(Adds proposal likely to be approved, background on Babis)
PRAGUE, June 8 (Reuters) - The Czech Finance Ministry has proposed scrapping plans by state-owned utility CEZ's to pay a 25.5 million crown ($1.04 million) profit sharing bonus to company management, documents for a June 12 shareholders meeting showed on Monday.
The finance ministry supported CEZ's plan to pay out a 40 crowns per share dividend, representing 73 percent of 2014 net profit, according to the documents.
CEZ had proposed members of its board and supervisory board should get the bonus as part of the distribution of profit to be agreed at the annual general meeting.
But the Finance Ministry, which oversees the state's 69.8 percent stake in CEZ, did not mention the bonus in a counter proposal on the agenda item.
Given the state's majority shareholding, the ministry will have no problem pushing through its counter-proposal. It would be the first time since 2001 that no management bonuses will be paid out.
Finance Minister Andrej Babis later said the decision to reject the award did not signal any loss in confidence in CEZ management but rather that he saw no reason for the energy utility's managers to receive "above-standard" rewards given falling performance amid a drop in wholesale electricity prices.
CEZ has been run by Chief Executive Daniel Benes since 2011.
"I think that supervisory board members get decent remuneration, the management also," Babis told reporters. "CEZ results are, of course, worse than in the past. I do not see a reason why these bonuses should be given at CEZ."
Babis, a billionaire entrepreneur who was appointed as minister last year, has pledged to deliver high dividend payouts and savings at state-owned firms.
CEZ, which has paid a similar bonus to management in past years, said its board had noted the counter proposal.
The company, central Europe's largest listed utility, reported adjusted net profit, which strips out extraordinary items such as impairments, of 29.5 billion crowns in 2014.
It expects its profit to drop by 8.5 percent to 27.0 billion crowns in 2015, around half of the record-high profit it reported in 2009, as falling power prices cut into earnings for a sixth straight year. ($1 = 24.6200 Czech crowns) (Reporting by Robert Muller, editing by Louise Heavens and Jane Merriman)