5.2 BOARD OF DIRECTORS

The Board of Directors outlines the Company’s strategy and key development focuses and oversees the performance of executive bodies to ensure that the interests of the Company and its shareholders are served.

The Board of Directors acts in accordance with Russian Federal Law No. 208-FZ dated 26 December, 1995, Russian legislation and the Company’s internal documents: Articles of Association, the Code of Corporate Governance and Regulations on the Board of Directors.

The Board of Directors is elected by cumulative voting at the General Shareholders Meeting for a oneyear period and consists of 11 members. In accordance with the Company’s Articles of Association, six directors must represent the State. An obligatory requirement of the Company’s Articles of Association is that the Board of Directors includes members representing the Market Council – a not-for-profit partnership that unites companies in the power sector and large electricity and heat power consumers.

To ensure unbiased decision-making by the Board of Directors and balanced interests for different shareholder groups, the Company strives to have at least three independent directors on its Board of Directors.

In 2010 Federal Grid Company had two different compositions of its Board of Directors. Until 29 June, 2010, the Board of Directors was composed of members elected by the Company’s Annual General Shareholders Meeting (which was held 30 June, 2009).

ą ď/ď Name Position
1 Boris Ayuyev member
2 Evgeny Dod member
3 Mikhail Kurbatov member
4 Alexey Makarov member
5 Andrey Malyshev Deputy Chairman
6 Sergey Maslov member
7 Dmitry Ponomarev member
8 Vladimir Tatsiy member
9 Ernesto Ferlenghi member
10 Rashid Sharipov member
11 Sergey Shmatko Chairman

Composition of the Board of Directors, as of 29 June, 2010

(The positions of the Board of Directors members are those that they held at the time they were elected to the Board)

Sergey Shmatko

Chairman
Born: 19666
Education: From 1983-1990 he studied in the Political Economics Department and the Mathematics and Mechanics Department of Ural State University (Sverdlovsk). From 1990-1992, he studied in the Economics Department of the University of Marburg (Germany). In 2004, he attended the Graduate School of the Military Academy of the General Staff of Russia’s Armed Forces and received a degree in Defense and Maintaining Russia’s National Security.
Holds the following positions:

  • Minister of Energy of the Russian Federation;
  • Chairman of the Board of Directors of Zarubezhneft;
  • Chairman of the Board of Directors of Federal Hydro-Generating Company;
  • Member of the Board of Directors of INTER RAO UES;
  • Member of the Board of Directors of Holding of the Inter-Regional Distribution Grid Companies;
  • Member of the Board of Directors of Gazprom;
  • Chairman of the Board of Directors of Transneft Oil Transporting Company;
  • Member of the Board of Directors of System Operator of Unified Energy System.

* Member of the Board of Directors since 2008.
* Holds no shares in the Company.

Andrey Malyshev

Deputy Chairman
Born: 1958
Education: He graduated from the Moscow Power Engineering University with a degree in Heat Power Automation, as a heat power engineer. He holds a PhD in Science, Sociology and Technical Sciences.
Holds the following positions:

  • Deputy CEO, Member of the Management Board of the Russian State Nanotechnologies Corporation.

* Member of the Board of Directors since 2008.
* Holds no shares in the Company.

Boris Ayuyev

Born: 1957
Education: He graduated from the Ural Polytechnic Institute with a degree in Electric Power Plants in 1979 and holds a PhD in Technical Sciences
Holds the following positions:

  • Chairman of the Management Board, Member of the Board of Directors of System Operator – Central Dispatch Control of the Unified Energy System;
  • Member of the Board of Directors of Energy Forecasting Agency;
  • Member of the Board of Directors of Administrator of the Trading System of the Wholesale Electricity Market;
  • Member of the Board of Directors of Financial Payment Center;
  • Chairman of the Not-for-Profit Partnership Russian National Committee of the International Council on Large Electric Systems.

* Member of the Board of Directors since 2004.
* Share of participation in the Company’s share capital: 0.0072209534%.
* Share of the Company’s ordinary stock: 0.0072209534%

Oleg Budargin

Born: 1960
Education: He graduated from the Lvov Polytechnic Institute in 1961 with a degree in Electrical Engineering and has a PhD in Technical Sciences. He is also a professor, with a PhD in Economics and is an honored power industry worker of Russia.
Holds the following positions:

  • Advisor on the Power Sector to the President of United Metallurgical Company;
  • Member of the Board of Directors of Energy Forecasting Agency.

* Member of the Board of Directors since 2010.
* Share of participation in the Company’s share capital: 0.0000226124%.
* Share of the Company’s ordinary stock: 0.0000226124%.

Georgy Kutovoy

Born: 1937
Education: He graduated from the Lvov Polytechnic Institute in 1961 with a degree in Electrical Engineering and has a PhD in Technical Sciences. He is also a professor, with a PhD in Economics and is an honored power industry worker of Russia.
Holds the following positions:

  • Advisor on the Power Sector to the President of United Metallurgical Company;
  • Professor of the Department for State Regulation of Natural Monopolies at the IPK Gossluzhbi State Educational Institution;
  • Member of the Board of Directors of Holding of Inter-Regional Distribution Grid Companies.

* Member of the Board of Directors since 2010.
* Holds no shares in the Company.

