Bulgaria’s Minister of Transport and Communications, Georgi Peev, has moved to cap salaries for state-owned enterprise directors at the level of the president’s salary, which is currently 8,472 euros. The decision, aimed at curbing monthly payments that have reached as high as 10,000 – 14,000 euros in struggling firms, requires new compensation methodologies to be implemented by September 1. Minister Peev stated that while the government has taken decisive measures to ensure pay matches performance, the Cabinet has not officially announced this decision through the Government Information Service.
Capping Executive Pay at State-Owned Enterprises
The Bulgarian government is overhauling how it compensates the leadership of state-run companies, responding to criticism over high salaries in entities burdened by significant debt. Current regulations allow some directors to earn between 10,000 – 14,000 euros per month, even while the companies they manage operate at a loss. Minister Peev told bTV that the existing pay structure is not only immoral but brutal. He noted that while previous administrations issued various declarations regarding salary reductions, until now, nothing has been done.
Under the new directive from the Council of Ministers, no member of a management board may receive a salary exceeding that of the president. Although parliamentarians froze their salaries in the middle of the year, the president’s current base salary is 8,472 euros. Minister Peev clarified that this cap does not guarantee directors will earn that amount; rather, compensation will be tied strictly to performance. "If there are no results in the enterprise, the directors should receive significantly less," Peev added.
Financial Crisis at Transport Institutions
Minister Peev’s push for reform follows his assessment of systemic issues within major transport entities. The minister highlighted the paradox of high executive pay in companies facing insolvency. He specifically cited the dire financial state of the Bulgarian State Railways (BDZ), which carries 135 million debt, and its freight subsidiary, BDZ – Tovarni prevozi, which is described as being on the verge of bankruptcy with over 60 million euro liabilities. The minister also identified significant financial instability at the National Railway Infrastructure Company (NKZHI), which faces 765 million euro debt, as well as at Bulgarian Posts.
Peev expressed frustration that these entities have maintained high executive compensation despite the shocking working conditions and near-minimum wages provided to the general workforce. He emphasized that the government has set a clear deadline for these changes.
Implementation Deadlines and Methodology Changes
The government has set a strict timeline to bring these compensation packages into alignment with corporate results. For the Ministry of Transport and Communications, the deadline for adjusting pay methodologies to the correct ratio is July 21. By August 1, new methodologies with new conditions will be in place. From September onwards, the ministry expects to be able to track the statistical difference in compensation.
Peev explained that previous methodologies were designed to ensure that management board members received the maximum amount permitted by law and internal regulations. By forcing a revision of these internal rules across all ministries, the government aims to ensure that future appointments—which are legally required to be awarded via competitive contests—are tied to sustainable development concepts. When a management board, executive director, or general director is appointed, it happens through a competition, Peev noted, adding that candidates must present a concept for the stable development of the enterprise.
While the government characterizes these measures as a necessary correction, the practice of replacing board members upon a change in administration—often followed by those same individuals winning the subsequent competitive bids—remains a point of contention. Such practices have previously drawn criticism from the Organization for Economic Cooperation and Development (OECD).
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