Performance assessment of the Board of Directors [GRI 102-28]

According to the Regulation on the Board of Directors and clause 2.9.2 of the Corporate Governance Code, the performance of the Board of Directors as well as its committees and members should be evaluated on a regular basis at least once a year. In addition, it is recommended to periodically hire an external organization (consultant) – at least once every three years – to conduct an independent assessment of the quality of work by the Board of Directors.

In 2019, both a self-assessment and an independent assessment of the activities of the Board of Directors and its committees were conducted. The Association of Independent Directors (IDA), which is a reputable organization in matters concerning corporate governance and represents Russia in the GNDI Global Network of Director Institutions, was hired as an independent consultant.

The assessment process included questionnaires and individual interviews with directors as well as an analysis of self-assessment materials and internal documents governing corporate governance issues. The assessment results were reviewed by the Nomination and Remuneration Committee and also at a meeting of the Board of Directors.

The results of the assessment and self-assessment were reviewed at an in-person meeting of the PJSC Inter RAO Board of Directors on June 28, 2019 Minutes No. 252 dated June 28, 2019. with a preliminary discussion of the issue at an in-person meeting of the Nomination and Remuneration CommitteeMinutes No. 102 dated June 5, 2019..

Based on the results of the self-assessment, the average score in 2019 did not change significantly compared with 2018 and amounted to 4.6 points (out of a possible 5 points).

The external assessment confirmed that the Company’s corporate governance complies with the recommendations of the Corporate Governance Code. The external assessment noted improvements in the Company’s management in terms of the balance of the Board of Directors since the last external assessment in 2016 as well as the greater role played by the committees of the Board of Directors, the training of members of the Board of Directors, and a higher level of efficiency in the processes of preparing for and conducting meetings.

Key findings of the independent (external) performance assessment of the PJSC Inter RAO Board of Directors (including self-assessment results) for 2018:
Committees The assessment noted the active work performed by the committees (audit, nomination and remuneration, and strategy and investment) to prepare decisions for review by the Board of Directors
Board of Directors and Management Board A high level of professional interaction and culture and management’s quick response to requests from the Board of Directors
Succession A succession plan was drawn up for members of the Board of Directors and the Management Board with a training and development program, and a talent pool policy was adopted
Risks A separate risk management and internal control unit was established and regularly cooperates with the Board of Directors and the Audit Committee
Occupational health and safety The Company’s high standards in these areas were noted
Ethics The Code of Corporate Ethics was approved based on best international standards
Materials Positive dynamics in work performed by management to improve the quality of materials and reports at meetings of the Board of Directors

Following the external performance assessment of the PJSC Inter RAO Board of Directors for 2018 that was carried out simultaneously with a self-assessment, the Nomination and Remuneration Committee prepared recommendations in 2019 on ways to improve the activities of the Board of Directors, which were approved as instructions of the Board of Directors and were taken into account when drafting the work plan of the Nomination and Remuneration Committee and the Board of Directors for the 2019/2020 corporate year Minutes No. 252 of the meeting of the Board of Directors dated June 28, 2019..

Key recommendations for improving the activities of the Board of Directors and its committees:
Recommendations Plans and results
Propose including an item on the preliminary consideration of the updated Strategy/Long-Term Development Program of PJSC Inter RAO (Inter RAO Group) in the work plan of the Strategy and Investment Committee and the Audit Committee. Executed. Issue included in the work plan.The Strategy/Long-Term Development Program of PJSC Inter RAO (Inter RAO Group) for the period until 2025 with a view to 2030 was tentatively reviewed at a joint meeting of the Strategy and Investment Committee and the Audit Committee on February 11, 2020.
Propose including an item on the structure, main focuses, and strategic risks of the updated Strategy/Long-Term Development Program of PJSC Inter RAO (Inter RAO Group) in the work plan of the Strategy and Investment Committee and the Audit Committee. Executed. Issue included in the work plan.A report on the structure, main focuses, and strategic risks of the updated Strategy/Long-Term Development Program of PJSC Inter RAO (Inter RAO Group) was reviewed at a joint in-person meeting of the Strategy and Investment Committee and the Audit Committee on November 26, 2019.
Propose including an item on the status of risk management work with a detailed analysis of individual risks based on a proposal by members of the Board of Directors in the work plan of the Board of Directors following preliminary review by the Audit Committee. Executed. The issue was included in the work plan of the Board of Directors and reviewed by the Board of Directors in absentia on September 19, 2019 with preliminary in-person review by the Audit Committee on September 10, 2019.
Review reports on sustainable development management (ESG) at meetings of the Board of Directors following preliminary review at a joint meeting of the Audit Committee and the Strategy and Investment Committee. Executed. The report by Company management on the sustainable development of the Inter RAO Group was reviewed by the Board of Directors in absentia on September 19, 2019 with preliminary in-person review by the committees on September 10, 2019 (joint meeting).
Review items concerning the Company’s investment appeal, including its dividend policy and the balanced distribution of profits, at a meeting of the Board of Directors following preliminary review at a meeting of the Strategy and Investment Committee as part of the Investor Relations Report. Executed. The report by Company management on the sustainable development of the Inter RAO Group was reviewed by the Board of Directors in absentia on September 19, 2019 with preliminary in-person review by the committees on September 10, 2019 (joint meeting).
Continue the practice of conducting specialized workshops to update the knowledge of members of the Board of Directors. Executed. The Company held a seminar on digitalization in 2019.