. Between 2000 and 2008, he worked as Deputy chief executive and Head of the corporate centre of OJSC RAO UES of Russia.

Graduated from the Plekhanov Moscow National Economy Institute in 1966, specialising in “economic cybernetics”, Ph.D. in Economics (1970), Doctor of Economics (1980), professor.

Does not own any shares in OJSC ALROSA.

At the seventh national Director of the Year awards in 2012, Ilya Arturovich YUZHANOV, Chairman of the Supervisory Board of OJSC ALROSA, and Sergey Konstantinovich DUBININ, Chairman of the Board of Directors of OJSC VTB Bank and member of the Supervisory board of OJSC ALROSA, won the prize for “Chairman of the Board of Directors: making a contribution to the development of corporate governance”. The pries are awarded by the Association of Independent Directors (AND) and the Russia Union of Industrialists and Entrepreneurs (RSPP) in partnership with PwC.

Meetings (absentee votes) of the Supervisory Board in 2012

The Supervisory Board held five meetings and 10 absentee votes in 2012. In total, the Supervisory examined 210 issues in 2012.

Among the principal issues considered by the Supervisory board during the period, the following need to be pointed out:

  • approval of the Rules and Regulations governing the internal monitoring of ALROSA’s financial and business activities;
  • the inclusion of candidates proposed by OJSC ALROSA shareholders in the list of candidates for elections to the Supervisory board and the Internal audit commission;
  • the announcement of the Annual General Meeting of shareholders;
  • preliminary approval of the annual report;
  • recommendations to OJSC ALROSA’s Annual General Meeting of shareholders on the distribution of profits based on the results of 2011, including in respect of the sie of the dividend per OJSC ALROSA share and the procedures for its payment;
  • the engagement of OJSC ALROSA’s auditors under Russian accounting standards, as well as auditors to carry out a compulsory audit of the ALROSA Group’s consolidated financial statements for 2012 in accordance with International Financial Reporting Standards;
  • the transfer without charge of the Company’s airport complex;
  • OJSC ALROSA’s participation in other organisations, in particular the self-regulated Moscow-based organisation EnergoAuditEkspertia non-commercial partnership, the Moscow-based Solid Minerals technological platform and the Moscow-based non-commercial partnership “Club of Directors on Science and Innovation”;
  • the contribution of funds to set up (increase) the endowments of the Ammosov Northeastern Federal University’s endowment management foundation and the Development of St. Petersburg University endowment management foundation;
  • the contribution of funds to the federal state autonomous higher professional education institution Lomonosov North Arctic Federal University;
  • the development of a procedure for the application of voluntary mechanisms relating to OJSC ALROSA’s environmental responsibilities, based on international standards and subject to independent checks or confirmation of the development of proposals for the compulsory regular publication of non-financial reports on the sustainability of the Company’s development, including its environmental responsibilities;
  • approval of the Rules and Regulations for the remuneration of members of OJSC ALROSA’s Executive board, as well as the Rules and Regulations for the remuneration of the President of OJSC ALROSA;
  • OJSC ALROSA’s Long-term development plan for the period 2012-2021;
  • Implementation of OJSC ALROSA’s innovations development and technological modernisation programme;
  • priority areas of activity: the contribution of funds to finance the endowment for the Skolkovo Institute of Science and Technology;
  • the main areas of the programme for the sale of non-core assets;
  • the results of OJSC ALROSA’s purchasing activity (quarterly);
  • the election of the Chairman, First Deputy Chairman and Deputy Chairman of the Supervisory board;
  • the approval of rules and regulations governing the Supervisory Board’s strategic planning, audit and human resources and remuneration committees;
  • the composition of the Supervisory Board’s committees;
  • approval of a transaction in which there is an interest: the agreement between the Government o Sakha Republic (Yakutia) and OJSC ALROSA on cooperation on providing social support for orphans and children without parental care;
  • core assets;
  • the numerical strength and composition of the Executive Board of OJSC ALROSA;
  • OJSC ALROSA’s governance system;
  • OJSC ALROSA’s involvement in the creation (founding) of an independent non-commercial organisation to provide pre-school education;
  • approval of OJSC ALROSA’s Long-term development plan for the period 2012-2021;
  • approval of OJSC ALROSA’s consolidated budget for 2013;
  • approval of the ALROSA Group’s sales policy plan for 2013;
  • approval of the Rules and Regulations governing purchases by OJSC ALROSA;
  • approval for transactions in which there is an interest.

In 2012, the Annual General Meeting of OJSC ALROSA’s shareholders decided that compensation should be paid for work performed on the Supervisory Board during the corporate period (year) running from 30 June 2011 to 30 June 2012 to members of OJSC ALROSA who are not public sector employees and who are neither an individual executive body nor members of OJSC ALROSA’s collegiate executive body, in a sum stipulated in accordance with the Rules and Regulations for the remuneration of members of OJSC ALROSA’s supervisory board, as approved by the Annual General Meeting of OJSC ALROSA’s shareholders on 30 June 2011:

  1. Alexeev, Gennady Fedorovich — RUB 990,000 (nine hundred and ninety thousand).
  2. Dubinin, Sergey Konstantinovich — RUB 990,000 (nine hundred and ninety thousand).
  3. Yefimov, Viktor Petrovich — RUB 990,000 (nine hundred and ninety thousand).
  4. Rybkin, Vladimir Borisovich — RUB 990,000 (nine hundred and ninety thousand).
  5. Tikhonov, Anatoly Vladimirovich — RUB 1.08 million (one million and eighty thousand).
  6. Urinson, Yakov Moiseyevich — RUB 1.08 million (one million and eighty thousand).
  7. Yuzhanov, Ilya Arturovich — RUB 1.17 million (one million one hundred and seventy thousand).

