Russia Proposes New Executive Pay Tied to Stock Performance
The Russian Finance Ministry has proposed a new compensation system for executives at state-backed companies. The draft government decree introduces Long-Term Incentive Plans (LTIPs), aiming to boost stock market value and expand the country's stock market capitalisation.
Under the new system, executives' pay will be tied to company shares or financial instruments linked to stock price growth. This move is designed to motivate employees and senior management to increase their companies' market value. The plans will be implemented in state-owned enterprises preparing for initial public offerings (IPOs) or secondary public offerings.
The ministry's goal is to enhance the investment appeal of stocks and support the national target of raising the capitalisation of Russia's stock market to at least 66% of GDP by 2030. Companies like Aeroflot, Gazprom, VTB, and Sberbank are among those expected to be affected by this change.
The Finance Ministry's LTIP initiative seeks to align executive interests with shareholder value, potentially driving growth in market capitalisation. This move could significantly impact the Russian stock market's expansion and investment appeal.
