2. Remuneration schemes applicable to supervisory board members
This chapter takes stock of policy approaches underpinning the remuneration of ordinary board members, board chairs and board committee members across countries. The chapter explores the extent to which board remuneration practices and levels relate to countries’ ownership arrangements and their SOEs’ corporate characteristics – including their size, commercial and non-commercial orientation, and sector of operation. It also takes stock of transparency and disclosure practices by ownership entities and SOEs.
As commonly recognised, boards play a central function in corporate governance and performance of state-owned enterprises (SOEs). The board has the ultimate responsibility, including through its fiduciary duty, for approving corporate strategies and overseeing SOE performance. In this capacity, the board may in effect act as an intermediary between the state as a shareholder and the company’s executive management. According to the OECD Guidelines on Corporate Governance of State-Owned Enterprises, the board should act in the interest of both the state (and any other shareholders, where applicable) and the company.
The work of the board is becoming increasingly complex and demanding. Consistent with the Guidelines, in many countries the role of the board has been gradually altered from exercising a “compliance” function toward fulfilling a key role in setting and monitoring corporate strategies. Boards are more directly involved in corporate decision-making, which means that both the potential benefits and the downside risks of board work have grown in importance. In light of this, the state expects more of the boards than previously, especially with regard to their time commitment. The amount of time spent on board work has increased in recent years, and will probably continue to do so going forward.
For this reason, it is crucial that SOE board remuneration policies be designed with a view to attracting competent professionals and incentivising them to act in the best interest of each company and its shareholders.
Actual remuneration levels
While aggregate SOE board remuneration levels seem to stand significantly below those of private companies, on average, board members of commercially oriented SOEs receive higher fees than those of public policy-oriented SOEs, except in countries where remuneration is set by law. Variations also exist according to the size of SOEs and their sectors of operation.
In almost all countries, the chair and vice chair of the board receive a higher remuneration than ordinary board members, which is most often equal to twice the allowance granted to other board members for the chair, and 1.25 to 1.5 times the regular amount for the vice chair. While board members may receive special compensation for their committee membership, as a general rule this is not very common, and is often decided for special cases or on an individual basis.
Overall, while several countries report that low remuneration levels have hampered the recruitment of competent board members, some countries also mention the vocational element of service to the public interest as a key lever for competent professionals to consider board positions of SOEs, as it may be associated with prestige. Likewise, some countries also report that a board position in a SOE can be used as a stepping stone to better paid positions in the private sector. In such cases, robust conflict of interest provisions need to be implemented.
Remuneration policies and practices
While board remuneration levels are formally approved by the AGM in almost all countries, different procedures exist across countries for setting the amounts of board fees. In countries with mainly commercial SOEs, remuneration seems to either be proposed by SOEs’ remuneration committee or set by the central ownership unit based on private sector benchmarks. By contrast, in countries with policy-oriented SOEs – including those operating under monopoly situations, or with a majority of SOEs of “strategic interest”, remuneration tends to either be set by law or based on public sector wage grids. Such measures have also been introduced in countries severely impacted by the 2008 global financial crisis, and have remained in place for the past decade. Some countries also report different procedures according to SOEs’ corporate form, share of state ownership and listing status.
Various policy approaches underpinning board remuneration exist across countries. In some countries, guidelines or principles on remuneration are set out in the state ownership policy, and are more or less detailed. In some countries, provisions are set by law. In other countries, no overarching policy/guidelines exist, but the law sets caps on remuneration. Overall, several factors need to be accounted for when devising a policy approach, including the prevailing laws and regulations, industry practices, size and complexity of the company, and their sector of operation.
Caps on board remuneration are established by the state in three-quarters of the surveyed countries, and take various forms. They can be set at a percentage of the average annual remuneration of executive managers, based on the minimum monthly wages in the country, as a multiple of the lowest basic monthly salaries of the public sector wage grid, or at the absolute level. In countries where no government-wide caps exist, limits are usually established on an ad-hoc basis by the ownership entity. In some countries, a lower remuneration limit is also established.
Remuneration components
There is considerable variation in the basis on which non-executive directors (including the members of supervisory boards) of SOEs across countries are remunerated. Non-executive directors can receive fixed fees, board meeting allowances, or a combination of both. Allowances to cover actual costs related to the board duties, including travelling, are in some cases added.
Other forms of remuneration such as short-term bonuses and performance-related compensation are generally not granted to supervisory board members. In cases where bonuses are granted, consideration should be given to the fact that they may closely align the interest of non-executive directors with those of executive managers, and as such may compromise the independence of directors by encouraging management to take excessive short-term risks. In addition, performance targets should be carefully designed so that they are not “gamed” to improve pay.
Remunerated civil servants on boards can give rise to potential conflicts of interest, as it may incentivise them to take on more directorships and to seek board membership in companies with the highest remuneration practices. Overall, in many countries where civil servants are allowed to serve on boards and are compensated, provisions have been introduced to limit the number of board seats that they may fill, as well as to cap their remuneration and to treat them like other independent members with regard to their selection, responsibilities and liabilities.
