We, the citizens of the Russian Federation, paid citizen A. B. Miller 1,752,624,000 rubles in compensation for his work in 2014. Forbes data, converted into rubles at the current exchange rate.
“We, the citizens, paid” is not an exaggeration, because the state, through Rosimushchestvo (Russia’s Federal Agency for State Property Management), owns 56.3% of Gazprom, and the state, again through Rosimushchestvo via the intermediary Rosneftegaz, owns another 16.7%. Thus, the decision on Miller’s compensation could only have been made through voting directives issued by Rosimushchestvo on behalf of the Russian Federation—that is, on behalf of us.
So this is official: the citizens of the Russian Federation rated the quality of A. B. Miller’s work so highly that they paid him a ten-digit sum.
Now let’s take a look at the results of that work (many thanks to Vladimir Milov for helping with the data):
Gas production. The most important indicator for Gazprom. The forecast for 2015 is 427 billion cubic meters, the lowest figure in the company’s history and 22% below the 1999 level (546 billion cubic meters). Failure.
Gas exports. Another crucial indicator—we fund the national budget through exports. In most previous years, we sold 150–170 billion cubic meters of gas per year to Europe; in 2014, exports fell to a record low of 146.6 billion cubic meters. Exports to the CIS (Commonwealth of Independent States) reached 100 billion cubic meters some 7–8 years ago (the figures can be found here), but last year they dropped to 45 billion. Failure. Overall, the gas export marketing system has fallen apart—Gazprom is no longer seen as a reliable supplier. The “take-or-pay” system has proven unworkable. The spot market offers European consumers better prices.
Domestic supply. This is also extremely important—it means heat for our homes and energy for our industry. Ten years ago, Gazprom consistently supplied Russian consumers with about 300 billion cubic meters per year; now it has slid to around 200 billion (figures here). Failure. On top of that, there have been constant increases in regulated domestic gas prices, which in dollar terms had already risen to the level of U.S. Henry Hub prices even before last autumn’s ruble crash. It’s absurd: we’re told “Gazprom is a national treasure,” yet gas prices are higher than in the United States. It got to the point that Putin openly complained about this during a meeting of the presidential commission on the fuel and energy sector (you can see it in Milov’s presentation here, slides 15–16).
Labor productivity and headcount. The average number of employees rose from 298,000 in 1999 (p. 5) to 450,000 in 2014 (p. 6). Failure.
And so on. If you play around with the numbers and calculate costs per employee or per cubic meter produced, your hair will really stand on end.
Sorry, but the question here is not, “What justifies paying 1.7 billion in salary?” It’s, “What justifies paying anything at all?” and “Why is he still employed?”
Also, I haven’t taken up this kind of fight in a long time, but what do you think of the idea of filing a class-action lawsuit against Rosimushchestvo of the Russian Federation on the grounds that it has no right to pay such compensation to the head of a state-owned company given these results?
P.S. The vindictive Alburov immediately dug up archived information about Miller’s apartment in central Moscow. Eleven rooms. 775 square meters (about 8,340 square feet). The heads of state corporations live well.