Govt Acts On Putin Move to Cap Large Resignation Payouts

YAKUTSK, April 2 (RIA Novosti) – Generous payoffs to departing executives at state-controlled companies need to be capped, First Deputy Prime Minister Igor Shuvalov said on Tuesday, backing similar comments made by Russian President Vladimir Putin in the same week that the head of a poorly performing state-controlled company received a $6.4 million “golden parachute” for resigning.

Putin has already instructed the government to draft a bill limiting resignation payouts, Shuvalov said.

The new legislation should without fail apply to companies partly or fully owned by the state, but as for private companies, it is a delicate issue, he said.

“Whether that provision should be introduced into corporate laws for private companies is a subject for discussion by the Federal Assembly [parliament] and the public,” Shuvalov said.

The decision on so-called “golden parachutes” should be “balanced,” he said.

“This measure must also be understandable to those who create capital, to those people who work in shareholding companies, who must be interested in using their talents to the max,” Shuvalov said.

He warned that such decisions should not be based on considerations of social justice alone, otherwise those people “will go work in a different sector or another country,” he said.

Speaking on Friday at a meeting of the All-Russia People’s Front, a broad umbrella movement of public associations, Putin said Russia should consider introducing caps in line with planned initiatives in other countries.

Putin warned that the cap should not serve as a disincentive for effective top-level managers, however.

Long-distance telecom operator Rostelecom announced last Wednesday that departing chief executive Alexander Provotorov, whose contract with the company was to expire in 2015, would receive a 200 million ruble ($6.4 million) bonus for his resignation.

That has drawn criticism, including from within the ranks of the ruling United Russia party.

“What is he, a Nobel Prize laureate?” party general council member Valery Trapeznikov asked Putin.

Former Norilsk Nickel chief executive Vladimir Strzhalkovsky, a former KGB colleague of Putin’s, was in December granted around $100 million after stepping down, according to the Vedomosti business daily.