Fortum Bosses Rightly Denied a Fortune

Readers will recall that Fortum, the biggest energy company in Finland, made a series of disastrous decisions to invest in Russian fossil fuels after Crimea was invaded. They made this investment by buying a majority stake in Uniper, a German company that was many times larger than them. The losses were terrible but the then Chairman and the CEO jumped ship before the proverbial stuff hit the fan. This financial disaster did not involve any clawback of their very generous remuneration, and they continue to hold prominent posts elsewhere in business. 

Fortum is a listed company but has the Finnish State as a majority owner because it is a strategically important company for Finland and our economy. You would not think so based on past and present behavior!

The new Chairman and CEO, at Fortum appear not to have learnt any lessons. The board, most probably with the knowledge of the CEO, presented the AGM with a bonus package that was generous in the extreme.

The state’s representative in the board was probably asleep because he failed to stop the proposal  in time – it presented a huge improvement on past bonuses for which there is absolutely no justification. There is no reason to increase bonuses at an energy company when they are make huge profits because Putin’s war on Ukraine caused fossil fuel prices to shoot up.

Fortum’s board had decided to increase the bonus just before the AGM, probably because Exxon’s man at the top got one too! However, another government civil servant spoke up at the last moment and the proposal was crushed somewhat, but…

… the question you may ask is whether shareholders really do understand what is needed at the board level to make thinks run honestly and transparently for stakeholders. It appears that there are too many old-boy networks operating for good governance to thrive.  

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