Putin May Soon have Another Lever on Top Corporate Managers -- the Power to Control Their Salaries

Paul Goble

            Staunton, June 8 – The Russian government is currently discussing a measure which may seem populist but in fact will have the effect of giving Vladimir Putin new leverage on the top managers of major corporations in the Russian Federation by allowing him the power to determine their salaries.

            According to Kommersant, the government is discussing the possibility of limiting the total annual compensation of the managers of state companies, state corporations, and those businesses under state control to no more than 30 million rubles (450,000 US dollars) (kommersant.ru/doc/4372677).

            Such a move might be popular with many Russians who earn nothing like so much, although discussion of this limit does have the effect of calling attention to just how large the difference in incomes and wealth between those at the top and everyone else is and thus infuriating those it is supposed to calm.

            But the most important consequence of this measure if it is indeed adopted comes from an exception it inserts: under the terms now being discussed, Putin will have the right to exempt this or that leader from the limit and thus to earn much more. That will allow him to show preference to those who are especially loyal and thus encourage loyalty as such.

            Many top managers are currently paid far more and would thus suffer a hit unless they showed the kind of deference to Putin that he wants. That sets up a complicated game: Most will be angry that they have to give up anything but will feel compelled to go along with the new system to keep their wealth.

            That may help Putin in one way; but it will beyond doubt hurt him in another. He will thus come to be seen by the population as personally responsible for the high salaries that the corporate elite that does go along will continue to get. And consequently, the Russian people will have yet another reason to be angry at someone who won’t help them but will the rich.

Moscow has talked about limiting corporate pay many times during Putin’s rule, but efforts to do so have foundered on how to arrange things so that the Kremlin won’t infuriate corporate leaders and prompt them to think about opposing what Putin wants to do. It is thus possible that this reform will founder on that dangerous rock as well.