Remuneration of members of the governing bodies

The remuneration procedure for the members of the Board of Directors and the executive bodies is set out in the following documents.

Board of Directors

• Regulations on Remuneration and Compensation for Members of FESCO’s Board of DirectorsApproved by the Extraordinary General Shareholders Meeting held on 2 December 2021, Minutes No. 56 dated 3 December 2021.

Executive bodies (President, CEO, and Executive Board)

• Regulations on Bonus Payment to FESCO’s Top ManagementApproved by resolution of the Board of Directors on 3 December 2021, Minutes No. 25/21 dated 6 December 2021.
• Short-Term Employee Incentive Programme (covering all employees of FESCO Group)Approved by resolution of the Board of Directors on 3 December 2021, Minutes No. 25/21 dated 6 December 2021.

In 2021, to maintain an effective level of motivation for the Board of Directors and management and ensure that they are consistent with the current market conditions, the above documents were restated and approved, with amendments made to FESCO Group’s Short-Term Employee Incentive Programme.

The performance evaluation period was changed from twelve to six months, and the previous annual remuneration amount for the members of the Board of Directors fixed in 2017 was increased.

Remuneration of the Board members

A fixed annual remuneration (base and additional) is paid to the members of the Board of Directors for the exercise of their duties, with compensation of their actually incurred, documented, and reasonable expenses.

The base remuneration is set for their participation in the routine work of the Board of Directors.

An additional remuneration is contemplated for the exercise of each the functions of the Chairman of the Board of Directors, the Chairman of a Committee, and a committee member.

No base and/or additional remuneration is paid to a member of the Company’s Board of Directors unless they participated in at least 25% of meetings of the Company’s Board of Directors or meetings of a committee of the Company’s Board of Directors in which they are a member, held in the quarter following which the relevant payment is made.

Fixed payments constitute the only form of monetary remuneration for the members of the Board of Directors.

No other forms of short-term motivation or monetary incentives apply to the members of the Board of Directors.

No compensations were paid in the reporting period. No loans were granted by the Company to the members of the Board of Directors in the reporting year.

Remuneration of members of the executive bodies

The Company pays a monthly fixed official salary for the exercise of the duties of a member of the Executive Board. Members of the Executive Board work part-time.

The remuneration of the sole executive bodies and the Executive Board members as the Company’s top executives consists of an official salary paid on a monthly basis and a bonus paid after summing up the results of achieving the key performance indicators (KPIs) for six months.

Bonus payment directly depends on the achievement of FESCO Group’s target EBITDA, objectives, and KPIs. The KPIs are set individually for each top executive, include operational, financial, and strategic criteria, and are approved by a meeting of the Board of Directors for each six-month period.

The Board of Directors may resolve to pay an additional remuneration to the top management for their special contribution to the achievement of the Company’s financial results and implementation of particularly important projects.

The remuneration paid to the members of the Executive Board and the sole executive bodies in 2021 totalled RUB 1,966.3 million. Neither reimbursement for expenses was paid, nor loans were granted to the members of the Executive Board in the reporting period.