Key Performance Indicators
Achievement of priority Company development goals is assessed based on the system of key performance indicators (KPI) implemented by the Company.
In 2015, the set of Company performance indicators was changed considerably in order to incorporate the priorities as defined by the Strategy for Development of the Power Grid Complex approved by Russian Federation Government Ordinance No. 511-r, correlate the indicators with the goals of the Long-Terms Company Development Program and fulfill certain orders given by the Russian Federation Government.
The system of key performance indicators for the Company’s Director General was adopted based on:
- clause 15.1, article 15 of the Company’s Articles of Association,
- resolution of the Company’s Board of Directors dated April 13, 2015 (minutes No. 256) on agenda item No. 8 “Approval of methods for calculation and assessment of achievement of key performance indicators for Director General of OJSC Moscow United Electric Grid Company.
The following scope and values of key performance indicators were adopted for 2015 (Table):
Key Performance Indicators
|Scope of indicators||Target values for 2015|
|Absence of major emergency occurrence rate growth||≤ 0||≤ 0||≤ 0||≤ 0|
|Prevention of growth in the number of injured persons in case of accidents||≤ 0.0551||≤ 0.0551||≤ 0.0551||≤ 0.0551|
|Financial stability indicator — leverage ratio||≤ 1.5 or ≤ 0.77||≤ 1.5 or ≤ 0.8||≤ 1.5 or ≤ 0.83||≤ 1.5 or ≤ 0.76|
|TSR (total shareholder return)||≥ average value for the companies included into the base for calculation of MICEX PWR as of the end of the reporting period or ≥ average value of indicator for the previous three years before the reporting year|
|Return On Invested Capital (ROIC)||≥ 0.9|
|Reduction of specific operating costs||≥ 10%|
|Level of power losses||≤ 8.55%|
|Achievement of required reliability level of delivered services||1|
|Reduction of specific investment costs||≥ 15%|
|Compliance with the commissioning schedule||≥95%|
|Compliance with the due dates for electrical connection||≤ 1.1|
|Labor efficiency indicator||4.429 thous. rubles/thous. man-hours|
According to the results of 2015, the target values of key performance indicators were achieved, the degree of annual KPI fulfillment is 90%, and degree of quarterly KPI fulfillment is 100%.
The indicators for 2015 were set with consideration of necessity to achieve the target benchmarks of the Strategy for Development of the Power Grid Complex (Russian Federation Government Ordinance No. 511-r), i.e., reduce the specific operating costs by at least 15% by the year 2017 relative to the level of 2012, reduce the specific investment costs by at least 30% and cut the electric power losses by 11% relative to the level of 2012.
The system of key performance indicators used by the Company determines the amount of variable remuneration paid to the executives: each indicator bears a certain specific relative value within the total remuneration amount; quarterly and annual bonuses are paid subject to achievement of corresponding KPIs.