ČEZ board members get hefty bonuses, record dividend planned

The outlook for 2023 is not as rosy due to higher taxes on windfall profits and a pending law affecting minority shareholders.

Expats.cz Staff

Written by Expats.cz Staff Published on 25.05.2023 12:00:00 (updated on 25.05.2023) Reading time: 2 minutes

Executives at Czech energy giant ČEZ will receive a total of CZK 135 million in bonuses, thanks to record profits last year. The partly state-owned company previously announced a net profit of CZK 81 billion for 2021, which was eight times higher than the preceding year. The company also plans a record dividend, much of which will go to the Czech state.

CEO and board of directors chairman Daniel Beneš will take the largest bonus, CZK 35.2 million. This is 1 percent more than the year before. Two other board members got bonuses of over CZK 20 million, and the lowest bonus was CZK 12.7 million.

The total income for a member of the board of directors is divided into a fixed and a variable component. The variable component is based on meeting performance indicators, which are determined and evaluated by the supervisory board. According to the company report, all members of the board of directors are entitled to the full amount of the variable component for last year.

The energy company also plans to pay its shareholders a record dividend if the general meeting approves it. The general meeting will be held on June 26.

The majority shareholder of ČEZ is the Czech state, which holds roughly a 70 percent stake through the Ministry of Finance. ČEZ has already announced that it will propose a dividend of 80 percent of last year's adjusted profit.

The payout per share should amount to CZK 117, which means the state would get CZK 44 billion. Prime Minister Petr Fiala said the government would use the dividends to help citizens and to consolidate state finances.

"Although ČEZ earned CZK 70.8 billion more for its shareholders last year [than in 2021], and if the general meeting approves it, it will also pay its shareholders a record dividend, the income of the company's management remained at the same level as the previous year," ČEZ spokesman Ladislav Kříž told ČTK.

In March, ČEZ attributed the increase in profits to the enormous rise in prices as a result of the Russian invasion of Ukraine, the record profit from commodity trading on foreign markets, and the high operational reliability of ČEZ power plants.

For this year, profits for the first quarter were down significantly. Net income reached CZK 10.8 billion, a year-on-year decrease of CZK 15.9 billion. A newly introduced windfall profits tax of 60 percent had a significant impact on net income. ČEZ Group for the entire year of 2023 expects a net income of CZK 33 billion to CZK 37 billion.

“The cost of levies on excessive production sales exceeded CZK 10 billion in Q1 and the tax on unexpected profits amounted to CZK 9 billion,” ČEZ chief financial officer Martin Novák said.

Economist Lukáš Kovanda recently said that he expects the share value of ČEZ to fall this year due to the government’s efforts to pass a new law, commonly referred to as “Lex ČEZ,” which would serve to squeeze out minority shareholders. If the law passes, minority shareholders would not be guaranteed a premium price when the state buys up their shares so it can nationalize the energy company.

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