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Following the change of government in Lithuania, a decision was made in December to award the heads of the state-owned energy giant Ignitis grupė 212 thousand LTL. shares worth EUR. Such an award is envisaged if the indicators of the 2020-2023 strategic plan are implemented.
In December, Ignitis Grupė announced share option agreements entered into by the managers of nine group companies on the stock exchange, and Darius Maikštėnas, chairman of the board and CEO of Ignitis Grupė, expected the biggest bonus: he could acquire up to 2,265 shares . .
Sigismund Gedvila / 15 minute photo / Darius Maikštėnas
Such a decision angered politicians earlier this year: company managers were summoned to the Seimas Budget and Finance and Economic Committees to explain in early January.
Later it was discussed whether it was correct for the intergovernmental government to make such a decision and it was pointed out that the goals set for managers were not clear. However, it is now becoming clear that the proposed bonus system also potentially violates the law, in particular the Companies Act. The Seimas Legal Department provided such an explanation on Monday.
“The shares of a state-owned corporation, as well as its subsidiary, cannot be assigned to company employees, including company managers. AB Ignitis Group is a group of state-owned energy companies, so the Ministry of Finance 2020 September 16 validity of the rules for the granting of shares of AB Ignitis grupė approved by the order “, – states in the conclusion of the lawyers.
This order was signed by then Minister Vilius Šapoka.
Valdo Kopūstas / 15min photo / Vilius Šapoka
The letter also states that article 47 of the Public Limited Companies Law establishes the procedure for granting shares free of charge or in part, but the provisions of this article do not apply to companies in which half or more of the shares they belong to the state or municipality. .
In addition, the Seimas Budget and Finance Committee (BFK) received an inquiry about the options program from the Ignitis Group of the Public Interest Protection Division of the Vilnius Regional Prosecutor’s Office.
Attorney General’s Office 15 minutes confirmed that the Vilnius Regional Prosecutor’s Office in the Public Interest Protection Division is examining the statement on the validity of the granting of shares of AB Ignitis grup los to the employees and administrators of the company under option agreements in accordance with the rules approved by order of the Minister of Finance.
“Once the necessary data has been collected, a decision will be made whether to go to court to protect the public interest,” the Attorney General’s Office said in a response.
Ignitis grupė: “In our opinion, this does not conflict with the Public Limited Companies Law”
The Ignitis Group, meanwhile, maintains that the ability to apply stock option plans to all executives and employees, that is, pay a portion of their compensation or share it as part of a motivation system, is a widespread practice throughout the world, especially among those that are publicly traded. and individuals, both state-owned companies.
“It is important to emphasize that the application of option schemes does not reduce the participation of state shares, since the shares to be redeemed under the option schemes would be bought on the stock exchanges of other private shareholders. In our opinion, this does not mean either. it conflicts with the Corporations Law ”, he affirms. 15 minutes in the comment sent.
Arno Strumila / 15min photo / “Grupo Ignitis”
According to the company, promoting managers and employees through options programs as an integral part of the remuneration and motivation system is a modern process that complies with international best practices and Lithuanian laws.
“However, Ignitis Group understands that it is one of the first state-owned companies to initiate such a practice in Lithuania, so it is natural that institutions need more detailed explanations and time to deepen the principles and legal regulation of the option programs “. “said the comment.
The Seimas committee will propose to suspend future participations of state companies
In response to the information, the Seimas Budget and Finance Committee will maintain parliamentary control over the granting of shares to state and municipal companies to individuals on Wednesday and suggests that new share-sharing agreements between state-owned companies are not signed until clarify the situation.
President of the Seimas BFK Mykolas Majauskas 15 minutes The committee said in January that the decision made by the state-owned company must be not only legal but also fair.
Photo by Lukas Balandis / 15min / Mykolas Majauskas
According to him, then the suspicions were raised for the moment chosen by the company to inform the public and the lack of transparency related to the implementation of the decision. In addition, the message was spread in a change of government, when both executive and parliamentary control were limited, and it was not immediately revealed exactly what results managers would have to achieve to receive share bonuses.
