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Duma limits “golden parachutes” to CEOs of state-run companies

January 24, 2014, 21:41 UTC+3 MOSCOW
The bill sets the upper limit of compensations, dismissal wages and any other job termination benefits payable to top managers of state companies at the size of their six average monthly wages
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© Itar-Tass

MOSCOW, January 24, /ITAR-TASS/. The Russian State Duma lower parliament house on Friday passed in the first reading a bill limiting “golden parachutes,” or benefits to top managers when their employment is terminated, payable to top executives of corporations, unitary enterprises and companies, where the government own more than 50 percent of the authorized capital. Relevant amendments are to be introduced in the Russian Labour Code.

“The bill is to be adjusted by the second reading,” head of the State Duma committee on labour, social policy and veteran affairs, Andrei Isayev of United Russia, told Itar-Tass. “The bill limits these “golden parachutes” only formally, since it has no provisions on the upper limits for wages.”

“I spoke with the minister [Minister of Labour Maxim Topilin], he took the criticism seriously and voiced an idea of limiting wages for top managers of state companies by means of a government resolution,” Isayev said, adding that if the government would not support this idea, such limits would be fixed in the law. He noted that this law was the first step aimed at “solving the problem of income gap” in Russian society.

Another lawmaker from the same committee, Valery Trapeznikov said that the upper limit of job termination benefits should be reduced at least by half and fixed at the size of three average monthly wages. “In line with the Russian Labour Code, the majority of Russian citizen are paid a dismissal wage that equals three average monthly wages,” he noted. “BY the second reading, many factions, including that of United Russia, will insist on this procedure that is binding on all Russian citizens. I hope the bill would be expanded by the second reading to cut down to size the unreasonably high appetites of tops managers of state-run corporations.”

The bill sets the upper limit of compensations, dismissal wages and any other job termination benefits payable to top managers of state companies at the size of their six average monthly wages. The lower limit is set at three monthly salaries. Commutation for annual leave will be payable regardless these restrictions.

These restrictions will be applicable to CEOs of state-run corporations, unitary enterprises and companies, their deputies, chief accountants, members of boards of directors and supervisory boards. When this law comes into force, all current labour contracts with such categories of employees are to be adjusted in line with this law within three months. The law when passed will be applicable to Russia’s seven state corporations, one state-run company and about 60 companies where the state holds a 50-percent stake.

The bill was drafted by the Russian government at the request of Russian President Vladimir Putin. The move followed the resignation of the CEO of the state-run telecommunications company Rostelecom, Alexander Provotorov, who had received a termination benefit of 233 million roubles (about eight million U.S. dollars), including a "golden parachute" of 201 million roubles. The issue was tackled at a conference of the All-Russia Popular Front in March 2013, which was attended by President Putin.

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