Fondul Proprietatea (FP) has summoned Hidroelectrica’s ordinary shareholders’ meeting in order to ask shareholders to replace four members of the Supervisory Board (”Board”). The four members are: Ioana Andreea Lambru (president of the Supervisory Board), Laurentiu Dan Tudor (member), Horia Marian Gambuteanu (member) and Andreea Negru Ciobanu (member).
The Fund’s request is based on the grounds that the respective Board members did not oppose an arbitrary proposal for the replacement of Petronel Chiriac, member of the Directorate, with Adrian Constantin Volintiru, the proposal being made without running a proper transparent selection procedure first. The Fund believes that disregarding the achievements of the current Directorate members so far and the need for a thorough analysis of the professional abilities and expertise required for this specific position, the four Board members have effectively breached the principles of Hidroelectrica’s Code of Ethics and the principles of the Corporate Governance Code.
The four Board members were appointed, on a four-month interim mandate, on April 19, 2017.
Among the rules and principles that the above mentioned Board members have broken are that there has been no evaluation report on the activity of the Directorate member to be revoked, Petronel Chiriac, and no analysis to justify such a decision;
One of the Board members, Andreea Negru Ciobanu, proposed a new Directorate member simply by bringing in front of the Supervisory Board a CV of the candidate (Adrian Constantin Volintiru), in spite of the need for a transparent appointment procedure;
The four Board members deliberately ignored and breached Hidroelectrica’s Code of Ethics which stipulates that: “the recruitment/promotion of the personnel must be made in a transparent manner, taking into consideration the necessary professional experience and integrity”;
The proposed revoking of Directorate member did not take into consideration the outstanding financial results of the company – a Q1 2017 pre-tax profit which is 38% higher than in the same period of 2016, a year of record profits in the company’s history;
Replacing, for only a four-month mandate, experienced Directorate members, with proven track records in the company and in the power generation sector, with other random candidates with no professional history within Hidroelectrica and no expertise in the hydro energy sector – as long as the company has outstanding results – is an unprofessional, irrational and completely unacceptable practice.
In order to overcome this management crisis at Hidroelectrica, the most profitable Romanian company and the largest power generator in the country, Fondul Proprietatea has asked for an ordinary shareholders meeting to take place to discuss and approve the following measures: the revocation of the four Board members, including the President and making new appointments to the vacated Board positions, in accordance with Law 111/2016, based on the good findings of the previous selection process.
“Appointing new members of the Directorate for a four-month mandate, with no experience whatsoever in the company and in executive positions in the electricity generation sector, by replacing highly qualified professionals is jeopardizing Hidroelectrica’s excellent results and goes against the company’s and the shareholders’ interests. Deficient management was one of the main causes that led Hidroelectrica to insolvency before 2012, when appointments at Board and executive management level were made according to political connections and with great disregard for professional experience or for transparent and competitive selection processes”, says Greg Konieczny, CEO and portfolio manager of Fondul Proprietatea.
”It is important to note that the Judicial Administrator has implemented, during the insolvency procedure, proper and clear rules for hiring management and has conducted a transparent and competitive selection process for more than 60 management positions within the company (Phoenix Project). I am extremely disappointed to see that Hidroelectrica’s Board totally disregards, within less than a year from the company’s exit from insolvency, the proper principles and rules the Judicial Administrator implemented,” he adds.
Konieczny also says that the inability to carry out long-term development plans during a period of successive interim mandates attributed to inexperienced professionals at the Board level has indefinitely delayed the perspective of an IPO at Hidroelectrica.
”Unless our proposals are quickly taken into consideration and implemented, the company’s latest record profitability and operational performance are at risk at being reversed.”