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 RUSSIA IN FACTS |
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11 June 2004 01:53
UES committee says managers need incentives
MOSCOW. June 11 (Interfax) - A Unified Energy System (UES) strategy and reform committee has said it is necessary to
provide incentives for company managers to efficiently manage UES assets and promote reforms in the sector.
Top UES managers need incentives to efficiently manage the company's assets and finances, and also to ensure
reliable production, according to a protocol from a meeting held at the beginning of June.
The committee also recommended that the UES board review terms for employment contracts with top managers that
exclude the debt coverage ratio from the list of indicators taken into account in determining quarterly bonuses. It also
recommended that a system of individual criteria and work performance be developed for UES executives. The committee
said annual bonuses should be reduced by 33% for UES executives and the money should go towards individual performance
incentives.
The committee thinks that Return On Total Assets (ROTA) should be taken into considering in determining the size of
annual bonuses and that top managers should only be receive the bonuses if combined assets at year-end are higher or
equal to those of the beginning of the year. The committee also recommended reviewing the possibility of excluding funds
earmarked for investments in calculating ROTA.
The committee said that any method used to calculate bonuses should also take into account international accounting
standards. This is necessary to compare the indicators determined both by Russian and international accounting
standards. The committee's calculations will be given to the UES board of directors.
The committee recommended several conditions be taken into account in developing a system of incentives for employees
to efficiently implement reforms. An employee that takes part in the program should take upon himself part of the risk
connected with changing the value of a UES share.
The committee said it is necessary to differentiate the level of risk undertaken by top managers and other employees.
[RU ASIA EUROPE EEU EMRG ENR ELG CORA] rm me
[Interfax] | 
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