Transparency and disclosure practices
In all but three of the surveyed countries, SOEs are required to disclose information on the remuneration levels of board members to the general public, albeit with varying levels of granularity: around two-thirds of surveyed countries require SOEs to do so for individual members, while they are required do so for the board as a whole in ten countries.
In most countries, SOEs mainly release this information in their annual reports, which are subsequently made publicly available on their websites. While in the majority of surveyed countries SOEs are required to “proactively” disclose this information, in some countries, SOEs that are subject to the transparency act disclose this information only upon request.
On average, individual SOEs disclose board remuneration information of greater granularity than the state. In some countries, a central online portal aggregating all remuneration information by all SOEs in the state’s portfolio has been set up either by central government, the ownership entity or the central ownership agency, making this information readily accessible. While in some countries, the state does not “proactively” publish information about board remuneration levels, it publishes a compliance report on the implementation of disclosure requirements by SOEs. Overall, the state publishes information on board remuneration in around two-thirds of surveyed countries.
2.2.1. Actual remuneration of ordinary board members
Variations according to SOE orientation
Overall, board members of commercially oriented SOEs receive higher annual nominal fees (USD 17 356 on average, representing 64% of average annual national wages) than those of public policy-oriented SOEs (USD 8 974 on average, representing 42% of average annual national wages), with the exception of Croatia, Ireland and Turkey, where fees are set by law or government decision (Figure 2.1). While annual nominal earnings of board members are highest in Latvia, Chile, the Netherlands, and France (Figure 2.1), these amounts are relatively modest when captured as percentages of average annual national wages (Figure 2.2).
Latvia stands as an exception with relatively high average annual nominal earnings of board members (USD 34 760 for board members of commercially oriented SOEs on average, and USD 20 391 for those of policy-oriented SOEs), which remain high when captured as a percentage of average annual wages (116% and 68%, respectively). This is because Latvia underwent substantial reform in 2015 to restore supervisory boards in the largest SOEs, and increase remuneration caps in order to attract professionals from the private sector and to better align with market levels. This has resulted in increasing board remuneration levels by approximately three times from 2015 to 2016.
Note: Data covers SOEs with a state shareholding of at least 50% which are not listed on the stock exchange, except for Chile, where data includes one listed SOE (ZOFRI), albeit with remuneration levels similar to those of non-listed SOEs. For Austria, data for commercially oriented SOEs includes average remuneration amounts of board members of large SOEs only. In Chile, France, the Netherlands, Portugal and Sweden, all SOEs are classified as commercially oriented. Data for Korea includes amounts for public corporations only (hereby classified as “commercially oriented SOEs”), as data for quasi-governmental institutions is unavailable (hereby classified as “public policy-oriented SOEs”). For Finland and Lithuania, data includes all SOEs regardless of their orientation. For Bulgaria, data includes policy-oriented SOEs only.
Source: Author, based on country responses to the OECD questionnaire. For details, see Annex B.
In Brazil, Costa Rica and Turkey, high board wages displayed as a percentage of average annual national wages can likely be explained by low average nominal wages in these countries, and the need to set remuneration levels at a high threshold in order for them to remain competitive with private sector peers.
Note: Data covers SOEs with a state shareholding of at least 50%, which are not listed on the stock exchange, except for Chile, where data includes one listed SOE (ZOFRI), albeit with remuneration levels similar to those of non-listed SOEs. For Austria, data for commercially oriented SOEs includes average remuneration amounts of board members of large SOEs only. In Chile, France, the Netherlands, Portugal and Sweden, all SOEs are classified as commercially oriented. Data for Korea includes amounts for public corporations only (hereby classified as “commercially oriented SOEs”), as data for quasi-governmental institutions is unavailable (hereby classified as “public policy-oriented SOEs”). For Finland and Lithuania, data includes all SOEs regardless of their orientation. For Bulgaria, data includes policy-oriented SOEs only.
Source: Author, based on country responses to the OECD questionnaire, and calculations using the OECD database (https://data.oecd.org/earnwage/average-wages.htm) and ILOSTAT database (https://ilostat.ilo.org/topics/wages/). For details, see Annex B.
Variations according to SOE size and sector of operation
While many countries report that the remuneration of board members can vary considerably depending on the company size rather than on its sector of operation (e.g. Lithuania, New Zealand, Sweden), some countries report outliers in specific sectors. For instance, in the Netherlands, the average amounts of annual remuneration are significantly higher in the air transport sector, while they are slightly lower in this sector in Croatia (ranging from HRK 1 000 to 2000 of monthly remuneration).
Comparison with private sector levels
Regarding how board remuneration levels of SOEs fare against those of private peer companies, many countries report that they stand significantly below market levels. For instance, in Greece, for SOEs in the HCAP’s portfolio, board meeting allowances of listed companies amount to EUR 600, compared to EUR 240 for unlisted SOEs.1 Likewise, in Costa Rica, evidence suggests2 that board remuneration in SOEs generally sits below the levels of comparable private sector companies (Afanador, Bernal and Oneto, 2017[1]). In the United Kingdom, recent analysis also found that the highest UKGI non-executive director remuneration was GBP 40k, when the lowest of the FTSE 250 was GBP 51k. In Ireland, informal feedback from processes undertaken in making appointments to SOE boards suggests that remuneration levels in SOEs are substantially lower relative to comparable board roles in private sector companies.
