The accomplishment of ROSSETI’s priority goals of development is evaluated by the Company’s system of key performance indicators (KPIs).
Since 2014, the Company has made substantial changes to its KPI system in order to align it with the priorities defined by the Strategy for Development of the Electric Grid Sector of the Russian Federation approved by Ordinance of the Government of the Russian Federation No. 511-r of April 3, 2013, interlink KPIs with the goals of the Company’s Long-Term Development Program, meet the requirements set forth in the Guidelines for KPIs Applied by Government-Linked Companies, State Unitary Enterprises, and Economic Entities in the Authorized Capital of Which the Russian Federation or a Constituent Entity of the Russian Federation Holds a Stake Exceeding an Aggregate of 50%, and carry out specific instructions issued by the Russian Government.
As resolved by the Board of Directors of ROSSETI (Minutes of the Meeting No. 170 of November 20, 2014 and No. 174 of December 25, 2014), introducing the Workforce Productivity Indicator into the KPI system in accordance with Directive of the Government of the Russian Federation No. 7389-p-P13 of October 31, 2014, the following key performance indicators and their target values were prescribed for 2014:
Quarterly Indicators
|
Quarterly Indicators |
Target Value in 2014 |
|---|---|
|
Reliability indicator |
Attained |
|
– maximum number of accidents (distribution grid companies) |
≤ 7 |
|
– nonoccurrence of large accidents (FGC UES) |
0 |
|
No growth of casualties |
No growth |
|
Financial soundness indicator: debt-to-equity ratio |
≤ 1.5 or the value specified in SDCs’ business plans |
The target values of all key performance indicators were attained in 2014, there were no negative deviations in the actually attained KPIs, the attained target values accounted for at least 100% of the plan
Annual Indicators
|
Annual Indicators |
Target Value in 2014 |
|---|---|
|
Indicative indicator: Total shareholder return (TSR) |
≥ average MICEX PWR Index or the actual value for the last three years |
|
Return on invested capital (ROIC) |
≥ 0.9 |
|
Reduction of purchase costs related to goods (work, services) |
≥ 10% |
|
Reduction of operating expenses |
≥ 5% |
|
Electricity losses |
≤ 9.63% |
|
Achieved reliability of services |
≤ 1 |
|
Reduction of specific investment costs |
≥ 6% |
|
Compliance with commissioning schedules |
≥ 90% |
|
Compliance with network connection deadlines |
≤ 1 |
|
Indicative indicator: Workforce productivity indicator |
≥ target value specified in the Company’s Long-Term Development Program |
The KPI values for 2015 and thereafter are set forth in the Long- Term Development Program of ROSSETI, including the values required to achieve the targets set by the Strategy for Development of the Electric Grid Sector of the Russian Federation with respect to reducing specific operating expenses by at least 15% against 2012 by 2017, reducing specific investment costs by at least 30%, and reducing electricity losses by 11% against 2012.
The Company’s system of key performance indicators is interlinked with the variable component of management’s remuneration: each indicator is assigned a specific weight in the bonus pool, and quarterly and annual bonuses are paid if the corresponding KPIs are attained.
