Electricity company's CEO quits, blames the politicians

[Tiriol]

Meanwhile, in Finland, as reported by Helsingin Sanomat.

Announcing retirement, Fortum’s Lilius says decision-makers shirk responsibility

Mikael Lilius, CEO of the majority state-owned electric utility Fortum, lashed out at state ownership policy on Thursday afternoon at a press conference where he also announced his impending retirement at the end of the year.
The announcement follows controversy over the generous bonuses granted to Fortum management.
“If an owner is dissatisfied with the management, it removes the management. If it is satisfied, it needs to support the management. During the nine years that I served as CEO of Fortum, I did not feel that I had the backing of the owner.”
“The organisation, and the company’s Board supported me, but in addition to that, the confidence of the owner is needed.”

Lilius said that at shareholders’ meetings the state representative praised the result, but in other respects, messages from the main owner were contradictory.
“For instance, decision-makers might express doubts about the workings of the Nordic electricity market, and claim that Fortum can manipulate the prices of electricity, even though it has never been possible to prove any such claims.”
Lilius, who has long worked as the CEO of a listed company in Sweden, says that in that country, things were different. “There the support of the owner was unshakable as long as it existed.”

Lilius denied claims by former Minister of Trade and Industry Mauri Pekkarinen (Centre Party), who claimed to have put a stop to the Fortum stock option arrangements. Lilius says that Fortum itself cancelled the option programmes, in favour of new share incentive arrangements.
According to Lilius, the new system of perks, which has sparked intense debate recently were decided upon in 2002 by the company’s Supervisory Board, which is composed of politicians. At that time, the Supervisory Board, which was chaired by Social Democrat Leena Luhtanen, had more power than it now has.
“In retrospect no political decision-makers have been seen, who would have stepped out and taken responsibility for these programmes, or for previous option programmes. It is difficult to operate in such a company.”

Those who criticise the company’s current board, or its chairman Peter Fagernäs, are barking up the wrong tree, Lilius indicated. “No member of the current board is responsible for the incentive arrangements of the concern.”
Lilius said that he had taken the view, that once something has been agreed upon, the agreements hold, and they should not be second-guessed.
Lilius could have continued in his post for a couple of years. The decision to stop was made on Thursday rather quickly, after Peter Fagernäs had said that he would give up the chairmanship of the board.

The discussion stemming from the incentives that has been raised in recent days influenced the decision by Lilius to retire.
It is not pleasant to be the target of people’s envy. “My morals, my reputation, and my honour have been publicly questioned. It is no fun to be accused of being greedy.”
“Considering that my family has also been threatened, and as I have had to live under the protection of a bodyguard from time to time, it was time to go.”
Lilius, who has bought a large sailboat, now plans to really retire, but he does not want to leave the world of business completely.
He noted that his 18 years of experience of serving as CEO of large listed companies is an experience that not many people have. “I believe that I still have something to contribute”, he said.

Fortum is one of the largest if not the largest electricity provider in Finland and it has raised its prices even when the price of the electricity has otherwise been falling. The bonuses awarded to its executives have been a subject of heated debate and apparently it has also extended to include threatening CEO Lilius's family.

This has some relevance to the current global financial crisis, since those bonuses are now seen as immense and quite frankly insane by the general population in the light of the worsening financial situation. I don't shed one single tear to Lilius (although I do feel sorry for his family), but the politicians don't get off scott-free. They have acted as if they couldn't do anything to the companies the government owns or has a majority in shares and now when the public is ready to go for anyone's throat, every politician is pointing fingers. Disgusting.

[Edi]

Even when that compensation plan was being put in place, it was widely criticized as being far too generous and heaping undeserved rewards on the top leadership. Pekkarinen and the other politicians just said that there was nothing wrong with it then and that it was supposedly reasonable. Nobody other than politicians and people who earned enormous amounts of money anyway agreed, yet it was rammed through.

Lilius has gotten 33 million euros over the past eight years and will get a pension of 40k euros per month, which is between 1.5 to 2.5 times the average yearly salary of common workers and roughly the yearly salary of higher-earning people.

Finland is such a small country that circles in which the big company executives move are so small everyone knows each other and as they sit on the committees and boards and other instances which draft these compensation schemes, it's a regular Good Old Boys' Club. Regular people see that and hear this kind of whining and no surprise the torches and pitchforks come out. I'm not much inclined to tolerate it either.

To give Lilius his due, he is a good executive who turned Fortum around in troubled times, but he is also an unrepentant asshole who doesn't give a shit about any form of social responsibility, based on his public interviews. He has been the main proponent of permanently rising electricity prices, justifying it with the "market price" of electricity, which is determined by the most expensive method of production, while Fortum produces the bulk of its electricity with methods that are only quarter as expensive. cue enormous profits, because the Nordic electricity market is nothing but a price-fixing cartel that does as it pleases.

Yeah, the numbers are nowhere in the same league as AIG and the other US bailouts, but they don't need to be to get Finns up in arms over it.