M. Majauskas reported that the Seimas had received a request from the Prosecutor’s Office of the Vilnius Regional Public Interest Protection Division regarding the Ignitis Group’s decision to reward company administrators with company shares.
Today also a legitimate question arises about the legality of the decision. The question is whether the decision did not violate the provisions of the Corporations Law. ” 15 minutes reported M. Majauskas.
He stated that for this reason he had asked the Seimas Legal Department for clarification on the legality of the decisions taken by the Ignitis Group and requested an opinion on whether in 2020 the order signed by the Minister of Finance in September 2006, by virtue of which agreements were entered into with the administrators of the company, it does not conflict with the Corporations Law.
“The Seimas Legal Department has stated that according to current laws, the shares of a company controlled by the state and the municipalities cannot be granted to individuals. According to the Legal Department, there are also doubts about the validity of the relevant order from the former Minister of Finance of the Government.
Taking the foregoing into account, I will propose to the Seimas Budget and Finance Committee to recommend to the Ministries of Finance and Energy, in accordance with their competence, to ensure that no new agreements are signed on the issuance of shares in companies controlled by the State. until the doubts about the legality of the decisions are dispelled ”, said M. Majauskas.
D.Maikštėnas would receive the highest amount
In December, Ignitis grupė announced stock option agreements entered into by the directors of nine group companies through the stock exchange.
Darius Maikštėnas, Chairman and CEO of Ignitis grupė, could acquire up to 2,265 shares, and Darius Kašauskas, Dominykas Tučkus, Živilė Skibarkienė and Vidmantas Salietis, members of the Board, could acquire 1,178 shares each.
Mindaugas Keizeris, CEO of the ESO subsidiary, could request 653 shares, Darius Montvila, CEO of Ignitis, 661 shares, 605 CEO of Ignitis Renewables and Rimgaudas Kalvaitis, CEO of Ignitis Production, 601 shares.
The specific number of shares to be granted will depend on the Ignitis Group’s performance indicators: return to shareholder, adjusted EBITDA, installed “green megawatts”, carbon reduction plan and fulfillment of its goals.
Ignitis grupė shares were listed on the Nasdaq Vilnius stock exchange last year.
Discussions on this situation had already taken place during the drafting of the law
The possibility of awarding company shares to employees for free was legalized in Lithuania in 2017, but even then it was debated that such a procedure should not apply to state and municipal companies.
Although initially it was proposed to regulate this through a Government resolution, after the clarification of the Seimas Audit Committee and the Legal Department, the safeguard that the procedure for granting shares free of charge would not apply to companies with more than half owned by the State or municipality included in the Public Limited Companies Law.
Ignitis Groups posts an explanation
On Tuesday night, Ignitis Grupė issued a report explaining the situation:
The Company informs that the Vilnius Regional Prosecutor’s Office, having received a request from an individual, has asked the Company and interested institutions to present information related to the Program.
The Company explains that after the completion of the initial public offering, the October 7 Company is an issuer whose shares are traded on a publicly regulated market, that is, a publicly traded company. The state owns 73.08 percent. 26.92 percent of the company’s shares. the shares are traded on regulated markets. The shares of the company can be acquired on regulated markets by Lithuanian and foreign retail investors. This part of the shares, which is traded on regulated markets, is not a state asset. The Company’s shares would be awarded to employees and key management personnel as part of the remuneration and motivation system through the transfer of treasury shares, that is, after the Company acquires its own shares in regulated markets. Therefore, the shares owned by the state would not be transferred and this would not affect the size of the controlling shareholder – the state – controlling interest (73.08%).
According to the company, promoting employees and managers through options programs as an integral part of remuneration and motivation systems is a modern process that complies with international best practices and Lithuanian law.
The company is one of the first state-owned companies to initiate such a practice in Lithuania, so it is natural for institutions to seek more detailed explanations and delve into the principles of options programs and the legal regulation of such systems. According to the company, neither the public interest nor the law was violated.
The Company will provide and supply all necessary information and will cooperate in another way to explain that neither the public interest nor the law has been violated.
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