Executive and Director Compensation

Director Compensation

Compensation Committee of CTC Media reviews the director compensation policies for the Company’s non-employee directors so as to make recommendations to the Board of Directors in regard to director compensation. For 2008, based on the recommendation of the Compensation Committee, the directors’ fees were set at $100,000 per annum. The Compensation Committee also recommended that the fee for committee chairmanship be maintained at $25,000 per annum. The Board of Directors approved these recommendations. As a result, in 2008, each non-employee director received $100,000 for service as a director. The co-chairmen and directors who served on board committees received an additional $25,000 in 2008. All directors were reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the Board of Directors and its committees. No stock options or other stock-based awards were granted to any of the Company’s directors in 2008.

Executive Management Compensation

The components of the compensation package for executive management of CTC Media are as follows:
• Base salary
• Annual bonus
• Equity incentives
• Other compensation

In determining total compensation packages for an executive, the Compensation Committee of CTC Media considers the executive's qualifications and experience, scope of responsibilities and future potential, the goals and objectives established for the executive, the executive's past performance, compensation levels at comparable companies, internal pay equity and, in light of the relatively high rate of inflation in Russia in recent years, inflationary pressures. The Company does not have any formal or informal policy or target for allocating between long-term and short-term compensation, between cash and non-cash compensation, or among the different forms of non-cash compensation. Instead, the Compensation Committee determines what it believes to be the appropriate level and mix of the various compensation levels in order to ensure adequate base compensation to attract and retain personnel, while providing incentives to maximize long-term value for the Company and its stockholders.

The Compensation Committee met in January 2009 to review performance by the Company’s executives and to recommend appropriate executive bonus awards for 2008 and 2009 compensation levels. The Compensation Committee intends to continue to meet early in each fiscal year to carry out these same tasks and will meet from time to time throughout each fiscal year as needed to address compensation and succession matters at the executive level as they arise.

For more detailed information on the compensation of our directors and executive management see section “Information about Executive and Director Compensation”
of the Proxy Statement filed in connection with the annual shareholder meeting held on April 20, 2009.