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Board member salaries boosted, questioned

Jan 09, 2013
From wire reports

RIGA - State companies with annual turnover of 40 million lats (57.1 million euros) or more have taken the opportunity now to increase salaries for their board members, reports Nozare.lv. On Nov. 27 last year, the government approved the Transport Ministry’s amendments regarding salaries for members of state-owned company boards, which state that board members at companies with annual turnover of 40 million lats or more who, besides doing their job, also work at other jobs at the company, may receive the applicable salaries.

Transport Ministry State Secretary Anrijs Matiss explained then that the amendments concerned the following companies: electric utility Latvenergo, forestry management Latvijas Valsts mezi, railway Latvijas Dzelzcels, Augstsprieguma tikls, Pauls Stradins Hospital, Eastern Hospital and highway management Latvijas Autocelu uzturetajs.
Latvenergo communications officer Andris Siksnis told Nozare.lv that the company had a new management model as of the beginning of this year, introducing the positions of the company’s executive directors. Therefore, according to the Cabinet of Ministers regulations and Latvenergo shareholders’ agreement, new contracts have been signed with the executive directors of the company.

The salary for Latvenergo executive directors is 5,000 lats per month, and the chief executive director – 6,000 lats per month. These amounts will be added to the current salaries of Latvenergo board members who work as the company’s executive directors, which is normal, given the scale of Latvenergo operations and the competence those working in these positions, said Siksnis.

Latvian State Television reports that salaries have also increased significantly for the Latvijas Dzelzcels (LDz) railroad company management members. The company’s CEO Ugis Magonis, who was paid about 2,600 lats a month until now, has now been confirmed with a monthly salary of 8,500 lats, because he is also the company’s president. Three board members, Aigars Strakss, Edvins Berzins and Eriks Smuksts, who are paid 2,400 lats for their work as LDz board members, have now been confirmed monthly salaries of 6,800 lats, because they also work as the company’s vice-president.

On the other hand, Latvian State Radio says that salaries have also been raised at Latvijas Autocelu uzturetajs road maintenance company. The company’s CEO, Vladimirs Kononovs, will now also be paid a salary for working as director of Rezekne Roads District, although the radio said it did not know how much Kononovs would be paid now. Last year, Kononovs was paid at least 2,500 lats a month.

Are salaries justified?
Since the Economy Ministry is the holder of the state’s stake in Latvenergo, and because decisions were made while he was away on vacation, Economy Minister Daniels Pavluts is demanding an explanation from the ministry’s state secretary, Juris Puce, on the alterations made at end-December in the organizational structure and salary levels at the company.

Speaking via his press secretary, Pavluts, who returned from vacation on Jan. 7, wants to hear the justification about the alterations in organizational structure, their purpose and practical advantages, the additional and new duties assigned board members as “officers,” the changes in salaries and how they compare with the average in the sector, region, and other companies with state shares.

Minister Pavluts would also like information on the results of the performance evaluations for Latvenergo board members, which served as the basis for the decisions made by the shareholders in December.
Eyebrows were raised upon hearing some of the results of the December decisions, for example from now on, the monthly salary for Latvenergo board chairman and newly-appointed chief executive officer, Aris Zigurs, will be 8,784 lats, but for the other officers, i.e. board members - 7,506 lats.
 

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