Leaner feasting on the way for senior managers
‘Feast in the time of famine’ is an old Russian saying. The top managers of many Russian companies have followed in the footsteps of their foreign counterparts and started giving up their year-end bonuses.
In some firms, top management receive premiums several times a year, and a year-end bonus reflecting the capitalization of the company.
The president of VTB bank, Andrey Kostin – as an independent director in oil company, Rosneft – has given up his annual bonus of $200 thousand, due to the difficult financial situation. The capitalization of banks and most companies has fallen up to 70%, as the Russian stock exchanges have suffered their worst falls since 1998. Vassily Titov, Vice-President at VTB says senior management will feel the effects.
“I think we will cut the bonuses, mostly for the top management, for this 4th quarter of 2008. These measures will touch first of all the top management, and not ordinary employees.”
Year-end compensation packages have not only stimulated managers to boost their companies performance but have also motivated them to stay within their companies. However, Alexander Filatov from the Association of Managers says that Russia has been experiencing a wage bubble.
“Levels of top managers compensation in Russia were inflated because of the imbalance of demand and supply. Now I think they will go down.”
Cuts in remuneration have followed other measures to slash costs, including reducing administrative spending, transportation and even use of company mobile phones. And now there's likely to be less feasting this Christmas for Russian managers.