General

Corporate Governance refers to a set of principles on the basis of which the proper organization, operation, management and control of a company is evaluated with the aim of maximizing value and safeguarding the legitimate interests of all those related with 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 non-executive 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.

Corporate Governance Code

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

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

During 2017, the Company complied with the provisions of the above Code with the deviations mentioned below in paragraph D.2. and intends to consider appropriate actions to further minimize existing deviations from the provisions of the Code.

The Company, in addition to the provisions of the Code, complied in 2017 with all the relevant provisions of the Greek Legislation (Law 2190/1920 as currently in force and Law 3016/2002).

Deviations from the Corporate Governance Code

The Company, in some instances, deviates or does not apply in its entirety certain provisions of the Code:

• With regard to the size and composition of the Board of Directors (or “BoD”)
• With regard to the role and attributes of the Chairman of the BoD
• With regard to BoD member election
• With regard to the functioning and evaluation of the BoD
• With regard to the System of Internal Controls
• With regard to the level and structure of compensation
• With Regard to the General Meeting of shareholders.

Corporate Governance Practices Exceeding Legal Requirements

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.
  1. Crude oil and Petroleum Products Supply Committee
  2. Finance & Financial Planning Committee
  3. Labour Issues Committee
  4. Remuneration & 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 and coordinating 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:
  1. Group Executive Committee
  2. Group Manufacturing Activities Committee
  3. Fuels Marketing Committee
  4. Non-core Energy Activities Committee
  5. Group Credit Committee
  6. Investment Evaluation Committee
  7. Electricity, Natural Gas & Renewable Energy Sources Committee
  8. Exploration and Production 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, and created a Code of Conduct Compliance Unit which has the responsibility of implementing the Code.

Composition & Operation of the Board of Directors, Supervisory Bodies and Committees of the Company

General Meeting of Shareholders and Shareholders’ Rights

The roles, 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) General

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

• Efstathios Tsotsoros, Chairman of BoD and CEO, Executive Board Member (CEO role assumed 17/04/2018)
• Gregorios Stergioulis, CEO, Executive Board Member (until 16/04/2018)
• Andreas Shiamishis, Deputy Chief Executive Officer, Executive Board Member
• Georgios Alexopoulos, Executive Board Member
• Ioannis Psychogios, Executive Board Member
• Theodoros-Achilleas Vardas, Non-Executive Board Member
• Georgios Grigoriou, Non-Executive Board Member
• Dimitrios Kontofakas, Non-Executive Board Member
• Vasilios Kounelis, Non-Executive Board Member
• Loudovikos Kotsonopoulos, Non-Executive Board Member (from 17/04/2018)
• Konstantinos Papagiannopoulos, Non-Executive Board Member - Employees’ Representative
• Panagiotis Ofthalmidis, Non-Executive Board Member - Employees’ Representative
• Theodoros Pantalakis, Non-Executive Board Member - Minority Shareholders’ Representative
• Spyridon Pantelias, Non-Executive Board Member - Minority Shareholders’ Representative

Roles and Responsibilities of the BoD

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 increase of the Company’s long-term economic value and to protect its interests.

In order 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, the Deputy 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.

• Indicatively, the BoD decides and approves, the following:
  1. The Business Plan of the Company and the Group and any necessary update.
  2. The Annual Business Plan and Budget of the Company and the Group and any necessary change.
  3. The issue of bond loans
  4. The Annual Report of transactions between the Company and its related parties.
  5. The Annual and Interim Financial Reports, including the Financial Statements of the Company and the Group.
  6. 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.
  7. The agreements for participation in consortia for the exploration and production of hydrocarbons.
  8. The final termination of manufacturing operations.
  9. The regulations that govern the operation of the Company and any amendments to them, including the Internal Procedures Manual and their changes.
  10. The basic organizational structure of the Company and any amendments to it.
  11. The appointment / dismissal of General Managers.
  12. The Collective Labour Agreement.
  13. The hiring processes for executives and the assessment of their performance, as well as the determination of the Company’s remuneration policy of the Management Team.
  14. Any other matter stipulated by the existing Company regulations.

Executive and non-executive members of the BoD

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 company by adopting the basic principle of corporate governance, which is the clear identification and the delegation of administrative responsibilities and duties among the executive members of the BoD, in order to avoid duplication of duties, proceeded with the no. 1320/24.4.2018 decision of the BoD in the allocation of administrative responsibilities and duties between the Executive Chairman and Chief Executive Officer and the Deputy Chief Executive Officer.

Chairman of the BoD and CEO

The Chairman of BoD and CEO is responsible 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 and, is the legal representative of the company and has the responsibility of all business units and functions except for those reporting to the Deputy CEO.

The General Manager of Group’s Internal Audit, as well as the Chairman and the CEO of ASPROFOS SA, also report to the Chairman of BoD and CEO.

Deputy Chief Executive Officer

The Deputy Chief Executive Officer reports to the Chairman of BoD and CEO and replaces him in case of absence or impediment and has the responsibility of:

• Group Financial Services, including the finance departments of all the Group's companies
• Group Strategic Planning & Development and New Activities
• Group Procurement
• Group Information Technology

Audit Committee

The Audit Committee is appointed by the General Meeting of Shareholders and is comprised of three (3) non-executive members of the Board of Directors and has the following responsibilities:

• It monitors the process and the performance of the statutory audit for the Company's individual and consolidated financial statements.
• It monitors and ensures that the Group’s Internal Audit Division is functioning properly, and evaluates its work, adequacy and effectiveness, without however hindering its independence.

Remuneration and Succession Planning Committee

The Company's Remuneration and Succession Planning Committee consists of two (2) non-executive members and one (1) executive member and has the following responsibilities:

• It proposes the principles, as well as the Company's remuneration and benefits policy for executives; any relevant decisions made by the CEO are based on these principles and policy.
• It proposes the total remuneration (fixed and variable - including share options) to the CEO in regards to the executive members of the Board of Directors, as well as the Senior Executives Directors of the Company and the Group.
• It proposes the total compensation payable to both the Chairman of the Board of Directors and the CEO to the General Meeting of Shareholders.
• Plans for the adequate and suitable succession of General Managers and executives, when needed, and submits relevant proposals to the Board of Directors.