Corporate management (стр. 2 )

­  the general shareholders meeting recommended taking a decision to increase the equity capital of the Company by making an additional open share offer and approved the decision on the additional share offering and the corresponding Prospectus;

­  the following priority areas of activity for the Company were set:

1.  developing a programme for innovation development;

Decisions by the Board of Directors on key areas for development at Kubanenergo

Realising investment projects

Regulations for drawing up and amending the investment programme and preparing reports on its execution were approved. Reports from the General Director on the execution of the investment programme and the schedule of construction of Olympic facilities were regularly considered at meetings of the Board of Directors.

Quality, uninterrupted and safe electricity supply

The programme for electricity supply and improving energy efficiency at the Company for was approved. The new revision of the Statement on the order of regulated procurement of goods, works and services for Kubanenergo needs was approved. The programme for insurance coverage of the Company was approved. Reports from the General Director on the readiness of Kubanenergo for the autumn winter period were examined.

Technical development of the electricity network sector

The programme for innovative development at Kubanenergo for was approved.

Customer service

The Consumer Services Centralised Service System standard at the Company was approved. The programme for long term development of electricity metering systems in Kubanenergo distribution networks was accepted.

2.  planning the development of Kubanenergo electricity distribution network;

3.  providing the level of reliability and quality of services provided set by organs of executive power of subjects of the Russian Federation in the field of state regulation of tariffs in accordance with normative legal acts;

4.  introducing systems to manage construction within the most important investment projects;

5.  consolidating electricity network assets;

6.  carrying out obligatory electrical inspection of objects of production and economic needs and production facilities in ;

­  targets for key indicators of effectiveness for 2011 were approved;

­  decisions were taken to amend the membership of the Management Board and the new organisational structure of the executive body of the Company was approved;

­  a decision was taken to set up a Committee of the Board of Directors for Technological Connection and its members elected, as well as reelection of members of other committees of the Board of Directors;

­  in the field of developing risk management systems a Statement on control environment and the risks of basic business processes at the Company and a Statement on insider information (in a new revision) were approved;

­  reports from the General Director on questions of executing the business plan and targets for key indicators of effectiveness were examined regularly, as well as reports on expenditure of funds received from additional share offerings;

­  in the field of financial management reports from the General Director on carrying out the programme of actions for financial recovery of the Company for and on the execution of the schedule of actions to reduce overdue accounts receivable for electricity transmission services and regulating the corresponding differences with subscribers were examined at meetings of the Board of Directors.

Monitoring execution of decisions taken at meetings of the Board of Directors by the Company’s executive bodies is carried out quarterly: in accordance with the work plan the question of execution of decisions taken at previous meetings of the Board of Directors is raised for consideration by the Board of Directors. In addition, information from the Corporate Secretary on execution of decisions by the Board of Directors is at each meeting of the Board of Directors held as in person or in absentia format or in joint presence format heard without fail.

Remuneration of members of the Board of Directors In accordance with the Statement on paying remuneration or compensation to members of the Board of Directors approved at the annual general shareholders meeting, remuneration of members of the Board of Directors is calculated in the following manner:

­  for attendance at a meeting remuneration is paid in the amount equal to three (in the event of the meeting being in absentia) or five (in the event of the meeting being in joint presence format) minimum monthly tariff rates for first class workers set by sectoral tariff agreement in the electricity production sector in the Russian Federation on the day of the meeting, taking indexation into account;

­  additional remuneration is paid to members of the Board of Directors for meeting net profit indicators according to the annual accounting report approved by the general shareholders meeting, as well as in the event of an increase in the size of market capital of the Company in the period of the Board of Directors.

In addition, members of the Board of Directors are compensated for their expenses related to taking part in meetings of the Board of Directors (travel, accommodation, meals, etc).

Total remuneration paid to members of the Board of Directors for taking part in the work of the Board of Directors in 2011 totalled 1 704 660 rubles. The Company owes no monies regarding remuneration of members of the Board of Directors.

Committees of the Board of Directors In ensure effective execution by the Board of Directors of their function in overall management of the Company’s activities committees of the Board of Directors have been set up. The committees have the status of consulting deliberating bodies which are involved in deeper development of questions related to the compentency of the Board of Directors and subsequent drawing up of recommendations on decisions by the Board of Directors.

The work of each committee is regulated by a corresponding Statement in which the aims and functions of the committee, the order of forming it and organising its work are set out.[7].

The membership of each committee is chosen by the Board of Directors of the Company from candidates proposed by members of the Board of mittee members do not have to be members of the Board of Directors, with the exception of the Audit Committee, whose members are chosen exclusively from the membership of the current Board of Directors.

