Skip to content
Subscriber Only
Leonid Bershidsky

It Pays Too Well to Run a Russian State Company

Huge salaries reflect the companies' bloated role in the economy.
Gazprom's Alexei Miller, Friend of Putin.

Gazprom's Alexei Miller, Friend of Putin.

Photographer: Alexander Nemenov/AFP/Getty Images

The biggest problem facing the Russian economy today isn't its excessive dependence on oil and gas exports, or the Western sanctions imposed in response to aggression in Ukraine. It is instead the state-owned sector's dominance, which stifles private initiative and promotes inefficiency.

On Thursday, the Russian edition of Forbes magazine published its annual ranking of the country's highest-earning chief executives, based on their 2014 compensation. The top three people on the list run state-controlled companies: Gazprom, VTB Bank and Rosneft. Six of the top 10 are state sector managers. That roughly matches the weight of state-owned enterprises in the economy.  In 2013, the Organization for Economic Cooperation and Development said the state-owned sector accounted for 50 percent of economic output and that it was growing. State-owned banks control about 60 percent of the banking system's assets.