Members of Seimas questioned the shareholding of Ignitis Grups

The Seimas Economic and Budget and Finance Committees, which debated the issue at a general meeting on Friday, took a break. They will discuss possible solutions in a series of meetings and announce the decision next week.

According to state Valius Rock, such a decision was made because there is no state representative on the group’s board. According to Algirdas Butkeviius, who works at the Budget and Finance Commission, the share bonus for a company manager must be defined in law.

Mykolas Majauskas, head of the Budget and Finance Committee, affirmed that the decision on participation causes mistrust in the company of the directors of the main subsidiaries.

I feel that with his actions he is losing the trust of the authorities and the public, says the head of the committee.

According to him, decisions about participation were opaque and were made intergovernmentally: I think deliberately to avoid public attention.

At that time, the leader of the Social Democrat, deputy Gintautas Paluckas, asked to cancel the planned actions of Ignitis Group.

In the event of political weakness or political uncertainty, the company may disproportionately dictate its needs, and the finance ministry or the minister, respectively, will make or allow such decisions to be made within their powers, he said.

According to G. Paluckas, such an incentive system creates a significant conflict of public and private interests.

Danish public objectives in which the public is interested, that is, the quality and availability of the service, can change the net profit of the company, EBITA. Meanwhile, managers are encouraged to dilute their stocks through these financial ratios. This is bias and could be avoided by setting additional indicators for the wage bill, Paluck said.

Inga Iliene, president of the State Energy Regulatory Council, had a question about how the company’s executives intend to achieve profitability in regulated activities.

The Ignitis group companies have three regulated cogeneration units and two potentially regulated ones in Vilnius and Kaunas (…). This represents approximately two-thirds of the revenue generated by regulated activity to date. The earnings are less. However, the question arises as to how our managers intend to achieve profitability in regulated activities, said I. ilien.

According to her, now the indicator of return on investment of regulated activities is calculated from total fixed assets, investments. According to I. iliens, the gros indicator cannot be boiled because the vibrator is boiled by the consumer.

You cannot increase the return on investment, you can only increase the value of assets or you can invest excessively. these risks must be managed, said I. ilien.

Darius Daubaras, Chairman of the Supervisory Board of Ignitis Group, assured that the benefit of unregulated activities, especially energy, will grow very fast: within five years, that balance will change and unregulated commercial activities will begin to develop.

The former Ignitis Group (then Lietuvos Energija), now rector of the ISM Dalius Misinas University of Administration and Economics, questioned whether such an incentive system is adequate for a company with more than 80% of its income from regulated activities.

Profit in a regulated company is not an indicator of efficiency. This is a calculated size, said D. Mission.

According to him, the free distribution of Ignitis Group shares is now provided to nine executives, most of whom are members of the board of directors, and the mandate, according to D. Misino, as well as the supervisory board, ends almost a year later. .

There is nothing to talk about long-term incentives, because there is no guarantee that they will work.

The Ignitis Group comments that it is developing a rapid development of sustainable production and it is expected that by 2026 the benefit of commercial activities will be similar to that of regulated activities, and in subsequent years it will overflow.

The question also arises whether the momentum to increase the value of shares will affect the prices of services. It is emphasized that the company’s objective of increasing the value of the shares is related to the development of new oil production capacity for the construction of solar, wind and potentially other power plants. Thus, the value of mons increases by expanding trading capacity, aikina mon.

Ignitis Group also reiterated that it plans to apply the share allocation program to all group employees. The program is currently being prepared and more will be announced in the first quarter of the year.

These incentive programs are lacking in publicly traded companies. This program also applies to another state-owned company, Klaipdos Nafta, which, in addition to the Ignitis Group, is the only Lithuanian company listed on the stock exchange.

On December 4, the Ignitis Group Supervisory Board approved the objectives and indicators of the long-term share options promotion program for the group administrator for 2020-2023, the criteria to evaluate their achievement and the maximum number of shares to be purchased by administrators.

On December 18, Ignitis Group announced the stock option agreements entered into by the heads of nine group companies. According to them, in 2024, the managers of the Group’s subsidiaries will have the opportunity to distribute almost 9,500 shares, valued at 212,100 euros, free of charge.

Darius Maiktnas, Chairman and CEO of Ignitis Group, may acquire a maximum of 2,265 shares, and Darius Kaauskas, Dominykas Tukus, Civil Skibarkien and Vidmantas Salietis, members of the Board, may acquire 1,178 shares each.

Ignitis Secondary CEO Darius Montvila will receive 661 shares, ESO CEO Mindaugas Keizeris 653, Ignitis Renewables CEO 605, and Ignitis Production CEO Rimgaudas Kalvaitis 601 shares.

The specific number of shares to be awarded will depend on the Ignitis Group’s performance indicators, the adjusted EBITDA, the megawatt of oil installed, the carbon exchange plan and the achievement of the goal set therein.

The Ministry of Finance owns 73.08% of the group’s shares.

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