Audit Committee		Committee for Personal and Awards
Set up 16.10.2009		Set up 06.08.2010
Main objectives		Main objectives
Preparing recommendations for the Board of Directors on questions related to monitoring the annual independent audit of financial statements and assessment of the effectiveness of internal control procedures in the Company.		Preparing recommendations for the Board of Directors on questions related to setting criteria for selection and assessment of candidates for the Board of Directors and executive bodies of the Company and with assessing the work of these bodies, as well as drawing u principles and criteria for setting the amount of remuneration to their members.
Membership		Membership
Aleksei Vladimirovich Demidov, Chairman of the Committee, member of the Management Board, Deputy General Director for Economics and Finance of MRSK Holding Anna Yurevna Katina, Head of Section for Analysis and Monitoring of the Department of Corporate Management and Investor Relations, MRSK Holding Sergei Evgenevich Yurchuk, Director of Finance at MRSK Holding Current membership of the Committee elected 20 July 2011. Previous membership, which worked during 2011, elected by decision of the Board of Directors on 30 July.		AV Chigrin, Chairman of the Committee, Head of Personnel Department at RMSK Holding VE Lutskovich, Deputy Head of Personnel Department at RMSK Holding Anna Yurevna Katina, Head of Section for Analysis and Monitoring of the Department of Corporate Management and Investor Relations, MRSK Holding NI Erpsher, Head of Directorate for Organisational Development at MRSK Holding Current membership of the Committee elected 20 July 2011. Previous membership, which worked during 2011, elected by decision of the Board of Directors on 5 August 2010.
Main results of work in 2011		Main results of work in 2011
Six meetings in the in absentia in person format, at which recommendations to the Board of Directors were developed on the following basic questions[8]: ­  considering candidates for external auditor and determing the size of payment for their services; ­  preliminary approval of the Company’s annual report for 2010; ­  progress in realising the project to set up an integrated system for risk management and internal control; ­  considering the new revision of the Statement on insider information.		Twelve meetings (one in person and and eleven in the in absentia in person format), at which recommendations to the Board of Directors were developed on the following basic questions: ­  the new membership of the Management Board; ­  approving the organisational structure and list of positions of the executive apparatus of the Company; ­  approving the Statement on personnel reserve of young specialists; ­  approving the new revision of the Statement on incentive schemes and the benefits packages for senior managers and the General Director.
Reliability Committee		Committee for Strategy, Development, Investments and Restructuring		Committee for Technological Connection
Set up 18.09.2006		Set up 05.02.2010		Set up 11.10.2011
Main objectives		Main objectives		Main objectives
Preparing recommendations for the Board of Directors on fields related to providing technological reliability and development of energy facilities, network equipment and other fixed assets of the Company.		Preparing recommendations for the Board of Directors on questions related to developing the Company’s development strategy, assessing the effectiveness of its work and improving investment attractiveness.		Preparing recommendations (conclusions) for the Board of Directors on questions related to improving the effectiveness and development of the Company’s activities in the sphere of technological connection of consumers to electricity networks.
Membership		Membership		Membership
BI Makhanoshin, Chairman of the Committee, Deputy General Director and Technical Director at MRSK Holding AP Petrov, Deputy Head of Department, Head of Section for Industrial Technological Regulation of the Department for Technical Development of MRSK Holding AV Bespalov, Head of Section for Investment Projects and Estimations of the Department of Capital Construction of MRSK Holding Pavel Vasilevich Zinchenko, Deputy General Director for Technical Questions, Head Engineer at Kubanenergo DYu Ryazantsev, Deputy Head Engineer, Head of Department of Operational and Process Management at Kubanenergo VD Voronin, Head Power Engineer at RN-Tuapsinskii NPZ MG Petrenko, Head Power Engineer at RN-Krasnodarneftegaz Current membership of the Committee elected 20 July 2011. Previous membership, which worked during 2011, elected by decision of the Board of Directors on 30 July 2010 and 23 March 2011.		DL Pankov, Chairman of the Committee, Director for Strategy, Development and Innovation at MRSK Holding DO Akhrimenko, Deputy Head of Department of Corporate Management and Investor Relations at MRSK Holding SA Balaeva, Head of Department of Investment at MRSK Holding VI Isaev, Head of Finance Department at MRSK Holding MA Lavrova, Deputy Head of Department of Business Planning at MRSK Holding Vitalii Aleksandrovich Kocherga, Deputy General Director for Corporate Management at Kubanenergo Andrei Vladimirovich Lyashko., Deputy General Director for Devolopment and Realising Services at Kubanenergo YuA Dmitrieva, Leading Advisor of Section for Realisation of the Federal Targeted Investment Programme of the Department of Economic Regulation and Property Relations in the Fuel and Energy Sector of the Ministry for Energy of Russia IA Korotaev, Head of Section for Energy Supply to Oil Processing and Sales Businesses of the Department of Power at Rosneft VP Levaev, Head of Section for Long Term Development of the Department of Power at Rosneft Current membership of the Committee elected 20 July 2011. Previous membership, which worked during 2011, elected by decision of the Board of Directors on 30 July 2010 and 23 March 2011.		Alisher Izamovich Arifov., Chairman of the Committee, Deputy General Director at RN-Energo AM Pyatigor, Head of Department for Long Term Development and Technological Connection at MRSK Holding Andrei Vladimirovich Lyashko., Deputy General Director for Devolopment and Realising Services at Kubanenergo Vitalii Aleksandrovich Kocherga, Deputy General Director for Corporate Management at Kubanenergo VP Levaev, Head of Section for Long Term Development of the Department of Power at Rosneft Current membership of the Committee elected 11 October 2011.
Main results of work in 2011		Main results of work in 2011		Main results of work in 2011
Ten meetings in the in absentia in person format, at which recommendations to the Board of Directors were developed on the following basic questions: ­  approving the business plan and targets for key indicators of effectiveness at the Company for 2011, as well as quarterly results of their execution; ­  examining the report on bringing power line buffer zones within statutory values; ­  examining information about the condition of the Company’s electricity production facilities.		Nineteen meetings (three in the joint presence format and the remainder in absentia) at which recommendations to the Board of Directors were developed on the following most important questions: ­  approving the business plan and investment programme, targets for key indicators of effectiveness at the Company, as well as reports on the results of their execution; ­  approving the Programme for innovation development of the Company; ­  on measures to eliminate delays in the schedule for construction of Olympic facilities.		The Committee held no meetings in the accounting year.

