Key Performance Indicators
Each year the Board of Directors of IDGC of Centre approves the key performance indicators (hereinafter – KPI) for the upcoming year. These KPI are set based on the following principles:
|PRINCIPLES FOR SETTING A KPI SYSTEM|
|The KPI system encompasses core operations of the Company and complies with the basic principles of the Russian Power Grid Complex Development Strategy.|
|KPI target figures are approved in advance before the start of the valuation period.|
|The KPI system is the primary effective system of incentives.|
|There are KPI subject to mandatory fulfillment at any period of time.|
The Company provides relevant reports to the Board of Directors on its fulfillment of the KPI at the end of each quarter and year.
The General Director and top managers5 receive bonuses at the end of the quarter or year if the Company meets all of the targets, and the results are approved by the Board of Directors.
A new system of KPI for the General Director of the Company and senior management was introduced at IDGC of Centre in 2013. In comparison with the previous years, this system includes a greater number of indicators characterizing core operations of the Company during the year. Broadly speaking, all indicators are divided in several groups: KPI specifying terms and conditions of remuneration, KPI specifying the amount of remuneration, and the long-range and indicative KPI, which do not influence the terms and amount of remuneration but are to be evaluated at the end of the year.
KPI SYSTEM OF IDGC OF CENTRE SINCE 2013:
KEY PERFORMANCE INDICATORS OF IDGC OF CENTRE FOR 2013-2014:
|Annual KPI||Unit of measurement|
|Component conditions of bonuses:|
|Net profit||thous. RUB|
|Net profit, target (for reference)||thous. RUB|
|Drop in cost of goods (services) purchased per unit of product by at least 10% a year for three years in real terms expressed in 2010 prices, %||%|
|Bonus size determinants:|
|Reliability: Average duration of power supply interruption||units|
|Receivables turnover ratio for power transmission services||days|
|Growth rate of controllable operating costs in period against previous period||units|
|Energy losses to grid supply||%|
|–meeting schedule for adding capacity, plan for financing and amount of capital investment, covered by reports on completion of work (for year)||%|
|–utilization of newly commissioned capacity||units|
|Quality of services provided:|
|–Quality of grid connection services||units|
|–Quality of power transmission services||units|
|–Quality of services||units|
|Effectiveness of innovative operations||%|
|Long-range annual indicators|
|Reliability of operations:|
|–Change in technical conditions (Δcondition index/Δcost)||units/ thous. RUB|
|Quality of information flow||units|
|Share of power transmission market in regions of operation||%|
|Indicative annual indicators|
|Total shareholder return (TSR)||%|
|Increase/savings of controllable costs over the approved OPEX in RAB regulation system||thous. RUB|
Preliminary estimates of the management indicate that all performance indicators for 2013 were met by 100%. However, at the time this Annual Report was prepared, the Board of Directors had not tallied the results of KPI for 2013.
Following the relevant decision by the Board of Directors, this information will be released on the Company’s website.