Romania’s energy minister Razvan Nicolescu said it’s too early to grant new bonuses to the management teams of state owned gas producer Romgaz and electricity producer Nuclearelectrica, given the fact that the managers of the two companies were selected just one year ago.

Nicolescu said that he will advise the state’s representatives in the general shareholders’ meetings (GSM) of the two companies to vote against the new bonus schemes. The state owns 70 percent of Romgaz (Bucharest Stock Exchange ticker: SNG) and 81.3 percent of Nuclearelectrica (BVB ticker: SNN). Both companies were listed on the Bucharest Stock Exchange (BVB) last year.

The Energy Department, coordinated by minister Nicolescu, holds the majority voting rights in the two companies so no decision can be taken in the GSMs of the two companies without the state’s consent.

Romanian investment fund Fondul Proprietatea (BVB ticker: FP) proposed that the members of the boards and executive managers of the two companies should also be awarded variable bonuses linked to the share price performances of the two companies on the Bucharest Stock Exchange.

Franklin Templeton, which manages Fondul Proprietatea’s EUR 3.5 billion assets, which include stakes of 10 percent in Romgaz and Nuclearelectrica, said that these variable bonuses would help align the interests of the boards and executive managers of the two companies with those of the shareholders.

The energy minister doesn’t agree to Franklin Templeton’s proposals. “I think that it’s much to early to talk about awarding bonuses for two state owned companies which had their management teams selected about one year ago. The management teams of both companies currently have remuneration and performance bonus levels adequate for the time being,” Nicolescu said.

Romgaz was listed at the beginning of November 2013, following a EUR 391 million initial public offering. The current price, of RON 34 is 13 percent higher than that in the IPO, but adding the dividend paid from last year’s profit, investors gained almost 22 percent on the IPO price.

In Nuclearelectrica’s case, things are different. The current share price of RON 8.2 is 27 percent lowe than the price for which the company sold 10 percent of its own shares in the IPO, in September 2013, which was RON 11.2. Even adding the dividend, investors who bought shares in the IPO still have a 16 percent loss.

State owned electricity transport company Transelectrica implemented a stock-options bonus scheme for its management last year.

Andrei Chirileasa, andrei@romania-insider.com