German energy companies Sefe and Uniper, rescued with multi-billion bailouts following the suspension of Russian gas supplies, have reportedly granted significant bonuses to some traders for 2022, according to four sources familiar with the matter.
Germany has so far provided around 26 billion euros ($28.6 billion) in equity injections and loans to Sefe and Uniper after they incurred record losses purchasing natural gas cargoes at record prices to replace lost supply from Russia – Germany's top gas supplier before the invasion of Ukraine.
While paying bonuses at bailed-out energy groups raises questions about the use of taxpayers' money, it also highlights the need for the companies to remain competitive.
Both Sefe – short for Securing Energy for Europe – and Uniper had to agree to salary limits for their management boards as part of the bailouts, but the bonus caps do not apply to all staff.
One of the sources said 200 of Sefe's traders in London had received hundreds of millions of dollars in bonuses, adding mid-level traders had received $5 million-$7 million each. Two other people said that generous subsidies had been paid at both Sefe and Uniper.
Sefe, the former German division of Russia's Gazprom, said the performance of its employees' justified remuneration that rewards their contribution to the security of supply, without providing specifics.
"This keeps Sefe competitive in the human resources market to be able to procure gas and hydrogen for the German market in the future," the company said in e-mailed comments, adding that overall personnel costs for 2021, the last year for which the information is available, had been 330 million euros.
Uniper confirmed bonuses were paid to trading staff for 2022 but below the previous year's level. "Competition for traders in the energy industry is intense. A zero bonus is therefore not appropriate," the company said.
Competition for traders is currently hot, with rivals such as Vitol and Trafigura reporting billions of dollars in annual profit, benefiting from the extreme price volatility following Russia's invasion of its neighbor.
Traders are often reimbursed based on a percentage of the profit they make on their trading book, and it is not unusual for them to make more than a company chief executive. BP's Chief Executive Bernard Looney, for example, earned $12 million last year.
Germany's Economy Ministry, overseeing Berlin's ownership of Sefe, said conditions set by the European Commission are decisive for remuneration issues, adding that only the company can comment on how these are being met.
The Finance Ministry, responsible for the government's ownership of Uniper, also referred questions on operating issues, including staff remuneration, to the company.
Sefe's London-based trading division employs around 830 staff, according to the group's website, while Uniper's global trading segment has around 1,400 employees.
