President Vladimir Putin proposed limiting severance payments to Russian executives, after a former KGB colleague was granted about $100 million when he stepped down as the head of OAO GMK Norilsk Nickel.
While so-called golden parachutes should “stimulate top-class managers” to work efficiently, “sensible limits” are needed, Putin said at a meeting of his People’s Front movement in Rostov-on-Don today. Capping such payments would comply with global standards, Putin said.
Norilsk Nickel, Russia’s largest mining company, in December promised outgoing Chief Executive Officer Vladimir Strzhalkovsky, 58, about $100 million, the most ever in the country. Strzhalkovsky, who worked with Putin in the KGB in Leningrad in the 1980s, was replaced by billionaire Norilsk shareholder Vladimir Potanin. Strzhalkovsky said he’d give part of the payout to families of intelligence agents who were killed in “hot spots.”
“Mostly, it’s an issue with state- or quasi-state controlled holdings,” Sergey Vorobiev, senior partner at recruitment service Ward Howell International, said by phone from Moscow. “There is no general problem of excessively high payouts in closely held companies in Russia.”
The board of OAO Rostelecom this month approved about 200 million rubles ($6.4 million) in compensation for former CEO Alexander Provotorov, who resigned after Putin’s former judo partner, Arkady Rotenberg, bought a minority stake in the state-run telecommunications provider.
Alisa Fialko and Kira Kiryukhina, spokeswomen for Norilsk and Rostelecom, respectively, declined to comment on Putin’s proposal.
Xtrata Plc investors in November prevented the payment of 144 million pounds ($219 million) by the merged new company Glencore Xstrata Plc, as incentives for about 70 managers to remain at what will be the fourth-largest mining group.
Investors of advertising firm WPP Plc and Citigroup Inc. also rejected proposed compensation for Martin Sorrell and Vikram Pandit, respectively, last year.