07-8

Meetings of the Company's Management Board in 2017

The Company Management Board's operation is determined by the principles described in the Charter, the Corporate Governance Code and the Regulations on the Management Board. In 2017, 25 meetings of the Management Board were held, where 101 issues, which according to the Charter attributed to the competence of the executive body, were considered with the follow-up decision-making. The Management Board performed its activities in accordance with the resolution of the General Meeting of Shareholders and the Board of Directors of the Company.

Full name Total number of meetings Presence at the meetings (number) Comment
Zhanbolat Urakovich Nadyrov 25 21 Was reelected by the resolution of the Board of Directors of December 14, 2016 No. 10/2016, of January 20, 2017 No. 1/2017
Alexandr Vladimirovich Levitanus 3 3 Was reelected by the resolution of the Board of Directors of April 14, 2015 No.3/2015 (The authorities were preliminary terminated by the resolution of the Board of Directors of January 20, 2017 No.1/2017)
Daniyar Takhirovich Zheksembekov 23 23 Was elected by the resolution of the Board of Directors of November 17, 2016 No. 9/2016, of January 20, 2017 No. 1/2017, of December 12, 2017 No. 10/2017
Yelnar Ruslanovich Adaibekov 25 22 Was elected by the resolution of the Board of Directors of April 14, 2015 No.3/2015, of January 20, 2017 No.1/2017
Saken Madikhanovich Baituganov 23 16 Was reelected by the resolution of the Board of Directors of April 14, 2015 No. 3/2015, of January 20, 2017 No.1/2017, of December 12, 2017 No.10/2017
Aidos Magauinovich Kanapin 25 25 Was elected by the resolution of the Board of Directors of August 14, 2015 No.7/2015, of January 20, 2017 No.1/2017
Andrey Alexandrovich Sapronov 3 3 Was reelected by the resolution of the Board of Directors of April 14, 2015 No.3/2015 (The authorities were preliminary terminated by the resolution of the Board of Directors of January 20, 2017 No.1/2017)
Zharkinbek Ishanbekovich Khiduanov 3 3 Was reelected by the resolution of the Board of Directors of April 14, 2015 No.3/2015 (The authorities were preliminary terminated by the resolution of the Board of Directors of January 20, 2017 No.1/2017)
Full name Total number of meetings Presence at the meetings (number) Comment

The key issues considered at the meeting of the Board are the following ones:

  1. approval of the staffing table (amendment) of the CO and its branches;
  2. approval of bylaws:
    • The integrated management system manual "Instruction on filling vacancies in the new organizational structure of the Central Office of Transtelecom JSC;
    • The integrated management system manual "Rules of official salaries and bonuses determination for administrative and production personnel of the central office of Transtelecom JSC;
    • The integrated management system manual "Regulations on the selection of personnel" as amended;
    • The integrated management system manual "Methods for the analysis of financial indicators of Transtelecom JSC";
    • Regulations on the Investment Committee of Transtelecom JSC;
    • Regulations on the Budget Committee of Transtelecom JSC;
    • Regulations on the Technical Council of Transtelecom JSC as amended;
    • Regulations on the work with floating assets of Transtelecom JSC as amended;
    • Regulations on the Council for the improvement of Transtelecom JSC;
    • Regulations on the GREEN movement in Transtelecom JSC;
    • The policy of Transtelecom JSC in the field of safety and labor protection;
    • The financial policy of Transtelecom JSC as amended;
    • Policy in the field of project management of Transtelecom JSC;
    • Information Policy of Transtelecom JSC.
  3. adoption as follows:
    • KPIs Maps with actual values for Executive Directors of the Central Office that are not members of the Management Board of Transtelecom JSC, based on the results of work during 2016;
    • Motivational Maps for 2017 for senior officials of the Central Office that are not members of the Management Board of Transtelecom JSC;
    • Composition of the Risks Committee of Transtelecom JSC as amended.
  4. on procurement issues:
    • procurement of works for commissioning the equipment of "Energy Dispatch Traction" Automated Control System at the level of Locomotive on the locomotives of KTZ- Freight Transpiration JSC through the single source procurements from TNS-Intec LLP for a total of 104 753 600 (one hundred four million seven hundred fifty three thousand six hundred) tenge including VAT;
    • services procurement:
      1. to conduct an audit of the energy management system from Russian Register Eurasia LLP through the single source procurements for a total of 1,900,000 (one million nine hundred thousand) tenge, excluding VAT;
      2. to conduct a recertification audit on the quality management system through the single source procurements from the Russian Register Eurasia LLP for a total of 2,850,000 (two million eight hundred and fifty thousand) tenge, excluding VAT;
      3. to conduct a recertification audit of the environmental management system through the single-source procurements from the Russian Register Eurasia LLP for a total of 2,850,000 (two million eight hundred and fifty thousand) tenge, excluding VAT.
    • procurement of legal advisory services and representation services due to representation in international jurisdictions and arbitration from Curtis, Mallet-Prevost, Colt&Mosle LLP through the single source procurements for a total amount of $85,000 excluding VAT;
    • procurement of Microsoft server licensed software through the single source from Corporate Business Systems LLP for a total amount of 798,376,909 (seven hundred and ninety-eight million three hundred and seventy-six thousand nine hundred and nine) tenge, excluding VAT;
    • procurement of services for the provision of 20 licenses for the right to use licensed Microsoft SQLSvrEntCore ALNG LicSAPk MVL 2Lic CoreLic software through the single source from Corporate Business Systems LLP for a three-year period for a total amount of not more than 156 034 145.40 (one hundred and fifty six million thirty thousand four hundred and forty five) tenge excluding VAT ( 52 011 381.80 tenge per year);
    • purchase of works on repair/modernization of telecommunication equipment through the single source for a total of 172 984 401 (one hundred seventy two million nine hundred and eighty four thousand four hundred and one) tenge excluding VAT from Astana New Technologies-2008 LLP.

