The rewards system in the Company meets the requirements regarding the need to unite the material interests of the employees with the strategic aims of the Company and the appropriateness of the size of the reward for the labour in put of each member of staff as a result of the Company’s activities.

The Company’s labour payment system regulates employee salary levels depending on their qualifications as well as the complexity, quantity, quality and conditions of the work carried out, and is reflected in the Statement on Kubanernego Employee Labour Payments. This Statement was developed in accordance with existing legislation in the Russian Federation, the Sectoral Tariff Agreement in Electrical Energy of the Russian Federation for 2009 to 2011, and the Recommendations on a Uniform Procedure for Paying Salaries according to Scaled Wage Rates (Official Rates of Pay) for Workers in Electrical Energy approved by the All Russia Sectoral Union of Employers in Electrical Energy and the All Russia Electrical Trade Union public association, and is an appendix to the collective bargaining agreement.

Pay and incentive schemes for management are regulated by the Statement on Financial Incentives for Higher Management at Kubanenergo and the Statement on Financial Incentives for Lead Managers at Kubanenergo. The incentive scheme for management set out in these Statements is aimed at creating the necessary conditions to attract high level professional managers to the Company, under whose management the Company can ensure the reliability and quality of electricity supply and improvements in the efficiency of property and financial management, as well as achieving high business results.

The collective bargaining agreement at Kubanenergo for 2009 to 2011 took third place in the Organising High Social Effictiveness in the Electrical Energy Sector 2009 all Russia sectoral competition. The Company’s collective bargaining agreement was also a winner at a Regional competition for major companies in the material production sphere in Krasnodar Region. The high opinion of the collective bargaining agreement at Regional and national levels is clear evidence of the effectiveness of the social accountability policy in the Company.