Remuneration of members of the committees of the Board of Directors Remuneration is stipulated for participating in meetings of committee meetings for all members of these committees. The total amount of remuneration plaid to members of committees of the Board of Directors in 2011 was 998 700 rubles. The Company owes no monies with regard to remuneration to committee members.

Executive bodies

Managing current activities at Kubanenergo is carried out by a single executive body - the General Director and the collegiate executive body - the Management Board.

In accordance with the Charter of the Company, the General Director is elected by the Board of Directors and is Chairman of the Management Board. Members of the Management Board are also elected by the Board of Directors according to proposals from the General Director of the Company and the size of the membership is determined by decision of the Board of Directors.

Each member of the Management Board, including the Chairman, has experience, knowledge and qualifications necessary for proper execution of the duties laid upon them. The General Director and members of the Management Board act conscientiously in the interests of the Company and all its shareholders. To avoid conflict of interest and possible negative consequences for the Company arising from them members of the Management Board disclose to the Company all information about their commercial activities unconnected to the interests of the Company.

General Director

In accordance with the Charter of Kubanenergo the competencies of the General Director of the Company include all questions of managing current activities by the Company, with the exception of questions lying within the competency of the general shareholders meeting, the Board of Director and the Management Board of the Company.

The General Director of the Company without letter of authority acts in the name of the Company, including:

·  ensuring execution of work plans of the Company’s necessary to achieve tasks;

·  organising financial recording and accounts in the Company;

·  to dispose of Company property, complete transactions in the name of the Company, to issue letters of authority;

·  publish inhouse regulatory acts and other internal Company documents on questions of his competencies, give instructions to be obeyed by all Company employees;

·  approve Statements on branches and representative offices of the Company;

·  in accordance with the overall structure of the executive apparatus of the Company approve personnel arrangements and salaries of Company employees;

·  has the rights and obligations of an employer as set out in labour legislation in relation to Company employees;

·  carries out the function of Chairman of the Management Board of the Company;

·  allocates duties among Deputy General Directors.

Since 1 December 2010 the function of single executive body of the Company has been carried out by Georgii Akhmedovich Sultanov[9], elected by the Board of Directors on 23 November 2010 (Protocol № 000/2010).

On 30 November 2011 the Board of Director extended the authority and term of Georgii Sultanov’s employment contract to 30 November 2012 inclusive (Protocol № 000/2011).

Remuneration of the single executive body Questions of remuneration of the General Director are regulated by the Statement on motivation of the General Director of Kubanenergo approved by decision of the Board of Directors of the Company (Protocol of 22.07.2011  № 000/2011). This Statement, an inseperable part of the employment contract of the General Director, sets the order of determining, approving and changing the salary, types of bonus for the General Director, as well as the order of making payments.

Bonuses for the General Director depend on the results of meeting the key indicators for the accounting period, a quarter or a year, approved by the Board of Directors.

If the results for the year show that the conditions (strategic priorities) set by the Board of Directors have been fulfilled then by decision of the Board of Directors the General Director can be paid an additional bonus.

