2015 Annual Report

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Key performance indicators

The achievement of IDGC of Centre’s priority development targets is evaluated by a system of Key Performance Indicators (hereinafter, KPI) used by the Company. Starting from 2015, the list of KPIs was changed significantly; these new indicators take into account the priorities set in the Strategy of power grid complex The power grid complex development strategy was approved by Resolution of the Russian Government No. 511-r on April 3, 2013. development and are associated with the instructions given by the Russian Government. For instance, the KPI target values for 2015 take into consideration the Company’s need to reduce its specific operating costs in 2017 by at least 15% compared to 2012, specifically investment costs, which need to be reduced by at least 30%, and electric power losses which need to be reduced by 11% compared to 2012.

The system of KPIs shows the achievement of the following targets:

  • Improvement the reliability and the quality of power supply;
  • Enhancement of the safety of power supply;
  • Reduction of investment and operating costs;
  • Implementation of the investment programme.

The applied KPI system is used as a basis of motivation for the Company’s General Director and management: a variable part of remuneration depends on the achievement of these set KPIs. For each KPI, its contribution is defined by the payments of bonuses, and quarterly and annual remuneration is paid if only all specified KPI have been achieved. The KPI of the General Director and its target values are set on an annual basis by the Company’s Board of Directors according to item 53) Cl. 15.1 Article 15 of the Company’s Articles of Association. The targets for 2015 were defined by the Board of Directors on February 26, 2015 (Minutes No. 03/15 of February 27, 2015), item No. 5 on “Approving the Methodology for the Calculation and Evaluation of the Implementation of the Key Performance Indicators of General Director of IDGC of Centre”.

Data on the KPIs implementation is available on theCompany’s website.

The following list of KPI and target values were set for 2015
Annual KPI Target Value for 2015
Total Shareholder Return (TSR) ≥ average value of the indicator for companies included in the MICEX PWR Index at the end of the reporting period, or ≥ average value of the indicator for last three years preceding the reporting one
Return on Invested Capital (ROIC) ≥ 0.9
Reduction of unit operating expenses ≥ as approved in the business plan
Level of electric energy losses ≤ as approved in the business plan
Achieving the level of reliability of services provided 1
Reduction of unit investment expenditures ≥ 15%
Implementation of a facility commissioning schedule ≥ 95%
Compliance with a grid connection deadline ≤ 1.1
Workforce productivity ≥ as approved in the business plan
Quarterly KPI Target Value for 2015
Not any increases in the number of major failures No increase
Preventing the growth of the number of victims in accidents No increase
Business solvency indicator — debt to equity ratio

≤ 1.5 or values on the business plan

(taking into account the solvency group)