Incentive principles and approaches used in respect of members of the Executive Board

Moscow Exchange endeavours to provide competitive remuneration, taking into account the contribution of each member of the executive bodies in the achievement of Moscow Exchange’s strategic objectives and financial performance.

The Supervisory Board of Moscow Exchange, with the participation of the Nomination and Remuneration Committee, determines the amount of remuneration (both fixed and variable) depending on the performance of Moscow Exchange and the personal contribution of each member of the Executive Board to the final results, as well as taking into account peer surveys (studies) concerning remuneration for similar positions in leading international consulting companies. The dependence of remuneration on performance is also seen in the annual approval of the key performance indicators for each member of the Executive Board and subsequent consideration of their reports on the achievement of such indicators and determination of the amount of remuneration based on annual performance (annual premium, annual bonus), taking into account, among other things, the relevant key performance indicators.

The system of remuneration for members of collegial bodies is based on an optimal balance between the dependence of the remuneration on the performance of Moscow Exchange and the personal contribution of each member to such performance.

The remuneration of members of executive bodies, including the structure of the remuneration, payment types, benefits and privileges, as well as the conditions, procedure and amount of reimbursement (compensation), and the list of eligible expenses, is determined by the Supervisory Board of Moscow Exchange.

The remuneration of each member of the executive bodies, the conditions and procedure for the payment of such remuneration and the conditions for the early termination of contracts, including termination benefits, compensation and/or any other payments in addition to that provided for in legislation and the conditions for payment thereof are reviewed and approved by the Supervisory Board on the recommendation of the Nomination and Remuneration Committee of Moscow Exchange (when approving the employment contract for each member of the executive bodies of Moscow Exchange), and they may be revised depending on the volume and significance of the problems resolved by such member, as well as the quality of their performance. The amount of compensation (severance pay) payable in the event of the early termination of the authority of the executive bodies upon the initiative of employees and in the absence of any bad-faith actions on their part shall not be more than twice the fixed part of their annual remuneration. No compensation is paid in case a member of an executive body is dismissed on grounds related to a disciplinary penalty or his/her employment is terminated as a result of an illegal act (or failure to act) committed by said member. Remuneration is discussed on an annual basis by the Supervisory Board on the recommendation of the Nomination and Remuneration Committee in respect of each member of the executive body. Personal bonuses depend on the achievement by a member of the executive body of the key performance indicators set forth for such member for a particular reporting year. To further increase the personal accountability of each member of the executive bodies, the Supervisory Board of Moscow Exchange regularly postpones the payment of remuneration to those members of executive bodies who are responsible for certain activities or projects in order to wait for the financial and other results of such activities; bonuses may be reduced or cancelled in the event of negative results. Sixty per cent of the approved bonuses for 2015 will be paid in March 2016, i.e. after summing up the year’s results. Forty per cent of bonuses will be deferred and paid in equal instalments after one and two calendar years (20% after one calendar year and the remaining 20% after two calendar years) on the basis of the relevant decisions of the Supervisory Board of Moscow Exchange. This procedure takes into account the risks of the decisions taken by members of the Executive Board.

In order to increase the motivation and accountability among members of the executive bodies and key managers of Moscow Exchange, to get them thinking like they were the owners of the company, and to link their remuneration to the long-term performance of Moscow Exchange, the Supervisory Board approved and periodically revises the principles and parameters for a long-term remuneration programme for the executives of Moscow Exchange.