THE SHAREHOLDERS OF THE BSE SEEM CONTENT WITH THE WEAK PERFORMANCE OF THE CEO Sobolewski, expected to stay with the BSE, but with a different compensation package

The shareholders of the BSE and Ludwik Sobolewski have to decide this year if the Pole will stay in charge of the company for another four years, and if yes, in what context, as his term will expire in August.

After having a good perception in the first two years of his term, and being paid a fixed salary of approximately 17,000 Euros a month, as well as combined bonuses of 450,000 Euros, amid the listing of state owned companies and the Proprietatea Fund selling some of its holdings, lately, the downward trend in the results of the Bucharest Stock Exchange has drawn discontent from the some shareholders.

At the end of last year, a consensus had formed among BSE shareholders to drop Ludwik Sobolewski, at the end of his term - August 2017. No selection process has been started yet nor any consultation about a possible successor to the CEO, and the SIFs that represent one of the biggest shareholders of the Bucharest Stock Exchange, are rather busy themselves, this year, with their own elections, so the BSE issue is not among their priorities.

Under these circumstances, some of the shareholders are considering at least a renegotiation of the salary of the CEO of the BSE.

The Bucharest stock exchange never published the salary of Ludwik Sobolewski, even though in the beginning of last year it has adopted a new Corporate Governance Code, but companies are not required to comply with its provisions, merely to provide explanations for the criteria they do not implement.

On the other hand, "BURSA" published information about the remuneration of the BSE CEO starting in 2013, according to information received from its sources.

The management of the Bucharest Stock Exchange has signed a four-year contract with Ludwik Sobolewski, the former head of the Warsaw Stock Exchange, which includes a fixed gross wage of approximately 17,000 Euros, money for a home, as well as a performance bonus.

In 2013, after having been CEO for only a few months, he earned a performance bonus of approximately 150,000 Euros, for meeting the profit criterion (the net annual profit was supposed to exceed 4.6 million lei, and after the first six months, meaning before the appointment of Sobolewski, in other words with no connection to his management, the profit stood at 4.2 million lei, and reached 5.4 million after nine months) and for the restructuring performed - the layoff of a number of employees, respectively.

In 2014, Sobolewski was entitled to a bonus of over 300,000 Euros, according to the contract, as the evaluation criteria were supposed to use 2012 as the benchmark. In 2014, the BSE had an operating profit of 11.13 million lei, up 172.7% over that of 2012 (the contract stipulated an increase of over 60%, as performance criteria), the daily average turnover was 11.72 million Euros, up 75% over 2012 (the contract stipulated an increase of over 50% as a performance criterion), BSE stock closed at 33.97 lei/share (the contract stipulated a price of 22 lei), while the 50% increase in bond liquidity was not achieved.

In the absence of new listings of state-owned companies, Sobolewski failed to meet the performance criteria in his contract, BURSA wrote in September 2016, after three years of mandate.

In 2015, the operating profit was 3.25 million lei, down 70% over 2014, while the performance criterion was a 40% increase. Also, the daily turnover decreased 33%, to 7.8 million Euros, while the contract required a 35% increase, and the stock was priced at 27 de lei, at the end of the year, higher than the 25 lei "benchmark".

Last year, the daily turnover of the BSE was 8.11 million Euros, up 2.78% compared to 2015. Liquidity is the only criterion that still needs to be met in order to switch to an emerging market status, after it was placed on the watchlist by the FTSE agency.

Even though that criterion isn't likely to be met any time soon, BSE officials are betting on the Hidroelectrica IPO, even though the governing program of the PSD does not include provisions pertaining to the capital market, though Ludwik Sobolewski got lucky at the end of 2016 with the MedLife IPO, the first one in several years.

When asked if he was considering getting a new term as the executive of the BSE, Ludwik Sobolewski said, last summer: "My answer is that it is too early to think about it. That is more than a year away. Time goes by quickly. If a number of conditions are met - if Hidroelectrica is taken public, if the Proprietatea Fund sells anything, if we get RCS-RDS, this year can create a good change. Even now, everything would be better if there were more optimism in the market. But the evolution of the market isn't helping. I don't know what is going to happen to me personally, next year (ed. note: in 2017), but my goal is to continue and to do more than I did so far".

Seen as the "saving heroes", the entire market had placed its hopes in Sobolewski, upon his appointment as CEO of the BSE, in August 2013. He asserted himself, through the good perception that he had, being seen as the man behind the fulminating success of the Warsaw Stock Exchange, between 2006 - 2013, when he was in charge.

To the Romanian stock market community, it almost didn't matter that he had been dismissed from that same Warsaw Stock Exchange, amid a row concerning the involvement of listed companies in the funding of a film in which his actress girlfriend was involved.

Arriving in Bucharest riding a wave of sympathy, the Pole also had a personal stake: to prove that the glory of the Warsaw Stock Exchange was also owed to him, and not just the result of supportive government policies.

Upon his arrival, BSE president Lucian Anghel compared Sobolewski to football trainer Jose Mourinho.

Recently, it would appear that the two don't get along as well as they did in the past, which was visible in the meetings of the Board of the Exchange. At the end of 2015, "BURSA" wrote that Sobolewski had begun browsing employment websites, seeking positions available in Dubai and Abu Dhabi.

Even though Sobolewski is blaming "external factors", for failing to meet the criteria in his contract, it is certain that he is far from having performed the "miracles" that the market community was expecting. Still, compared to his performance, his image was less affected, so he is expected to still remain the CEO of the BSE, after the month of August. It remains to be seen whether he will be just as good at negotiating his compensation package as he was in 2013, when the management of the BSE agreed to pay him twice what it paid his predecessor, Victor Cionga.