Payments to members of the Company’s Supervisory Board totalled RUB 7,29 million.

The table below provides information on the participation of all members of one or both compositions of the Supervisory Board in the work of this body in 2012:

Name Participation in corporate governance events in 2012
total meetings absentee votes
1. Alexeev G.F. (up to 30.06.2012) 6 3 3
2. Andreev F.B. 14 5 9
3. Akhpolov A.A. (up to 30.06.2012) 6 3 3
4. Barsukov S.V. 15 5 10
5. Borisov Y.A. (up to 30.06.2012) 6 3 3
6. Borodin P.A. (from 30.06.2012) 7 1 6
7. Grigoryeva Y.V. (up to 30.06.2012) 6 3 3
8. Guryeva N.F. (from 30.06.2012) 9 2 7
9. Danchikova G.I. (up to 30.06.2012) 6 3 3
10. Demyanov I.K. 14 5 9
11. Dzhabrailova L.K. (up to 30.06.2012) 6 3 3
12. Dzyubenko V.V. (from 30.06.2012) 9 2 7
13. Dubinin S.K. 15 5 10
14. Yefimov V.P. 15 5 10
15. Zakharov D.P. (from 30.06.2012) 9 2 7
16. Mestnikov S.V. (from 30.06.2012) 9 2 7
17. Morozov D.S. (from 30.06.2012) 9 2 7
18. Osipova N.A. (from 30.06.2012) 8 2 6
19. Rybkin V.B. (up to 30.06.2012) 6 3 3
20. Tikhonov A.V. 15 5 10
21. Urinson Y.M. 15 5 10
22. Yuzhanov I.A. 15 5 10

The Supervisory Board’s specialist committees

Three committees operate under the auspices of the Supervisory Board: the strategic planning committee, the audit committee and the human resources and remuneration committee. The committees carry out preliminary examination of the most important issues relating to the Management of the Company, and put their recommendations forward to meetings of the Supervisory Board.

Strategic Planning Committee

The Strategic Planning Committee was set up by the Supervisory Board on 20 April 2010. The committee works to improve the effectiveness of OJSC ALROSA’s activities over the long term. The committee plays the main role in defining the strategic aims of the Company’s activities, developing its priority areas of activity, drawing up recommendations in respect of the Company’s dividend, credit, investment and integration policy, as well as assessing the effectiveness of the Company’s activities over the long term.

Individuals who are not members of the Supervisory Board may be elected to the committee. The members of the Strategic Planning Committee were elected on 6 July 2012.

The composition of the Strategic Planning Committee (as at 31 December 2012) is as follows:

Committee Chairman —Borisov, Yegor Afanasyevich;

Committee members:

  • Andreev, Fedor Borisovich;
  • Barsukov, Sergey Vladimirovich;
  • Danchikova, Galina Innokentyevna;
  • Yefimov, Viktor Petrovich;
  • Tikhonov, Anatoly Vladimirovich.

The Strategic Planning Committee held four meetings in 2012.

Audit Committee

In order to analyse and support procedures relating to internal monitoring, audit, financial reporting and risks related to full disclosure of information, on 20 April 2010 the Audit Committee was set up under the auspices of the Supervisory Board. The committee consists of members of the Supervisory Board with professional experience in the field of internal monitoring, audit, finances, accounting and managing financial institutions.

The Supervisory Board elected members of the Audit Committee on 6 July 2012.

The composition of the Audit Committee (as at 31 December 2012) is as follows:

Committee Chairman — Dubinin, Sergey Konstantinovich;

Committee members:

  • Barsukov, Sergey Vladimirovich;
  • Mestnikov, Sergey Vasilyevich;
  • Osipova, Nina Antoninovna;
  • Tikhonov, Anatoly Vladimirovich.

The Audit Committee held seven meetings and four absentee votes in 2012.

Human Resources and Remuneration Committee

The Human Resources and Remuneration Committee was set up by the Supervisory Board on 20 April 2010. The committee works to recruit qualified specialists to manage the Company and to create the necessary incentives to ensure they are successful. The committee consists of members of the Supervisory Board who do not hold positions in the Company.

The members of the Human Resources and Remuneration Committee were elected on 6 July 2012.

The composition of the Human Resources and Committee (as at 31 December 2012) is as follows:

Committee chairman — Urinson, Yakov Moiseevich;

Committee members:

  • Borodin, Pavel Andreevich;
  • Guryeva, Natalya Filippovna;
  • Zakharov, Dmitry Petrovich;
  • Morozov, Denis Stanislavovich.

The Human Resources and Remuneration Committee held two meetings and four absentee votes in 2012.