Alexey Makarov

Born: 1937
Education: He graduated from the Leningrad Polytechnic Institute and holds a PhD in Economics (1970) and became a professor (1974); he is an expert on system research for the power industry, the development of power sector policy and forecasts in the fuel and power energy sector. He is also a member of the Russian Academy of Sciences (RAS).
Holds the following positions:

  • Member of the RAS, Power Sector, Engineering, Mechanics and Management Processes Department;
  • Director of the Energy Research Institute of the RAS;
  • Independent Director of the Energy Forecasting Agency.

* Member of the Board of Directors since 2008.
* Holds no shares in the Company.

Dmitry Ponomarev

Born: 1967
Education: He graduated from the International Law Department of the Moscow State Institute of Foreign Affairs of the Ministry of Internal Affairs and the Economic Department of the C.E.P. Paris Institute for Political Science.
Holds the following posts:

  • Chairman of the Management Board of the Non-Commercial Partnership "Market Council";
  • Chairman of the Management Board of Administrator of the Trading System of the Wholesale Electricity Market;
  • Member of the Board of Directors of System Operator of the Unified Energy System;
  • Member of the Board of Directors of Energy Forecasting Agency;
  • Member of the Board of Directors of Lenenergo;
  • Member of the Board of Directors of Financial Payment Center;
  • Chairman of the Board of Directors of Energorynok.

* Member of the Board of Directors since 2008.
* Holds no shares in the Company

Yuri Soloviev

independent director
Born: 1970
Education: He graduated from the Plekhanov Russian Academy of Economics in 1994. In 2002, he received an MBA from the London Business School.
Holds the following positions:

  • President of VTB Capital, Head of the Investment Business of the VTB Group;
  • Chairman of the Board of Directors of VTB Asset Management;
  • Member of the Board of Directors of RAO Energy Systems of the East;
  • Director General, Chairman of the Management Board, Member of the Board of Directors of VTB Capital IB Holding;
  • Director General, Chairman of the Management Board, Member of the Board of Directors of VTB Capital Holding;
  • Member of the Board of Directors of VTB Capital Investment Management Holding AG.

* Member of the Board of Directors since 2010
* Holds no shares in the Company.

Ernesto Ferlenghi

independent director
Born: 1968
Education: He graduated from the Tor Vergata University of Rome (the Department of Mathematics, Physics and Natural Sciences) with a degree in Physics.
Holds the following positions:

  • Head of the Representative Office of Eni Russia and the CIS;
  • Director General of Eni Energy, the Russian Federation.

* Member of the Board of Directors since 2008.
* Holds no shares in the Company.

Igor Khvalin

independent director
Born: 1974
Education: He graduated from the Moscow Aviation Institute (the State Technical University) and the Moscow State Pedagogical University, with PhD in Sciences and History.
Holds the following positions:

  • General Director of Volga Engineering Group;
  • Member of the energy effiency working group of the Commission for the Modernization and Technological Development of the Economy attached to the Russian President;
  • Member of the Board of Directors of Holding of Inter-Regional Distribution Grid Companies.

* Member of the Board of Directors since 2010.
* Holds no shares in the Company.

Rashid Sharipov

independent director
Born: 1968
Education: He graduated from the Moscow State University of Foreign Affairs in 1991, with a degree in International Affairs and International Law. He also holds an LL.M. degree from the California Western - School of Law (1993).
Holds the following positions:

  • Deputy Director General of KFK-Consult;
  • Member of the Board of Directors of System Operator of the Unified Energy System;
  • Member of the Supervisory Board of Russian Regional Development Bank;
  • Member of the Board of Directors of Center for Engineering and Construction Management of the Unified Energy System.

* Member of the Board of Directors since 2008.
* Holds no shares in the Company.

Deals Involving the Company’s Shares

Deals with the Company’s shares in 2010

  • Oleg Budargin
    Deal date: 24 June, 2010
    Shareholding in the Company’s share capital prior to the acquisition: 0%
    Shareholding in the Company’s share capital after the acquisition: 0.0000226124 %.

Board of Directors’ Activities

In 2010 the Board of Directors held 27 meetings. Of this number, two were held in the presence of shareholders. The Board of Directors made a total of 182 decisions, including approving the Company’s long-term programs, such as energy savings and the energy efficiency improvement program, the 2010-2014 investment program, the innovative development program, the insurance coverage program and decisions that outline the main areas of the Company’s operations:

  • On approving the list of measures necessary to ensure the security of the Company’s sites in the North Caucasus Region;
  • On acquiring a diesel power plant with equipment in the Republic of Karelia, Sortavala, Valaam Island;
  • On discontinuing the Company’s participation in: Tsentr Energetiki, Sibenergoholding, Intergeneration, and SOVASATOM;
  • On approving the new version of the Regulations on the Procedure for the Regulated Procurement of Products, Work and Services for Federal Grid Company Needs;
  • On approving Regulations on the Dividend Policy;
  • On approving the new version of the Regulations on Remuneration for Members of the Committees of Board of Directors.

The Company publishes decisions of the Board of Directors with Minutes' numbers and dates on its corporate web site: http://www.fsk-ees.ru/shareholders_and_investors/corporate_governance/decisions_of_the_board/