Remuneration of the Management Board
Remuneration to members of the Management Board, including Chairman of the Management Board – General Director in 2018, was paid in accordance with the employment contracts and the Regulations on Payment of Remuneration and Compensation to Members of RusHydro’s Management Board approved by the Company’s Board of Directors on November 11, 2016 (Minutes No. 243 of November 14, 2016).
In 2016, the Company engaged Ernst & Young (CIS) B.V. (Moscow branch), a global consultancy firm, to conduct large-scale research on top management remuneration policies at Russian companies of comparable scale. The research results were used to revise the methodology for calculating remuneration of the Management Board.
Since January 1, 2017, the remuneration is directly dependent on the achievement of the Company’s short- and long-term KPI recommended by the Nomination and Compensation Committee and approved by the Board of Directors.
The current incentive system relies on the following principles: transparency, balanced approach (interests of shareholders are aligned with the management’s interests in achieving the Company’s long- and short-term goals), impartiality (the remuneration depends on the RusHydro’s performance and outcomes from the implementation of significant projects).
The current remuneration system includes a Long-Term Incentive Plan for the Management Board linked to the growth in share price and KPI set by the Company’s Board of Directors. The Plan aims to ensure closer alignment of interests of the management and shareholders in delivering consistent growth of the company’s value and developing the business. The key objectives and principles underpinning the Plan are to motivate the Company’s management to achieve strategic objectives and pursue openness to shareholders as remuneration is dependent on the achievement of the KPI, is calculated using the unified methodology and is based on equal payment conditions.
The amount and terms of payment of remuneration to the members of the Management Board upon early termination of employment are determined in the regulation on payment of remuneration and compensation to RusHydro’s Management Board approved by the Board of Directors. The Company does not make “golden parachute” payouts for early termination. The maximum compensation paid to members of the Management Board upon early termination of employment is limited to three average monthly salaries as provided for by the Russian legislation.
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