Corporate Governance Structure and Principles > Remuneration of Governance and Control Bodies > Remuneration of members of the Management Board and Director General

In accordance with the Provision on Material Incentives and Social Package for Top Managers of JSC IDGC of the North-West approved by the decision of the Board of Directors of June 15, 2011, members of the Company's Management Board are also classified as top managers of JSC IDGC of the North-West. The remuneration system for members of the Management Board includes the following elements:

  • Annual basic wages (amount of wages for the year according to the labor agreements).
  • Remuneration for execution of functions of a member of the Company's Management Board. Provision on Material Incentives and Social Package for Top Managers of JSC IDGC of the North-West provides for an individual premium of 15% of the wage (in proportion to the amount of hours worked).
  • to top managers for exercise of powers of a members of the Management Board.

The amount of bonus payments to top managers depends on the degree of achievement of the Company's key performance indicators approved by the Board of Directors and on the degree of achievement of individual KPIs set by Director General by activity areas for the corresponding periods (quarter and year).

The criteria of determination and the amount of remuneration of Director General are fixed in the labor agreement and the Provision on Material Incentives for Director General of JSC IDGC of the North-West, approved by the Board of Directors of the Company on June 15, 2011.

The Provision on Material Incentives determines:

  • the procedure for defining, approval and change of the amount of wages of the Company's Director General;
  • types of bonus payments;
  • the procedure for payment of wages and bonus payments;
  • the procedure for making decisions aimed at realization of approved Regulations.

The amount of bonus payments of Director General depends on the degree of achievement of key performance indicators (KPIs) approved by the Board of Directors of the Company for the corresponding periods (quarter and year).

Key performance indicators for 2012

KPIs of Director General (target values) set by the Board of Directors
KPIs of top managers (target values) set by Director General
Annual KPIs Quarterly KPIs
  • net profit based on annual performance;
  • reduction of expenses on acquisition of goods (works, services) per product unit by at least 10 percent per year during 3 years in real terms in 2010 prices;
  • return on equity (ROE) secured by cash flow;
  • loss of electric energy to be supplied to the network;
  • reliability criterion (annual);
  • efficiency of the investment program implementation with regard to the current year.
  • avoidance of more than the maximum number of accidents falling within the characteristics set forth in clause 2.1 of the Guidance on Investigation and Registration of Technological Malfunctions in the Operation of Energy Systems, Electric Stations, Boilers, Electric Grids and heating Systems;
  • absence of fatal industrial accidents or group accidents if there is an injured person with a severe outcome in the reporting period;
  • obtaining (availability) of a readiness certificate in due time;
  • system indicator of consumers' power supply interruptions (for feeders 6 kV and higher);
  • system indicator of the average length of consumers' power supply interruptions (for feeders 6 kV and higher);
  • efficiency of the investment program implementation with regard to the current quarter.

The Company's Board of Directors assesses the achievement of KPIs based on the report of Director General on achievement of target values of KPIs. In 2012 the Board of Directors approved the reports on achievement of KPIs:

  • for the 3rd quarter of 2011 — decision of the Board of Directors of January 27, 2012 (Minutes No. 91/12);
  • for the 4th quarter of 2011 and 2011— decision of the Board of Directors of June 20, 2012 (Minutes No. 102/23);
  • for the 1st quarter of 2012 — decision of the Board of Directors of June 20, 2012 (Minutes No. 102/23);
  • for the 2nd quarter of 2012 — decision of the Board of Directors of November 26, 2012 (Minutes No. 115/13).

The Company's Board of Directors of October 30, 2012 (Minutes No. 114/12) made a decision on the switch from January 1, 2013 to the new system of key performance indicators and approved the new list of KPIs for Director General and top managers of the Company.

Key performance indicators for 2013

Annual KPIs Quarterly KPIs
  • net profit;
  • reduction of expenses on acquisition of goods (works, services) per product unit by at least 10 percent per year during 3 years in real terms in 2010 prices;
  • work reliability: average length of average electricity transmission interruption;
  • turnover of receivables for electricity transmission services;
  • EBITDA;
  • growth rate of manageable operating costs in the period compared to the actual value of the preceding period;
  • level of electric energy loss to be supplied to the network;
  • efficiency of investment activities:
    • compliance with the schedule of capacity commissioning and implementation of the financial and capital investment plan closed by certificates of works performed (for the year);
    • utilization of newly commissioned capacities;
  • level of quality of services rendered:
    • quality level indicator for technological connection services;
    • quality level indicator for electricity transmission services;
    • servicing quality level indicator;
  • efficiency of investment activities
  • absence of fatal industrial accidents or group accidents if there is an injured person with a severe outcome due to non-performance (improper performance) by the Company's employees of their job duties;
  • obtaining (availability) of a readiness certificate in due time;
  • work reliability: avoidance of more than the set maximum number of accidents;
  • efficiency of investment activities:
    • compliance with the quarterly financing and capital investment schedules closed by certificates of works performed and the investment program on an accrual basis from the beginning of the year (for the quarter);
  • control over operating cash flow;
  • coefficient of completion of the plan of repairs of major equipment;
  • absence of violation of the effective laws of the RF, Articles of Association and internal documents of the Company in organizing and conducting corporate events.

The new system of KPIs is aimed at strengthening of control and increase of the Company's managers' motivation.

Remuneration paid to members of the Management Board of the Company in 2012 (RUB)

Description Amount
Salary 24,983,917
Remuneration for performance of functions of a member of the Management Board 2,096,136
Bonus for achievement of quarterly KPIs 6,737,765
Bonus for achievement of annual KPIs for 2011 22,627,200
Other bonuses (including completion of assignments of particular importance) 4,235,557
Total 60,680,575

Remuneration paid to Director General of the Company for the period from January 1, 2012 to June 30, 2012 (RUB)

Description Amount
Salary 4,058,630
Bonus for achievement of set quarterly KPIs 1,168,728
Bonus for achievement of set annual KPIs for 2011 3,434,232
Other bonuses (relating to corporate awards of JSC IDGC Holding) 1,430,930
Total 10,092,520

Remuneration paid to Director General of the Company for the period from July 1, 2012 to December 31, 2012 (RUB)

Description Amount
Salary 1,717,116
Bonus for achievement of set quarterly KPIs 332,346
Bonus for achievement of set yearly KPIs for 2011 (taking into account that Director General held its office from July 1, 2012 ) —
Other bonuses —
Total 2,049,462

The total remuneration paid to Director General and members of the Management Board of the Company in 2012 amounted to RUB 72,822,557. In 2011 such remuneration amounted to RUB 42,628,598. The increase in the total amount of remuneration paid to Director General and members of the Management Board of the Company in 2012 is associated with the payment of annual bonus based of the results of achievement of KPIs for 2011 in the amount of RUB 26,061,432 while in 2011 the annual bonus was not paid.