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20 May, 2024
 
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MPs debate executive bonuses in semi-governmental organizations

Renewed CYTA CEO contract sparks broader discussions on compensation and performance benchmarks

Maria Eracleous

Maria Eracleous

The issue surrounding the renewal of Cyprus Telecommunications Authority (CYTA) CEO Andreas Neocleous's contract for another five years and a requested bonus sparked discussions within the Council of Ministers about executive bonuses in semi-governmental organizations. According to sources, the Ministry of Finance is drafting a framework to allow bonuses based on organizational performance when renewing or concluding CEO contracts for such entities.

When CYTA's Board of Directors proposed renewing Neocleous' term and included a bonus request equivalent to 60% of his salary, the Cabinet deliberated that such bonuses should be stipulated in original contracts. Without such provisions, offering a bonus could raise objections, especially from those who previously didn't pursue the position under those conditions. Consequently, Neocleous' renewed contract with CYTA does not include a bonus. However, this event initiated a broader debate to establish criteria for bonuses tied to specific organizational achievements. This regulatory shift aims to create a more market-driven environment, potentially attracting top private-sector executives to the public sector, thereby enhancing semi-public organization performance.

This bonus provision won't be exclusive to CYTA but will extend to other major semi-public organizations like EAC and OKYPY.

Concerns have emerged regarding potential salary disparities. Specifically, there's apprehension that post-bonus CEO salaries in semi-governmental roles could surpass those of corresponding ministry directors-general. The Ministry of Finance plans to address this within a broader modernization framework, though it's not an immediate priority.

As of January 7, Neocleous has yet to sign his renewed contract. However, the Council of Ministers' approval makes the renewal procedural, and it's expected to be formalized soon. The renewed contract, effective from January 7, maintains Neocleous's annual salary at €130,000, consistent with legal stipulations. Despite the current absence of a bonus framework, the issue remains significant in the context of future contract renewals.

[This article was translated from its Greek original]

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Cyprus  |  bonuses  |  economy

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