Gazprom Board of Directors approves Regulation on Company’s Key Performance Indicators
The Gazprom Board of Directors approved the Regulation on Company’s Key Performance Indicators (KPI).
The document is developed with due regard to Gazprom’s effective KPIs as well as to the Methodological Guidelines issued by the Russian Ministry of Economic Development and the Federal Agency for State Property Management (Rosimushchestvo).
The Regulation gives a definition of the terms and introduces the system of key performance indicators, their main groups as well as goals, tasks and requirements applicable to KPIs.
The document also stipulates the key performance indicators for assessing the activity of Gazprom’s top managers, motivating the Company’s Board of Directors Members and making decisions on manpower. This group of KPIs includes, inter alia, the Total Shareholder Return (TSR) and Return on Equity (ROE) indicators – a 30 per cent share of all KPIs in this particular group.
The KPI system has been effective in Gazprom since 2006. It represents a set of criteria assessing the Company’s and its subsidiaries performance.
Gazprom also established a planning system using strategic target indicators. It is similar to the key performance indicators system applied by global energy companies, and it also considers the peculiarities of Gazprom’s activities and its development prospects.
In compliance with the List of Orders by Russian President dated July 5, 2013, state corporations, state companies, state unitary enterprises and business entities with over 50 per cent of a total governmental share in their equity capital, are obliged to adopt key performance indicators for evaluating managerial activity, to subsequently use them in making decisions on remuneration and staff changes.
Pursuant to the List of Orders, the Russian Ministry of Economic Development in cooperation with Rosimushchestvo worked out the Methodological Guidelines on the application of key performance indicators by the said organizations. The Methodical Guidelines are approved by the Russian Government. They envisage the typical framework of key performance indicators system and types of KPIs (financial and economic as well as industry specific ones), their relation to motivating members of company’s governing bodies, and other parameters.