Enel Plans To Get Control Of Russia's OGK-5 By Yr End-Report

Italy's Enel SpA (EN) is planning to launch a partial takeover bid on Russia's wholesale power generator OGK-5 before the end of the year and reach close to a 70% stake in the Russian company, reports Corriere della Sera in its Tuesday Internet edition. The remaining 30% will be held by Russian electricity monopoly RAO Unified System of Russia (EESR.RS), or UES. Enel in June bought a 25% stake in OGK-5 at a public tender for $1.52 billion. It subsequently bought another 5% for $281 million and it said it wants to raise its stake to a controlling one. On Aug. 31, OGK-5 will hold a board meeting, which is scheduled to change its structure to allow in three board members to be appointed by Enel, the paper adds.

CEO Confirms Mgmt Bd Member's Exit - Newspaper

Confirms Mgmt Bd Member's Exit - Newspaper VIENNA (Dow Jones)--Austrian Airlines AG's (AUA.VI)Chief Executive Alfred Oetsch has confirmed the departure of management board member Josef Burger in a company email, reports Austrian daily Die Presse Tuesday. "I ask for your understanding that we don't comment on management board member Burger's leaving," Oetsch wrote to his employees in the internal email, which Die Presse has received a copy of. Burger has been on coalition course with CEO Oetsch regarding the carrier's extensive turnaround plan that has seen its long-haul destination portfolio considerably reduced, Die Presse reports. The newspaper says Burger is furthermore being accused of having leaked details of a co-operation agreement between AUA and Austrian catering company Do&Co to the press, a deal that proved less favorable for AUA, according to Die Presse. The mistrust allegedly was so outspoken that Oetsch hired a security company to conduct an investigation against Burger, Die Presse writes, quoting unconfirmed rumours. But also the CEO himself is faced with heavy criticism from within AUA, the newspaper continues. The carrier's staff association intends to call for Alfred Oetsch's resignation at a meeting with Austria's Chancellor Alfred Gusenbauer, which is to take place in the coming days. The association accuses Oetsch of "management by chaos", Die Presse writes. Austria holds a 42.75% stake in AUA through the state-holding company OIAG.

How Hefty Pay Raises Undid An Insular Board

THE WALL STREET JOURNAL) By Scott Thurm Many laws and regulations have been adopted in the past 25 years to curb executive compensation. But there is no substitute for judgment and integrity by corporate directors. A case in point is Tennessee Commerce Bancorp, a one-branch commercial lender that in June awarded big raises and stock options, to Chief Executive Arthur Helf and three other officers. Mr. Helf's annual salary more than doubled, to $400,000, from $190,000; the others received similar boosts. Those are modest numbers when some CEOs make tens of millions. But the story behind the raises is nonetheless telling. Based in Franklin, Tenn., south of Nashville, the bank is thriving. Assets as of June 30 totaled $750 million, up 50% from a year earlier. Second-quarter net income rose 72%. But its board remained relatively insular, even after the bank listed its shares on Nasdaq in 2006. The 13 directors -- who included small-business owners, Franklin's mayor and a doctor -- had served together since 2000. The board included Mr. Helf and two other officers, a relatively high ratio of insiders in the Sarbanes-Oxley world. Directors serve three-year terms, a so-called staggered board that discourages corporate raiders and shareholder challenges. All 13 sat on the compensation committee -- violating Nasdaq rules, although no one noticed for a while. The calm was shattered on July 18, when the bank said three directors had resigned. A Securities and Exchange Commission filing revealed the three were unhappy about the raises. One of the departing directors, Fowler H. Low, wrote in his resignation letter that the policy was "crafted to provide excessive and retroactive compensation to 'executive managers.'" Bank President Michael Sapp, one of the three executive directors, later told investors that the raises were "an attempt to restore some parity with our peers." Chief Financial Officer George Fort, speaking for the officers, declines to respond to Mr. Low's criticism. "We really would like to let the public filings speak for themselves," he says. "The issue has been decided. It's old news at this point." The raises were awarded after the company commissioned a compensation survey from Clark Consulting. Many boards employ consultants to help set executive salaries, but critics say the studies are often designed to support raises. Mr. Low said the study was "flawed," in part because it compared Tennessee Commerce with bigger banks. Todd Leone, a managing director for Clark Consulting, declines to comment, saying the study is confidential. The board approved the raises on June 1, though Mr. Low says the board, sitting as the compensation committee, never met to discuss the raises. The executives who are also directors -- Mr. Helf, Mr. Sapp and Chief Administrative Officer H. Lamar Cox -- each voted on the raises for the other two. That seems to violate the spirit, if not the letter, of the bank's proxy, which states that officers don't "participate in discussions or vote on matters relating to their compensation." Ironically, on June 1, the same day the raises were approved, Nasdaq told the bank that its compensation committee was improper because it included the officers. Last week, the bank said it had named a new committee, made up of three outside directors. The dissident directors protested the voting process. But Mr. Helf said in a June 6 memo that the bank's lawyers had approved. Tennessee Bancorp's lawyer, Steven Eisen, of Baker, Donelson, Bearman, Caldwell & Berkowitz, confirms he "gave the board an opinion that the process was legal." He declines further comment, citing attorney-client privilege. At the bank's annual meeting on June 8, shareholders re-elected six directors and approved a new incentive plan to award stock options and restricted stock. Shareholders weren't told about the raises that had been approved the week before, retroactive to Jan. 1. In July, the three directors resigned -- a rare boardroom protest over compensation. In his resignation letter, Regg Swanson called the process "unethical," and said it had "violated my trust in the management of the bank." Mr. Swanson didn't return a call seeking comment. For his part, Mr. Low says the decision to quit was "difficult and emotional." Mr. Low had known Mr. Helf for decades, and had once hired him. In an interview, he says the officers, who hadn't had raises in several years, probably deserved increases. Yet Mr. Low, who is 75 and retired, says he felt compelled to resign. "The executive officers/directors have concluded that the board can be manipulated in whatever manner deemed desirable," he wrote in his resignation letter. "I have to question whether we are a board of directors -- or a board of directed." Another director sees it differently. Dorris "Eli" Bennett hints that he was troubled by the process, though he won't say how he voted. But Mr. Bennett, who owns a tool-and-die company, thinks he can be more effective by staying on the board. If directors think the board acted improperly, "the worst thing you can do is quit," he says.