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JSC Bank of Georgia (BGEO)

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Thursday 10 June, 2010

JSC Bank of Georgia

Result of AGM

Result of AGM

Bank of Georgia

JSC Bank of Georgia announces result of AGM, resignation of the Chairman of the Supervisory Board and other governance changes

Result of AGM

JSC Bank of Georgia (LSE:BGEO)(GSE:GEB), the leading Georgian universal bank (“the Bank”), announced today that all the resolutions put to shareholders at the Annual Meeting of Shareholders (“AGM”) held on 9 June, 2010 were passed by the required majority. These resolutions are contained in the Notice of the AGM dated 18, May 2010, a copy of which as well as other documents pertaining to the AGM is available on the Bank of Georgia website (www.bog.ge/ir) or upon request from the Bank at its registered office: 3 Pushkin Street, Tbilisi, Georgia, 0105.

The total number of voting shares in issue as of the record date of the AGM (6 May, 2010) was 30,473,921. 97.3 % of total voting shares were present at the AGM. The following resolutions were adopted at the AGM:

1. Approval of the consolidated audited results for fiscal year 2009 of the Bank and subsidiaries by Ernst & Young.

2. Approval of the Management Report on the performance of the Bank for the fiscal year 2009.

3. Acknowledgment of the resignation of Messrs. Irakli Gilauri and Nicholas Enukidze from the Supervisory Board of the Bank.

4. (a) Approval of the term extension of the Supervisory Board member - Mr. Allan Hirst for additional 4 years period.

(b) Approval of the term extension of the Supervisory Board member - Mr. Jyrki Talvitie for additional 4 years period.

(c) Approval of Mr. Neil Janin’s election to the Supervisory Board of the Bank for the term of 4 years.

(d) Approval of Mr. Alasdair Breach’s election to the Supervisory Board of the Bank for the term of 4 years.

5. Approval of compensation for the Bank’s Supervisory Board members as follows:

(a) Net base annual compensation:

  • Chairman of the Supervisory Board - USD 150,000
  • Vice-chairman of the Supervisory Board - USD 70,000
  • Member of the Supervisory Board - USD 50,000

(b) Additional net annual compensation for the committee membership:

  • Chairman of the Audit Committee - USD 20,000
  • Member of the Audit Committee - USD 15,000
  • Chairman of other committees - USD 15,000
  • Member of other committees - USD 10,000
  • Chairman of the Supervisory Board will not be entitled to additional compensation for committee membership.

(c) Payment of compensation: the compensation will be payable quarterly in Bank of Georgia’s shares and/or GDRs based on the market average share price for the relevant quarter.

Governance changes

As a result of the AGM, the changes in the Bank’s governance take effect immediately. Nicholas Enukidze has resigned from the Supervisory Board in line with the introduction of the classical two-tier board structure with the Supervisory Board consisting of non-executive directors, as announced by the Bank in November 2009. Correspondingly, Irakli Gilauri has stepped down as a member of the Supervisory Board to continue to serve as Chief Executive Officer. The election of Messrs. Neil Janin and Alasdair Breach to the Supervisory Board as non-executive members completes the transition to the new governance structure. The Supervisory Board intends to elect Mr. Neil Janin as Chairman of the Supervisory Board at the next Supervisory Board meeting.

Nicholas Enukidze commented, “I am very proud of what my colleagues and I have achieved at Bank of Georgia. We successfully navigated the turmoil of the past two years and emerged as Georgia’s leading financial institution overcoming the effects of global financial crisis and political and economic challenges in Georgia in 2008 and 2009. I believe that the new non-executive board comprised of world-class professionals and the highly experienced and capable management team will serve best the Bank’s interest going forward and I wish my colleagues at Bank of Georgia all the best.”

Irakli Gilauri, Chief Executive Officer commented, “I would like to thank Nicholas for his major contributions during probably the most eventful and challenging times in the Bank’s history and wish him success in his next professional challenge. The change in the governance structure gave us an exceptional opportunity to bring Neil Janin and Al Breach, highly respected professionals in the financial industry, to the Bank’s Supervisory Board. I am delighted that Neil has agreed to join the Supervisory Board and I am confident that his views and insights will add great value to the Bank. I look forward to working closely with the Supervisory Board as we embark on the growth path with a sharp focus on shareholder value creation.”

Al Breach, the newly elected Supervisory Board member noted, “Having served as an advisor to the Bank’s Supervisory Board since November 2009, I am delighted that in my new position I will continue working with the Bank’s leadership team on extending the competitive lead the Bank has today. Among other the significant contributions to the Bank over the past two years, Nicholas has built a first-rate team that is now in place to carry on the development of the strong banking franchise.”