Remuneration of members of the Management Board

Remuneration of the members of the Management Board made in performed in accordance with the Rules of performance assessment and bonuses payment to to-managers of Transtelecom JSC (hereinafter referred to as the Rules), which have been drawn up in accordance with the legislation of the Republic of Kazakhstan, the Charter of Transtelecom JSC, and the Model Rules of Performance assessment and bonuses payment to top-managers of Kazakhstan Temp Zholy NC JSC.

The rules are based on the following principles:

  • the relationship of remuneration with the performance of tasks that meets the interests of the Company and Kazakhstan Temir Zholy NC JSC;
  • simplicity and transparency of the remuneration level determination guidelines;
  • dependence of the remuneration amount on the results of the Company's performance and the performance of top-level managers.

The procedure of the top-level managers' performance assessment consists of the following stages:

  • choice of motivational KPIs, the target values setting;
  • approval of motivational KPIs;
  • performance monitoring;
  • calculation and approval of actual performance.

Motivational KPIs are designed in the form of a KPI map with target values by cascading the Company's strategic goals into specific indicators. At the same time, a KPI passport is designed for each KPI.

Bonuses payable for performance (short-term and long-term bonuses), as well as based on the results of performance for the year are paid depending on the results of work with a view to material incentive for the successes achieved and to improve the efficiency of work, these bonuses are not of a permanent nature and are not taken into account when the average salary is calculated.

Performance assessment is carried out on the basis of KPIs that characterize the effectiveness of the Company's financial and economic performance (corporate KPIs) and the degree of results achievement by the members of the management board in functional areas of activity (functional KPIs).

Corporate KPIs are single for all members of the Management Board. Functional KPIs is a KPI that is set individually for each employee, and is usually aimed at achievement of objectives in the supervision areas.

Corporate and functional KPIs have a threshold and target value, as well as the "Challenge" value. The threshold value characterizes the minimum expectations from the result of the activity, which are highly likely to be achieved on condition of conscientious performance of official duties. Target values characterize the expected level of high performance results. The value of the "Challenge" KPI characterizes outstanding results of the KPIs that contributed to the implementation of the Company's ambitious goals.

The maximum amount of bonuses payable based on performance of senior employees over the year can not exceed their 4-fold annual salary (official salary).

In the reporting year, the amount of bonuses paid to key management personnel of the Company (the total amount of wages and all types of cash incentives) amounted to 338 971,059 thousand tenge.

# KPI name Un. 2017 Performance
2017 Plan 2017 Actual
Performance indicators
1 Labor productivity of Transtelecom JSC's employees KZT thousand/person 24 111 23 801,1 96,8
2 Growth in the number of users of broadband Internet access in relation to the previous year % 100 114,62 125
3 Level of reliability of the backbone network % 99,3 99,83 125
Financial indicators
4 EBITDA margin % 27,96 28,93 106,9
5 Net income тыс.тг. 5 549 941 5 331 602 90,2
6 ROE - return on equity % 22,71 21,91 91,2
# KPI name Un. 2017 Performance
2017 Plan 2017 Actual