Corporate governance system

MANAGEMENT BOARD

The Company is operated by the Management Board, the collective executive body appointed by the Board of Directors of RAO "UES of Russia". The Management Board performs the functions set forth in the Charter of RAO "UES of Russia" and acts pursuant to the Regulation on the Management Board of RAO "UES of Russia" approved by the Company's shareholders at the AGM held 28 June 2002.

Under the Company's Charter, the Management Board of RAO "UES of Russia" is responsible for managing day-to-day activities of the Company. It produces and submits to the Board of Directors top priority issues relating to the Company's operations and long-term plans for their implementation, as well as internal documents of an organizational and administrative nature.

During 2007, the Management Board held 203 meetings and considered over 850 items of business.

In accordance with the Management Board's schedule, which was approved by the Chairman of the Management Board of RAO "UES of Russia" Anatoly Chubais and ratified by the Board of Directors of RAO "UES of Russia", the Management Board considered the following key issues relating to the Company's operations in 2007: investment programmes for RAO "UES of Russia", OAO "FGC UES", OAO "SO UES ", and OAO "HydroWGC" for 2008-2010, and arrangements to control their implementation; most significant non-financial risks for RAO "UES of Russia" and measures for their optimization; key results received in the preparation of the Forecast Balance for the Electricity Industry and the Holding Company for the Period until 2010 and the Scenario Conditions for the Development of the Electricity Sector for the Period from 2008 to 2015; concept of insurance coverage for risks to which energy companies are exposed; establishment of interregional distribution companies; raising ERU finance for investment projects of RAO "UES of Russia"; implementation of a climate-oriented approach at the SDCs of RAO "UES of Russia" and putting arrangements in place for the interaction between the energy companies and their customers; preparations at the companies of RAO "UES of Russia" for the autumn and winter period of 2007/2008; progress report on the implementation of the Environmental Policy Programme of RAO "UES of Russia" for 2007, adjustments to the Programme and discussion of the Environmental Policy Programme of RAO "UES of Russia" for 2008; and many other matters relating to the Company's operations.

The remuneration criteria for members of the Management Board are set out in the Procedure for Remuneration of Top Managers approved by the Board of Directors of the Company on 25 June 2004.

The incentive system for members of the Management Board of the Company links the amount of bonuses to performance of the key targets set by the Board of Directors of RAO "UES of Russia".

The total amount of remuneration paid to the members of the Management Board of RAO "UES of Russia" for 2007 was RUB149,535,720. The Management Board members of RAO "UES of Russia" are listed in the Appendix.