State Companies Reform: Cut the number of bosses and allowances / how much the Hidroelectrica or Post

The number of members of the board/supervision councils of state-owned companies managed in a unitary system, for example the Romanian Post, will be reduced to a maximum of 3 members, compared to 3-7 members at present, while for companies in dualistic system, such as Hidoelectrica, there will be at most 5 members, compared to 7, ADUM. The fixed and variable allowances will be reduced, and those who do not agree will be revoked without the payment of damages, according to the draft law on the reform of the state companies, debated by the General Secretariat of the Government (SGG).

What cuts will be at companies such as Hidroelectrica or the Romanian Post

In the case of companies managed in a unitary system, that is, those with a single governing body, appointed board of directors, the number of members will be reduced to a maximum of 3 compared to 3-7 members at present. An example of such a state company is the Romanian Post, which has 7 members in the Board of Directors. They receive monthly fixed allowances between 17,385 lei/gross and 17,825 lei/gross.

In the case of companies administered in the dualistic system, which are run by a directorate and a supervisory board, the project provides for a maximum of 5 members in the Board of Directors, compared to 7, at present. An example of such a company is Hidroelectrica, where the Supervisory Board has 7 members, who receive monthly fixed allowances between 11,642 lei/gross and 13,350 lei/gross. The members of the Hidroelectrica directorate have a monthly fixed allowance of 38,462 lei.

How will the fixed and variable allowances be reduced

The draft law provides for the reduction of the fixed remuneration of the executive and non -executive members of the admnistration and surveillance councils to a maximum of 2 times the average for the last 12 months of the average monthly gross wage for the activity carried out according to the main activity of the company. Currently, this level is maximum 3 times the average over the last 12 months of the average monthly gross wage.

The remuneration of the executive members of the Board of Directors consists of a monthly fixed allowance and a variable allowance.

The main proposed changes:

The draft normative act introduces an exception to the amount of the remuneration provided above for the autonomous regions that have, cumulatively, a turnover in the last financial exercise superior to the equivalent of 7,300,000 euros and have at least 50 employees.

• “The variable component of the remuneration of the executive members of the Board of Directors may not exceed in their case a maximum of 4 times the average over the last 12 months of the average monthly gross wage for the activity carried out according to the main activity registered by the Autonomous Administration.
• The measures mentioned above were also introduced for the companies managed in both a unitary system and in the dualistic system.
• Unlike the autonomous regions, in the case of public enterprises whose actions are traded on a regulated market the variable component of the remuneration of the executive members of the Board of Directors can not exceed maximum 6 times the average for the last 12 months of the average gross salary for the activity carried out according to the main activity registered by the Autonomous Regia ”.

New performance indicators

The draft law also changes the key performance indicators (ICP) which are mandatory and are stipulated in the mandate contracts of the administrators and directors of the state companies. The financial indicators will have a higher weight than the non -financial ones.

Thus, the financial indicators will have a weight of 50-75%, compared to 25-50% at present. The non-financial indicators will have a weight of 25-50%.

What happens to those who will not agree with the cuts

Within 30 days from the date of entry into force of this, the members of the board/supervision, the directors of the public enterprises, respectively the members of the directorate, whose payment remuneration exceed the limits stipulated in this normative act will have the obligation to conclude additional acts to the mandate contracts for the remuneration and benefits within the law.

Also within 30 days, additional acts will be concluded at the mandate contracts regarding the minimum level of key performance indicators approved by AMEPIP.

“In the situation in which the parties do not agree on the changes of the mandate contract provided, the public authorities/general meetings of the shareholders revoke the members of the administrative/supervisory councils, as well as the directors of the public enterprises/the members of the Directorate, without the payment of damages, in compliance with the legislation in force.

The board of directors constituted under the current legislation will conclude their mandates in the composition provided at the date of their establishment. (respectively, 3 or 5 members, as the case may be). At the same time, the procedures initiated under the legislation in force will also be completed according to this legislation ”, it is shown in the foundation note.

New rules to the recruitment of bosses

In the case of state -owned companies that have over 50 employees and a turnover of over 7.3 million euros, the project stipulates that the selection of administrators/directors will be carried out by companies specialized in the recruitment of human resources. It will be mandatory for the independent expert to present a portfolio of clients from the last 3 years for the selection of public or private enterprises/directors stating that he has provided recruitment services for at least 7 clients, who have materialized with the occupation of the respective positions.

The project team will have to be made up of at least 5 experts with experience in recruiting the administrators/directors of public or private enterprises, materialized with the occupation of the respective positions or with the completion of the contractual obligations.

For all the companies at the central level and for those at the local level (…), within 10 working days from the date of receipt of the report, AMEPIP will issue an opinion according to the procedure or a decision, ordering the annulment of the procedure or remedial measures, as the case may be.