How not to manage a company: Skr123 million to the pension fund of top managers of Vattenfall
Friday, 26 July 2013
The Swedish state owned energy company, Vattenfall that has been in the
news recently for poor performances and down grading, has been
shown how it had squandered money in the tax payer company. It awarded
some of its top managers Skr 132 million in pension bonuses and other
financial award even though they participated in the failed business
that has brought the company down.
Vattenfall CEO Øystein Løseth - img: Scancomark.se
According to an investigative report carried out by the Swedish daily,
Dagens Nyheter, ten of the eleven officials of Vattenfall's management
team at the time of the business fiasco with the failed acquisition of
the Dutch Nuon Energy company, and some of whom have left the company
were awarded in total of over Skr132 million in severance pay and
Earlier this week, Vattenfall announced that the company was writing
down the value of its assets by Skr30 billion. Most of the write-down
came from the Dutch gas giant Nuon which Vattenfall bought for about
Skr90 billion in 2009.
The CEO at the time and the driving force behind the deal was Lars G
Josefsson, who has left the company with a pension plan worth nearly
Skr62 million. But he is far from being the only one in the management
team with favourable severance agreement writes the paper.
Ten of the eleven who sat in the Vattenfall Group management board in
2008 and 2009, when the Nuon business went through, have left the
company, with heavy pockets.
See the table below
|Management Team member
||Mount of pay received
|Lars G Josefsson
|61.7 million for pension
|CEO up till 2010
|Hans- Jurgen Meyer
||CFO up till 2010
|Hans von Uthmann
|| Vice CEO/chief for
business Nordic group up till 2009
|Personnel directors up till 2011
|Chief for business group an
Europe uphill 2010
||Chief for human resource up till 2008
||Information director up till 2009
||Head of economic analysis up till 2008
|Chief for public affairs till 2012
|| Not known
|Chief for business group central Europe. Still working and earns about
|Source: Dagens Nyeheter
The paper reports that it
has gone through Vattenfall's annual reports and have identified that
many of them got away with lots of millions of preferential agreements
in connection with the deal. The total is over Skr132 million which has
already been distributed or commissioned to them.
They who go the most, apart from the CEO, was Hans-Jürgen Meyer,
who was the Chief Financial Officer of Vattenfall's European
operations. He in 2010 got his severance pay and pension of Skr21.5
According to Vattenfall personnel manager, Olof Gertz, this type of agreement is not in operation today.
"Since the government set new guidelines for remuneration to senior
executives in 2009, we follow them, for example, we have removed all of
the bonuses for the management team. I am proud that we have managed to
do so in such a short time," he said to the paper.
Minister for Financial Markets, Peter Norman would not comment on the
amounts paid to the former management team, but through his press
secretary told the paper that severance pay is a matter for the Board.
Despite increased criticisms from the Social Democrats party, Lars
Engwall, professor of business administration at Uppsala University,
explains that state companies have evolved to become increasingly
similar listed companies in the private sector. According to him,
allowances and pension arrangements for management of all types of
companies has increased over the years.
Dagens Nyehter identified that Tuomo Hatakka is the only person who was
a member of the management team at time of the Nuon business
arrangement who still remain with company.
He has worked at Vattenfall since 2001 and at the time of the deal, he
was director for Central Europe, thus his job description involved the
Netherlands and Germany. Last year he had a salary of Skr10.7 million a
year and with additional benefits of Skr12,000 a year and a pension
provision of close to Skr2.5 million a year, writes Dagens Nyeheter.
Current CEO Øystein Løseth, who was previously CEO of Nuon, last
year had a base salary of Skr13.5 million for the year and benefits
(such as car, home and free trips home to Norway) for Skr775,000 Dagen
High severance pay is nothing new for Vattenfall. Back in 2007, when
then-Vice President Klaus Rauscher was fired, he was paid Skr49.5
million. His successor, Hans Jürgen Cramer worked only for five months,
but still got a severance pay of Skr20.9 million.
Therefore, as economic problems continues to strain Vattenfall, people
may ask how the company was poorly managed. Besides poor strategies,
operations and internal managerial policies such as the pay for its top
executives could explain why the company has found itself in its
By Scancomark.com Team