Corporate Governance

Corporate Governance refers to a set of principles on the basis of which the proper organisation, operation, management and control of the company is carried out with the objective of maximising value and safeguarding the legitimate interests of all those related to it.

In Greece, the Corporate Governance framework has been developed mainly through the adaptation of mandatory rules, such as Law 3016/2002. This law imposes the participation of nonexecutive and independent non-executive members on the Boards of Directors of Greek listed companies, the establishment and operation of internal audit units and the adoption of Internal Procedures Manual. Moreover, a significant number of other legislative acts incorporated in the Greek legal framework the EU directives concerning corporate law, thus creating a new set of rules regarding corporate governance, such as Law 3693/2008, requiring the creation of audit committees and incorporating significant disclosure obligations, concerning the ownership as well as the governance of a company, Law 3884/2010, dealing with the rights of shareholders and additional corporate disclosure obligations in the context of preparation of the General Meeting of shareholders and Law 3873/2010, incorporating in the Greek legal framework the Directive 2006/46/ EC of the European Union, concerning the annual and consolidated accounts of companies of a certain legal form. Finally, in Greece, as well as in most countries, the Company Law (codified law 2190/1920, which is modified by numerous guidelines derived from many of the aforementioned EU Directives) includes the basic legal framework of company governance.

The Company has voluntarily decided to adopt the Corporate Governance Code for listed companies of the Hellenic Corporate Governance Council (HCGC) (or “Code”). The Code can be located on the Hellenic Corporate Governance Council (HCGC), at the following address: http://www.helex.gr/esed (opens in a new window)

Apart from HCGC’s website, the Code is also available to all the employees through the intranet as well as in hard copy through the Group’s departments of Finance and Human Resources.

The Company, on occasion, deviates or does not apply certain provisions of the Code in their entirety, in respect to the following:

• Size and composition of the Board
• Role and attributes of the Chairman of the Board
• Election of Board members
• General functioning and evaluation of the BoD
• System of Internal Control
• Level and structure of compensation
• General Meeting of Shareholders

The Company, within the framework of implementing a satisfactory and well-structured system of corporate governance, has applied specific practices of good corporate governance, some of which exceed relevant legal requirements (Codified Law 2190/1920, law 3016/2002 and law 3693/2008).

Specifically, the Company has adopted the following additional corporate governance practices, all of which are related to the size, composition, responsibilities and overall operation of the BoD:

Due to the nature and purpose of the Company, the complexity of matters and the necessary legal support of the Group, which includes a number of operations and subsidiaries in Greece and abroad, the BoD – numbering thirteen members, which is ten more than the minimum required by law – has established committees that comprise of its members, with advisory, supervisory and authorizing responsibilities, aiming to support the BoD.

These committees are briefly stated below:

• Crude oil and Oil Products Supply Committee
• Finance & Financial Planning Committee
• Labour Issues Committee
• Remuneration and succession planning Committee

In addition to the above committees of the BoD, executive and non-executive committees have been established in the Company, mainly with an advisory role. They comprise of senior executives of the Company and their goal is to support the work of Management. The most important such committees are:

• Group Executive Committee
• Group Credit Committee
• Investment Evaluation Committee
• Group Human Resources Committee
• Executive Technical Committee
• Executive Marketing Business Committee

The BoD has included specific provisions in the Company’s Internal Procedures Manual, banning transactions of shares for the Chairman of the BoD, the CEO and for other members of the BoD, as long as they serve as either Chairman of the BoD or CEO of a related company. The BoD has also implemented a Procedure of Monitoring and Disclosure of Significant Participations and Transactions on the Company’s shares, as well as a procedure of Disclosing and Monitoring Transactions and Financial Activity with the Company’s major clients and suppliers. The company adopted Code of Conduct in accordance with the 1175/24.11.2011 BoD decision.

The role, responsibilities, participation, the ordinary or extraordinary quorum of participants, the Chairmanship, Agenda and the conduct of procedures of the General Meeting of the Company’s Shareholders are described in its Articles of Association, as updated based on the provisions of Codified Law 2190/1920 (following integration of Law 3884/2010 on minority voting rights). Shareholders are required to prove their shareholder status and the number of shares they own at the exercise of their rights as shareholders. Usual forms of proof are custodian or Central Depository certificates or electronic communication though specialised secured electronic platforms.

