Naftogaz does not have UAH 126M to pay annual bonuses to board members - Vitrenko.

The decision by Naftogaz's supervisory board regarding the payment of multimillion-dollar annual bonuses to four members of the company's executive board cannot be implemented, Naftogaz CEO Yuriy Vitrenko has said.

According to an Ukrinform correspondent, Vitrenko said this in a letter to Ukrainian Prime Minister Denys Shmyhal.

The reason for his appeal to the head of government was the decision by the supervisory board to pay bonuses to executive board members Otto Waterlander, Petrus Stephanus van Driel, Sergiy Pereloma and Yaroslav Teklyuk, which were accrued in advance "for the year 2021." The total amount of remuneration is almost UAH 126 million.

Taking into account the potential severance package (12 monthly salaries in case of dismissal of officials), Naftogaz has to reserve UAH 215 million before tax to cover payments with an irrevocable bank guarantee, which is equal to 29 monthly salaries of each of the said board members. Officials can receive almost UAH 173 million.

Vitrenko said in the letter that pressure was being exerted by the chairman of the supervisory board, which demanded the immediate signing of agreements to provide bank guarantees for these payments.

Read also: Naftogaz may record UAH 105B loss for Q1 2021 - Vitrenko

At the same time, Vitrenko believes that annual remuneration to the said officials was accrued illegally. One of the arguments is that the supervisory board itself has not yet approved the regulations on remuneration to members of the company's executive body, as required by applicable law, and that it has not brought into line with Ukrainian law the policy on setting the amount of remuneration to Naftogaz board members and the heads of the company's subsidiaries.

In addition, Vitrenko sees as a violation the decision to award annual bonuses to officials long before the end of the year. Moreover, the company still has not prepared financial statements for the first half of the year. And it is likely that Naftogaz suffered multibillion-dollar losses during this period.

Also, the bonuses do not meet international standards and established practices for the remuneration of board members. Most importantly, the company's financial plan for 2021 does not envisage money to provide a respective bank guarantee. Therefore, the conclusion is that the decision of the supervisory board cannot be implemented.

The company's supervisory board, to which Ukrinform turned for clarification, has declined to comment on the situation. It only said that consultations were underway with members of the supervisory body, which could result in a public reaction to Vitrenko's appeal to Shmyhal.

Earlier reports said that discussions were ongoing at NJSC Naftogaz of Ukraine on the company's financial performance reflected in its report for the first quarter of 2021. The company may record a possible loss of almost UAH 105 billion.

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