Board of Directors

The BoD administers the Company’s activities, except for the issues referred to the GSM competence by the Federal Law “On Joint-Stock Companies” and the Charter. The BoD ensures control over the executive bodies, efficient interaction among the bodies and observation and protection of rights and legitimate shareholder interests. The BoD competence includes decision-taking on the following key issues: determination of priorities and development strategy of the Company, placement of bonds and other securities (except for the cases stipulated by the Russian legislation), election of the CEO and pre-term termination of the powers (including resolutions on pre-term cancellation of the CEO’s labor contract), determination of MB membership, election of MB members, remunerations and compensations paid to the MB members, pre-term termination of the powers, Recommendations on the amount of dividends on shares and payout procedure, Approval of large transactions and interested-party transactions (in cases stipulated by the Federal Law on joint-stock companies). The full list of key competence issues of the BoD is set forth by the Charter (item 15.1, article 15).

According to item 16.1 of the Charter the Board of Directors consists of 11 persons. The current membership of the Board of Directors2 was elected on August 29, 2012 by the EGSM (protocol #5 dd. 30.08.2012):

Igor KHVALIN (1974)

The BoD Chairperson. Education: Moscow State Aviation Institute, profession: Computers, system and network devices (engineer). Candidate of historical science. Since 2012 Deputy Executive Director for Strategy at IDGC Holding, OAO. Share in the charter capital – none.

Roman BERDNIKOV (1973)

Education: Moscow Energy Institute, profession: engineer. Since 2012 First Deputy of Executive Director at IDGC Holding, OAO. Share in the charter capital – none.

Aleksey DEMIDOV (1976)

Education: St. Petersburg Trade Economic Institute, profession: Accounting and audit. Since 2012 First Deputy Executive Director at IDGC Holding, OAO. Share in the charter capital – none.

Valery RODIN (1952)

Education: Urals Polytechnic Institute, profession: Thermal plants. Since 2009 General Director at IDGC of Urals, OAO. Share in the charter capital – 0.0081%.

Evgeny ZHUYKOV (1961)

Education: Sverdlovsk Economy Institute, profession: Economy and planning of logistics and supply. Since 2011 General Director at MES of Urals branch of FSK UES, OAO. Share in the charter capital – none.

Konstantin YUSHKOV (1964)

Education: Urals Polytechnic Institute, profession: engineer. Since 2010 portfolio advisor at Wermuth Asset Management GmbH, OOO. Share in the charter capital – 0.2%.

Valeria KUVAEVA (1987)

Education: State Institute of Management, profession: Corporate governance. Since 2010 chief specialist of FEC Economy Regulation and Property Relations Department in the Ministry of Energy. Share in the charter capital – none.

Mikhail AZOVTSEV (1978)

Mikhail AZOVTSEV (1978) Education: State University – High School of Economics. Since 2004 M&A Director at Integrated Energy Systems, ZAO. Share in the charter capital – none.

Dmitry FEDOROV (1983)

Education: Lomonosov Moscow State University, profession: Economist. Since 2010 Investment Director at Infrastruktura Kapital, OOO. Share in the charter capital – none.

Sergey LEBEDEV (1967)

Education: Lomonosov Moscow State University, profession: Finances and credit. Since 2012 Director for Economic Forecasts – Head of Economic Forecast Department at FSK UES, OAO. Share in the charter capital – none.

Aleksandr PYATIGOR (1980)

Education: Akmola Agricultural University, profession: Energy supply and electrification of farm corporations. Since 2010 Head of Perspective Development and Connection Department at IDGC Holding, OAO. Share in the charter capital – none.

The BoD members performed no transactions on share acquisition or alienation during the reported period. To ensure the objectivity of adopted resolutions and balance of interest expressed by different shareholder groups the Company strives to have at least 3 (Three) independent directors.

The BoD sessions are arranged on a regular basis but no less than once in six weeks. In 2012 there were 23 BoD sessions (including 5 sessions in the form of compresence). During the sessions 391 issues regarding various operating directions were reviewed. The most important BoD resolutions adopted in 2012 were:

  • Approval of 2013 business plan (protocol #96 dd. 26.01.2012)
  • Approval of Energy-saving and Efficiency Increase Program for 2012 and for 2013-2016 (protocol #96 dd. 26.01.2012);
  • Placement of public debt via commercial papers (protocol #98 dd. 27.02.2012)
  • Determination of the priority – implementation of Production Asset Control System (protocol #102 dd. 16.04.2012) Participation in National Committee SIRED, NP (protocol #106 dd. 15.06.2012) and Market Council, NP (protocol #118 dd. 21.12.2012)
  • Approval of issue resolution and prospectus – documentary interest-bearing non-convertible bearer commercial papers series BO-01 with obligatory centralized custody (protocol #108 dd. 18.06.2012)
  • Approval of internal documents in a new version – The Regulations on the Audit Committee, Internal Control Policy (protocol #110 dd. 08.08.2012) and Regulations on the internal technical control (protocol #113 dd. 10.10.2012)
  • Withdrawal from Kurganenergo, OAO by alienation of shares and participation in Lenenergo, OAO by acquiring shares (protocol #114 dd. 15.10.2012)
  • Changes of KPI system for the CEO and top managers (protocol #115 dd. 06.11.2012)
  • Approval of business plan including 2013-2017 investment plan.
  • Approval of a candidate to a Deputy General Director position (protocol #119 dd. 15.01.2013)

The BoD also regularly reviews CEO’s reports on various issues and execution of BoD resolutions. In 2012 the BoD approved 69 interested-party transactions3. There were no transactions acknowledged by the Federal Law “On Joint-Stock Companies” as major as well as other transactions which are, under the Charter, subject to major transaction approval procedure in 2012.

Criteria determining the amount and payment frequency of the BoD remunerations as well as the amount of BoD-related expense compensation are determined by the Regulations on Remunerations and Compensations paid to the BoD members approved by the AGSM on 30.04.2008. According to the Regulations BoD remuneration consists of fixed and variable parts and includes 3 payment categories:

  1. For each BoD session in which a BoD member participated (individual work). Participating in an in-absentia session, a BoD member earns 8 minimum monthly tariff rates of a 1st grade worker, stipulated by the sector tariff agreement, as of session date (in-praesentia session – 10 tariff rates). The BoD Chairperson remuneration increases by 50%.
  2. Additional remuneration for net profit according to RAS statements, approved by the AGSM.
  3. Additional remuneration for increased capitalization during the BoD terms of office.

2 All BoD positions are as of the election date. All BoD members gave written consent, as stipulated by the Russian legislation, on the use of personal information in the annual report.

3 Interested-party transactions approved by the BoD in 2012 are disclosed in the Appendix to the present annual report.