Board of Directors (BoD)

The Company is managed by a BoD, comprised of 13 members, with a term of five years, as follows:

Efstathios Tsotsoros
Chairman of the Board,
Executive Board Member

Gregorios Stergioulis
CEO, Executive Board Member

Andreas Shiamishis
Executive Board Member

Ioannis Psychogios
Executive Board Member

George Grigoriou
Non-Executive Board Member

Dimitrios Kontofakas
Non-Executive Board Member

Vassilios Kounelis
Non-Executive Board Member

Panagiotis Opthalmidis
Non-Executive Board Member – Employees’ Representative

Theodoros Pantalakis
Non-Executive Board Member - Minority Shareholders’ Representative

Spyridon Pantelias
Non-Executive Board Member - Minority Shareholders’ Representative

Konstantinos Papagiannopoulos
Non-Executive Board Member – Employees’ Representative

Theodoros-Achilleas Vardas
Non-Executive Board Member

Stratis Zafiris
Non-Executive Board Member

The BoD is the supreme executive body of the Company and principally formulates its strategy, its development policy and supervises and controls the management of its assets. The composition and characteristics of the members of the BoD are determined by Law and the Company’s Articles of Association. First and foremost among the duties of BoD is to constantly pursue the strengthening of the Company’s long-term economic value and to protect its interests.

To achieve corporate goals and uninterrupted operation of the Company, the BoD may grant some of its authorities, except the ones that demand collective action, as well as the administration or management of the affairs or representation of the Company to the Chairman of the BoD, the CEO or to one or more BoD members (executive and non-executive), to the Heads of Company Departments or to employees. BoD members and any third party that has been granted authorities from the BoD is not permitted to pursue personal interests that conflict the interests of the Company. BoD members and any third party that has been granted authorities from the BoD must disclose in a timely manner to the rest of the BoD any personal interests that might arise as a result of transactions with the Company that fall under their duties as well as any other conflict of interest with the Company or with entities affiliated to it in accordance with Codified Law 2190/1920 art. 42. (e), par. 5.

Indicatively, the BoD decides and approves, the following:

• The Business Plan of the Company and the Group,
• The Annual Business Plan and Budget of the Company and the Group,
• Any necessary change to the above,
• The issue of bond loans
• The annual report of transactions between the Company and its related parties, according to Codified Law 2190/1920 art. 42. (e), par. 5,
• The annual report of the Company and the Group,
• The establishment of / participation in companies or joint ventures, company acquisitions, installation or termination of facilities – in all cases of such transactions with minimum value of €1 million,
• The agreements of participation in consortia for the exploration and production of hydrocarbons,
• The final termination of plant operations,
• The regulations that govern the operation of the Company and any amendments to them,
• The basic organizational structure of the Company and any amendments to it,
• The appointment / dismissal of General Managers
• The Collective Labour Agreement,
• The Internal Procedures Manual,
• The determination of the Company’s remuneration policy of the Management Team,
• The hiring processes for executives and the assessment of their performance,
• Any other matter stipulated by the existing Company regulations.

The BoD determines the responsibilities and status of its members as executive or non-executive. At any time, the number of non-executive members of the BoD cannot be less than one-third of the total number of its members.

The Executive Chairman, apart from the responsibility to preside over and administer the meetings of the BoD and sign the respective decisions, and performs all acts that fall under his responsibilities according to the Company’s Articles of Association has the responsibility of the:

• The Domestic and International marketing (imports other than crude oil, exports, wholesale and retail marketing)
• The Strategic Planning and Development as to the tasks of the strategic planning, the annual and five-year business plan, the renewable energy sources and new technologies, the monitoring and control of company’s returns, financial indicators and participations’ yields
• The financial services other than Investor Relations
• The Group Legal Services
• The Group Corporate Affairs
• The Group Information Technology and Systems

The General Manager of Group’s Internal Audit reports to the Executive Chairman.

The Chief Executive Officer (CEO) is the legal representative of the company and has the responsibility of:

• The Strategic Planning and Development as to matters relating to the activities of the strategic planning and the business plan implementation, participation in DEPA/DESFA and ΕLPEDISON, as well as to new business partnerships and in relations with international organizations
• The Financial Services as to Investor Relations
• The Group Human Resources and Administrative Services
• Health, Safety, Environment and Sustainable Development
• The refining and supply activity of the Group
• Group Procurement
• Exploration & Production of Hydrocarbons

The Chairman of the BoD and the CEO of Asprofos SA report directly to the CEO.

The Company has established an Audit Committee, appointed by the General Meeting of Shareholders and is made up of three (3) non-executive members of the BoD. The Audit Committee has the following responsibilities:

• To oversee the process of the external audit of financial statements
• To monitor issues concerning the existence and maintenance of the external auditors independence, especially in relation to the provision of non-audit services.

The Company has established a Remuneration and Succession Planning Committee that is comprised of two (2) non-executive members and one (1) executive member of the BoD, with the following responsibilities:

• To propose the principles of the Company’s remuneration and benefits policy for executives – relevant decisions by the CEO are based on these principles
• To propose the remuneration and benefits policy for senior executives – relevant decisions of the CEO follow this policy
• To propose to the CEO the overall compensation (fixed and variable – including stock options) for the executive members of the BoD and senior executives of the Company
• To propose to the General Meeting of Shareholders, through the BoD, the total compensation of the Chairman of the BoD and the CEO
• To plan for adequate and suitable succession of General Managers and executives, when needed, and submit relevant proposals to the BoD.