Neil Janin, the newly elected Supervisory Board member commented, “I am looking forward to working with my new colleagues on the Supervisory Board and the members of the management team of Bank of Georgia. This is an exciting time for me to join the Bank, which is well positioned to build upon its success as it continues to grow and secure its leading position well into the future.“

Allan Hirst, Vice-Chairman of the Supervisory Board of the Bank and Citigroup’s former head of Russia, Poland and other Eastern European markets, concluded, “As Executive Vice-President of the Supervisory Board and subsequently as Executive Chairman of the Supervisory Board, Nicholas has led the Bank through difficult years for Georgia. I would like to thank Nicholas for his dedication and his outstanding service to the Bank and wish him all the best in his future endeavors. I would also like to use this opportunity and welcome Neil and Al to the Board.”

About Neil Janin:

Neil Janin, a Canadian national, is a “just retired” Director of McKinsey & Company in its Paris office, where he joined the Firm in 1982. Today, he divides his time between, counseling CEOs of both for-profit and non-profit organizations and their teams; teaching and doing research on leadership development at INSEAD as executive in residence, and HEC in Paris, and consulting to McKinsey & Co. He started and led the Financial Institutions practice in France. Over his 27 year long career at McKinsey, he conducted engagements in the retail, asset management, and corporate banking areas. His work spanned the functions of strategy, organization and operations. He has practiced in Europe, Asia and North America. Neil Janin was also one of the thought leaders of McKinsey’s organization practice and has conducted engagements in every area of organizational practice: design, leadership, governance, performance enhancement, culture change and transformation. Specifically, he contributed to the Post Management Integration framework used by the Firm in its merger work worldwide, and led a recent research effort on top team effectiveness and strategy visioning. In 2009, as co-chairman of the commission of the French Institute of Directors (IFA), Neil Janin authored a position paper on the responsibilities of the board of directors with regards to the design and implementation of a company’s strategy. Before joining McKinsey, Neil worked for the Chase Manhattan Bank (now JP Morgan Chase) in New York and Paris, and Procter & Gamble in Toronto. Neil holds an MBA from York University, Toronto and a joint honors degree in Economics and Accounting from McGill University, Montreal.

About Al Breach:

Al Breach is Chairman of TheBrowser.com (a web-based filter of choice current affairs writing that he co-founded in 2008), on the board of Vostok Nafta (since 2007) and a Swiss-based investor. Until October 2007 he was Head of Research, Strategist and Economist for UBS Russia and Managing Director. He joined what was then Brunswick UBS in January 2003 as chief economist. He and the team he led won II and Extel surveys of the best Russia strategist / economist / team on repeated occasions. Prior to Brunswick UBS, Al was Russia & FSU economist at Goldman Sachs from late 1998 to 2002; for much of the period the one Goldman professional based in Moscow. Before Goldman Sachs, from July 1996, he wrote the journal Russian Economic Trends at RECEP, a Russian government affiliated, EU-funded, LSE / SITE run economics journal based in Moscow. Along with Moscow and Switzerland, Al, a Londoner, has lived in Beijing, Tokyo, New York and Zimbabwe. He graduated from Edinburgh University in Mathematics with Philosophy in 1993 top of his class. He then did an MSc in Economics at the London School of Economics (LSE), graduating in 1994.

About Bank of Georgia

Bank of Georgia is the leading Georgian bank offering a broad range of corporate and investment banking, retail banking, wealth management and insurance services to its customers in Georgia, Ukraine and Belarus. Bank of Georgia is the largest bank in Georgia by assets, loans, deposits and equity, with 34.8% market share by total assets (all data according to the NBG as of 30 April 2010). The bank has 137 branches and over 996,000 retail and more than 157,000 corporate current accounts.

Bank of Georgia has, as of the date hereof, the following credit ratings:

Standard & Poor’s   ‘B/B’
FitchRatings ‘B/B’
Moody’s ‘B3/NP’ (FC) & ‘Ba3/NP’ (LC)

For further information, please visit www.bog.ge/ir or contact:

Irakli Gilauri   Macca Ekizashvili
Chief Executive Officer Head of Investor Relations
+995 32 444 109 +995 32 444 256

igilauri@bog.ge

ir@bog.ge

This news report is presented for general informational purposes only and should not be construed as an offer to sell or the solicitation of an offer to buy any securities