Announcing retirement, Fortum’s Lilius says decision-makers shirk responsibility

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Mikael Lilius, CEO of the majority state-owned electric utility Fortum, lashed out at state ownership policy on Thursday afternoon at a press conference where he also announced his impending retirement at the end of the year.
      The announcement follows controversy over the generous bonuses granted to Fortum management.
      “If an owner is dissatisfied with the management, it removes the management. If it is satisfied, it needs to support the management. During the nine years that I served as CEO of Fortum, I did not feel that I had the backing of the owner.”
      “The organisation, and the company’s Board supported me, but in addition to that, the confidence of the owner is needed.”
     
Lilius said that at shareholders’ meetings the state representative praised the result, but in other respects, messages from the main owner were contradictory.
      “For instance, decision-makers might express doubts about the workings of the Nordic electricity market, and claim that Fortum can manipulate the prices of electricity, even though it has never been possible to prove any such claims.”
      Lilius, who has long worked as the CEO of a listed company in Sweden, says that in that country, things were different. “There the support of the owner was unshakable as long as it existed.”
     
Lilius denied claims by former Minister of Trade and Industry Mauri Pekkarinen (Centre Party), who claimed to have put a stop to the Fortum stock option arrangements. Lilius says that Fortum itself cancelled the option programmes, in favour of new share incentive arrangements.
      According to Lilius, the new system of perks, which has sparked intense debate recently were decided upon in 2002 by the company’s Supervisory Board, which is composed of politicians. At that time, the Supervisory Board, which was chaired by Social Democrat Leena Luhtanen, had more power than it now has.
      “In retrospect no political decision-makers have been seen, who would have stepped out and taken responsibility for these programmes, or for previous option programmes. It is difficult to operate in such a company.”
     
Those who criticise the company’s current board, or its chairman Peter Fagernäs, are barking up the wrong tree, Lilius indicated. “No member of the current board is responsible for the incentive arrangements of the concern.”
      Lilius said that he had taken the view, that once something has been agreed upon, the agreements hold, and they should not be second-guessed.
      Lilius could have continued in his post for a couple of years. The decision to stop was made on Thursday rather quickly, after Peter Fagernäs had said that he would give up the chairmanship of the board.
     
The discussion stemming from the incentives that has been raised in recent days influenced the decision by Lilius to retire.
      It is not pleasant to be the target of people’s envy. “My morals, my reputation, and my honour have been publicly questioned. It is no fun to be accused of being greedy.”
      “Considering that my family has also been threatened, and as I have had to live under the protection of a bodyguard from time to time, it was time to go.”
      Lilius, who has bought a large sailboat, now plans to really retire, but he does not want to leave the world of business completely.
      He noted that his 18 years of experience of serving as CEO of large listed companies is an experience that not many people have. “I believe that I still have something to contribute”, he said.


Previously in HS International Edition:
  Chairman Fagernäs and CEO Lilius to leave energy utility Fortum (2.4.2008)
  Government to re-examine incentive programmes for state-owned companies (1.4.2009)

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