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EDITORIAL

Cutting the strings on the golden chute

THE SKY of the corporate world is full of 24-carat golden parachutes allowing CEOs to bail out from businesses when they get tired or when firms decide their time is past. When Time magazine dug into the history of golden parachutes it discovered price tags exceeding $35 million, plus deals guaranteeing lavish consultancy fees for the manager being shoved out of the corporate jet. Doubtless, there have been some diamond parachutes worth multiples of these sums. Slovakia’s sky has its parachutes too and even if the price tag is only a fraction of these famous ones, they are still enough to outrage the public and even politicians.

THE SKY of the corporate world is full of 24-carat golden parachutes allowing CEOs to bail out from businesses when they get tired or when firms decide their time is past. When Time magazine dug into the history of golden parachutes it discovered price tags exceeding $35 million, plus deals guaranteeing lavish consultancy fees for the manager being shoved out of the corporate jet. Doubtless, there have been some diamond parachutes worth multiples of these sums. Slovakia’s sky has its parachutes too and even if the price tag is only a fraction of these famous ones, they are still enough to outrage the public and even politicians.

A pair of one-time managers at the Košice-based heating plant TEKO recently received severance payments of €100,000 and €90,000 respectively, despite holding their posts at the company for only a few weeks or months. What makes their situation more piquant is that TEKO is a state-owned company and the managers in question were nominated to their jobs by political parties.

Other heat-producing companies have been making headlines in Slovakia not only because of outrageous golden parachutes but also due to the mess that some political nominees have left behind, as well as some rather unfortunate picks by parties which have helped turned the practice of political nominations into a complete farce.

In one example, the Žilinská Teplárenská heating company, while led by a Slovak National Party (SNS) nominee during the government of Robert Fico, in 2008 sold 60,000 tonnes of excess emissions quotas at half the market price. The Trnava heating plant, under its previous management did even better between 2008 and 2009, selling emissions at €0.01 per tonne. The market price at the time was around €20 per tonne.

This is the extent of the managerial skills of some political nominees. Yet, in this Slovak fairytale, they were even paid when asked to leave. Businesses have in the past produced their own ethical justifications for golden parachutes, but in the cases of the Slovak heating companies none of these apply.

For example, advocates of golden parachutes claim that offering them makes it easier to head-hunt someone for a position, and then provides more security and the prospect of keeping the same managers from yielding to offers from other companies.

Yet if the Slovak version of the golden parachute opens after just a couple of weeks on the job, it almost invites political nominees – who in fact know that their job prospects last only as long as their political sponsors remain in power – not so much to strive for success as to use the limited time they have to improve their personal prospects and fill their pockets. If a manager of a state-run enterprise is sacked for incompetence they should be liable for the damage they cause rather than being given a parachute.

In the light of all these developments Prime Minister Iveta Radičová has said that the era of political nominations will end and that managers will in future be picked via a competitive process – and that those chosen will not get offered a golden parachute. But it remains to be seen if this will become reality, and if so if it will be applied to the present government.

Those who have been running Slovakia for the past two decades have not conceded some important definitions: that party interest does not equal the public interest or the interest of the state. Or, indeed, that the interests of the state do not always coincide with the interests of the public.

The recent statement by MP Igor Matovič that each Slovak deputy had installed as many as 10 people to various positions was probably intended to impress the media and get attention, but nevertheless he has a point.

It is disappointing that politicians after each election cling to political nominations to state-owned businesses. They still somehow pretend to believe that being someone’s cousin, or getting a job simply because of loyalty, or from being close to a party means that a nominee will be just as good a manager as a professional with years of experience. Why do party headquarters think they are better suited to pick managers than independent bodies? And why do ‘independent bodies’ so often pick nominees along party lines?


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