The KPI system
The achievement of priority development goals of the Company is assessed with the KPI system applicable in the Company.
Starting from 2015, the Company’s system of key performance indicators has been significantly modified to take into account the priorities defined by the Development Strategy of the Electric Grid Complex of the Russian Federation, approved by the RF Government Executive Order No
The System of Key Performance Indicators for the Company’s General Director is established pursuant to decision of the Board of Directors as of March 13. 2015 (Minutes No. 176/18).
For 2015, the Board of Directors of the Company approved the following Key Performance Indicators with target values.
|Description||Target value in 2015|
|TSR — total shareholder return||
≥ the average value of the indicator for companies included in the calculation base of the Moscow Exchange Electric Utilities Index (MICEX PWR) as of the end of reporting period, or
|Return on invested capital (ROIC)||≥ 0.9|
|Reduction of unit operating expenses||≥ approved in the Business Plan|
|The level of electricity losses||≥ approved in the Business Plan|
|Achieving the level of reliability of the services||1|
|Reduction of unit investment costs||≥ 15%|
|Compliance with the electrical facilities commissioning schedule||≥ 95%|
|Compliance with the terms of grid connection||≤ 1.1|
|Labour efficiency||≥ approved in the Business Plan|
|Absence of increase in the number of major accidents||Absence of increase|
|Prevention of increase in the number of injured persons in accidents||Absence of increase|
|Financial stability indicator — financial leverage coefficient||≤ 1.5 or the Business Plan value (with due account for the financial standing group)|
Performance of the annual KPIs as of year-end 2015 amounted to 88.9% and was due to the failure to meet the target indicator of ’Compliance with the electrical facilities commissioning schedule’. Performance of the quarterly KPIs as of year-end 2015 amounted to 91.7% and was due to the failure to meet the target indicator of ’Avoidance of increase in the number of injured persons’ in Q4 2015.
The values of indicators for 2015 take into account the need to achieve the target figures of the Development Strategy of the Electric Grid Complex of the Russian Federation in terms of reduction by 2017 of unit operating costs by at least 15%, unit investment costs — by at least 30%, electricity losses — by 11% as compared to 2012.
The System of Key Performance Indicators applied in the Company is tied with the size of the variable part of remuneration for management — for each of the indicators, a percentage is set in the amount of paid premiums, — quarterly and annual bonuses are made subject to the performance of relevant KPIs.