The battle for dividends

Inter RAO UES postponed payments to shareholders for an indefinite period

During yesterday's meeting of Inter RAO UES shareholders, a discussion broke out regarding dividends. The fact is that it was decided not to pay ordinary income to shareholders this year. At the same time, according to the new bonus system for top managers, members of the board of directors will receive 1.4 million rubles. per year. This is necessary to raise the company’s image, and dividends will be paid to shareholders when the economic situation improves, explained Deputy Prime Minister Igor Sechin, Chairman of the Board of Directors.

It was decided to use the bulk of Inter RAO UES’s profit for the past year (RUB 1.071 billion) to pay off the company’s debts. At the same time, the corporation refused to pay dividends for 2008. As its head Evgeniy Dod explained, the value of the corporation's net assets is less than the amount of its authorized capital. However, this decision was preceded by heated debate. Most of all, shareholders were outraged by the fact that the company's financial difficulties had little impact on the income of top managers. Thus, members of the board of directors will receive 1.4 million rubles. for regularly attending all meetings. If they take part in the work of various council committees, they can count on a substantial increase. Managers will be able to lose this money only if they are absent from half of the meetings.

It took the company's management a lot of effort to convince shareholders of the need for such measures and the good prospects of the company. Thus, Mr. Dod assured the audience that the company’s shares today are undervalued by at least four times. “At the end of 2009, management will strive to show such results as to ensure both the implementation of the investment program and the payment of dividends. We will try to ensure growth that will allow you to enjoy owning Inter RAO UES shares. The main income for shareholders will be due to the growth in share prices,” Mr. Dod promised. He also noted that even during the global financial crisis, the company managed to maintain stability and a sufficient level of liquidity. The head of the company was supported by Igor Sechin. According to him, despite the economic turmoil, Inter RAO UES even managed to increase the volume of electricity exports by 9%. He also noted that the company will follow the path of diversifying its sales markets. He named Latin America, Southern Europe, the Middle East and Southeast Asia as promising energy consumers. The company is already operating in Cuba and Jordan. “Other projects are on the way, including Chinese ones,” said the head of the board of directors. However, he warned shareholders that they can only count on payments due to them when the economic situation in the country begins to improve. “I cannot but agree that dividends must be paid. But you need to look at the situation objectively: how the company will develop, is there access to investment resources, what is their cost. This will be done in the future, when the macroeconomic situation in the country is more stable,” the Deputy Prime Minister noted.

Petr GELTISHCHEV