For achieving high targets in the key indicator of effectiveness determined by the Board of Directors to be a priority, by decision of the Board of Directors, the General Director can be paid a special bonus according to the results of the Company’s work in the accounting year.

The Board of Directors of the Company has the right to make decisions on a one-time payment to the General Director for fulfilling particularly important tasks (works) whose completion demands special requirements in deadlines and quality, responsibility and significance for the sector and the state. In addition by decision of the Board of Directors the General Director is paid a one-time bonus in the event of his receiving a state award, or departmental or corporate award.

Management Board

The Management Board is the collegiate executive body of the Company, acting on the basis of the Charter and the Statement on the Management Board[10] approved by decision of the annual general shareholders meeting of Kubanenergo. The competencies of this executive body include, in particular, the following questions:

taking decisions on questions related to the competencies of higher management bodies of businesses of which 100% of the equity capital or all voting shares belong to the Company; preparing and presenting reports on the financial and operating activities of businesses of which 100% of the equity capital or all voting shares belong to the Company for consideration by the Board of Directors; developing and presenting long term plans for realising the main areas of activity of the Company for consideration by the Board of Directors; preparing the business plan and reports on the results of its execution, as well as approving and correcting cash flow; preparing reports on the financial and operating activities of the Company and the execution by the Management Board of decisions of the general shareholders meeting and the Board of Directors of the Company; setting the social benefits and guarantees for employees of the Company; taking decisions on completing transactions where the subject of the transaction is property, work or services whose cost totals from 1% to 25% of the balance sheet assets of the Company.

Meetings of the Management Board During 2011 there were thirteen meetings of the Management Board in accordance with its planned working, as well as on the initiative of the Chairman of the Management Board, of which one meeting was held in the joint presence format and twelve in the vote in absentia format.

Membership of the Management Board

Current membership of the Management Board elected by decision of the Board of Directors on 14 July 2006. Change in the members of the Management Board related to individual members standing down took place on 09.01.2007, 02.07.2007, 23.01.2008, 17.04.2008, 25.07.2008, 31.12.2008, 29.06.2009, 23.03.2011 and 05.09.2011.

	Georgii Akhmedovich Sultanov, 1954 General Director and Chairman of the Management Board Education: Krasnodar Polytechnical Institute, Doctor of Technical Sciences
	Sergei Vladimirovich Anatskii, 1965 Deputy General Director for Capital Construction Other positions held: Member of the Board of Directors of Energoservis Kubani Education: Krasnodar Higher Military Command Engineering Guided Missile School
	Aleksei Vasilevich Brizhan, 1978 Director of Sochi Electricity Networks, Kubanenergo Education: Kuban State Technological University, PhD in Economics
	Mikhail Borisovich Bronnikov, 1965 Deputy General Director for Capital Construction of Olympic Facilities Education: Ust-Labinsk Construction and Fitting Institute
	Aleksandr Nikolaevich Galyaev, 1972 Deputy General Director for Economy and Finance Other positions held: Member of the Board of Directors of Energoservis Kubani Education: Kuban State University
	Pavel Vasilevich Zinchenko, 1963 Deputy General Director for Technical Questions, Head Engineer Other positions held: Member of the Board of Directors of Energoservis Kubani Education: Krasnodar Higher Military Command Engineering Guided Missile School, PhD in Technical Sciences
	Vitalii Aleksandrovich Kocherga, 1977 Deputy General Director for Corporate Management Other positions held: Member of the Board of Directors of Energoservis Kubani Member of the Committee for Strategy, Development, Investment and Reorganisation of the Board of Directors of Kubanenergo Member of the Committee for Technical Connection of the Board of Directors or Kubanenergo Education: Kuban State University
	Lyudmila Vladimirovna Loskutova, 1973 Chief Accountant, Head of Finance Department Other positions held: Member of the Revision Commission at Energoservis Kubani Education: Kuban State Agrarian University
	Andrei Vladimirovich Lyashko, 1978 Deputy General Director for Devolopment and Realising Kubanenergo Services Other positions held: Chairman of the Board of Directors of Energoservis Kubani Member of the Committee for Strategy, Development, Investment and Reorganisation of the Board of Directors of Kubanenergo Member of the Committee for Technical Connection of the Board of Directors or Kubanenergo Education: Kuban State Agrarian University
	Inver Yusufovich Natkho, 1958 Director of Krasnodar Electricity Networks, Kubanenergo Education: Kuban Order of the Red Banner of Labour Agricultural Institute
	Svetlana Stanislavovna Samoilenko, 1963 Deputy General Director, Secretary General of Kubanenergo Other positions held: Chairman of the Board of Directors of Energetik and Plamya Education: All Union Correspondence Financial Economic Institute, North Caucasus Academy for State Service under the President of the Russian Federation

All members of the Management Board of the Company are citizens of the Russian Federation.