Rostelecom Option Program

Main article about the company: Rostelecom

2024: Rostelecom paid 1.4 billion rubles under the employee motivation program

According to the results of the first half of 2024, Rostelecom paid ₽1,4 billion as part of a long-term program to motivate senior management employees. This program, valid from 2023 to 2024, was aimed at stimulating the company's top management, according to a company report published in September 2024.

As Interfax reports with reference to this document, the program is based on the principle of co-financing the purchase of Rostelecom shares by the employees themselves. The president of the company, the chief accountant and employees of the 10th grade can participate in the program. The document states that the program consists of two cycles - one was launched in 2023, and the second started in 2024. The aggregate maximum share available to all program participants does not exceed 3% of the company's share capital, which is equivalent to 3.19% of ordinary shares. For each cycle, the share cap is 1.5% of the share capital or 1.6% of the ordinary shares.

𝓲

Flickr

The program is designed to meet corporate goals such as free cash flow (FCF), net income and operating income before amortization (OIBDA). The reporting document emphasizes that the program allows employees to direct part of their remuneration to the purchase of company shares, which provides them with the opportunity to receive additional remuneration depending on the position, level of investment and results achieved.

Rostelecom's previous motivational program, covering 2020-2022, completed its operation in 2023. Within its framework, the participants could be employees of the 6th-11th grades, who directed part of their remuneration to the purchase of the company's shares. This program also provided for the provision of additional remuneration in the form of shares, based on the position and amount of investment. The maximum stake in the 2020-2022 program amounted to 6% of the company's authorized capital or 6.38% of ordinary shares.^[1]

2012: Approval of DM members to participate in the option program

On June 14, 2012, Rostelecom shareholders approved by a majority vote (80.16%) the participation of members of the company's board of directors in the option program. Within its framework, participants will be able to purchase preferred shares of the operator from the hedge fund Gazprombank - Telecommunications Plus in the amount of 1.8 billion rubles. at a price of 87.6 rubles. per share. 10.04% of shareholders voted against this decision, and 9.46% abstained.

On the same day, during the discussion of the issues included in the agenda of the annual general meeting of shareholders, the head of the law firm "Lawyer" and one of the minority shareholders of Rostelecom Oleg Ashurkov opposed the participation of members of the operator's board of directors in the option program. "The members of the board of directors are not employees of the company, they have no labor contracts, and therefore the program should not apply to them," he said. Oleg Ashurkov also added that the issue of remuneration for the company's management was included in the subpoena only after he filed a lawsuit with the Supreme Arbitration Court.

Ivan Rodionov, the newly elected chairman of the board of directors of Rostelecom, did not agree with Oleg Ashurkov. In his opinion, any manager, including members of the board of directors, are employees of the company.

"The remuneration of both managers and board members is built on three levels: cost compensation, the participation of the board of directors in achieving the result and the interest of its participants in increasing the value of the company," he explained. "There is no other incentive tool other than the option program."

2011: Program for RUB 3.5 bln adopted

In June 2011, the Board of Directors of Rostelecom adopted an expanded option program in the amount of 3.5 billion rubles. (corresponds to 16.3% of preferred shares). Its participants then for the first time included members of the board of directors of the company. The program is designed for two years and consists of two stages. At the end of each phase - June 14, 2012 and June 14, 2013 - 50% of the total program volume can be implemented. Participants can purchase shares under options within six months after the exercise date.

Some minority shareholders of the company considered such a remuneration system for top managers of Rostelecom illegal. The Investor Protection Association (API), representing the interests of Dart Management and NCH (own about 1% of Rostelecom's shares), recommended that shareholders speak out against the approval of the option program. It was also supported by the Popov Foundation, founded by the former CEO of the holding Svyazinvest"" Evgeny Yurchenko (as of December 31, 2011, he owned 0.79% of Rostelecom's ordinary shares). Two minority shareholders of Rostelecom unsuccessfully tried to prove in court that the decision to adopt this program was unlawful.

See also

• Rostelecom's financial performance
• History of Rostelecom
• Chronicle of the relationship between the Ministry of Communications and Rostelecom on the project "Electronic Government"

Notes