In the Netherlands, a 2019 study found that while the average total remuneration of supervisory board members of listed index funds has increased by 187% over the past 15 years, which can be partly explained by an increase in the base fee and attendance fees, median total remuneration of supervisory board members of SOEs has increased by 18% since 2009, which is mainly explained by some indexation and in a number of cases by an increase in commission fees (Focus Orange, 2019[2]).
On the other hand, board remuneration seems to be on par with market levels in countries where remuneration is set based on private sector benchmarks, and sometimes by an external consultant, with a view of setting competitive – but not market-leading – fees. Overall, while several countries report that low remuneration levels have hampered the recruitment of competent board members, some countries also mention the vocational element of service to the public interest as a key lever for competent professionals to consider board positions of SOEs, as it may be associated with prestige (e.g. Brazil, France, Spain, Turkey, United Kingdom). Likewise, some countries also report that a board position in an SOE can be used as a stepping stone to better paid positions in the private sector (e.g. New Zealand). In such cases, robust conflict of interest provisions need to be implemented.
2.2.2. Actual remuneration of board chairs and vice chairs
The chair of the board carries a particular responsibility for organising the work of the board, for maintaining a dialogue with the management and the shareholders, and for devoting time to external representation of the company and other hospitality activities if relevant. As such, the chair of the board’s remuneration should reflect the scope of the duties that the position entails.
In most countries, the chair and vice chair of the board receive a higher remuneration than ordinary board members, with the exception of Brazil, where undifferentiated amounts are granted to the board chair, vice chair and ordinary board members, as they are harmonised for all board members of commercially oriented SOEs (USD 9 148 on average) and public policy-oriented SOEs (USD 7 261 on average). Likewise, in Croatia, a fixed compensation rate for all board members regardless of their position on the board is set by law.
In many countries, the chair receives twice the allowance granted to other board members (e.g. Chile,3 Estonia,4 New Zealand, Turkey), and the vice chair receives 1.5 times (Chile) or 1.25 times (New Zealand) the amount paid to ordinary board members (Figure 2.3).
Note: Data includes non-listed SOEs with a state shareholding of at least 50%. In France, the Netherlands and Portugal, all SOEs are considered as commercially oriented. For Finland and Lithuania, data includes all SOEs irrespective of orientation. For Austria, data for commercially oriented SOEs includes average remuneration amounts of board members of large SOEs only.
Source: Author, based on country responses to the OECD questionnaire, and OECD calculations based on OECD database (https://data.oecd.org/earnwage/average-wages.htm) and ILOSTAT database (https://ilostat.ilo.org/topics/wages/). For details, see Annex B.
In some countries, the additional compensation granted to board chairs is lower. In the Philippines, the board chair is allowed an additional 20% of the standard rates for board meetings only, granted that he/she qualifies for the requirements of eligibility to compensation. In Lithuania, depending on the remuneration model adopted, the chair of the board may receive higher board meeting attendance allowances, or may be allowed to declare a higher number of hours spent for board member duties. In case the fixed annual remuneration model is used, the remuneration level is equivalent to 1.3 or 1.5 times the remuneration of ordinary board members. However, it is worth noting that according to Lithuanian law, the chair of the board has almost identical rights and duties as other board members, and thus his/her remuneration does not differ significantly from the amount paid to other board members.
Beyond this general rule of higher remuneration for the board chair and vice chair, special treatments also exist in some countries. For instance, in Israel, an active board chair (full-time) is entitled to the same remuneration as the CEO. In other cases (not an active chair), the chair is entitled to request an annual fixed pay, as opposed to board meeting allowances.
In Costa Rica, there is a considerable difference between chairpersonship of the board in SOEs that have the “Executive President” figure,5 and those that have a non-executive chair. The Executive President is responsible for chairing the board, for overseeing the CEO, and is also involved to varying degrees in the administrative aspects of the company. As such, the Executive President position receives a fixed monthly remuneration, which is not homogenous across SOEs, and can be between two to six times higher than the monthly meeting attendance allowance that would be granted to a non-executive chair. Of note, non-executive board chairs receive the same meeting attendance allowance as the rest of the board.
In Latvia, since 2016, the remuneration of the chair of the supervisory board is calculated by applying respective coefficients (from 1.5 to 3, depending on the size of the enterprise set by regulations) to the statistically determined average monthly salary of employees in the country in the previous year. The remuneration of supervisory board ordinary members is capped at 90% of the chair’s remuneration.
2.2.3. Remuneration of board committee members
Board members who are members of board committees may receive special compensation for this work. However, as a general rule this is not very common, and is often decided for special cases or on an individual basis. For instance, in Austria, additional fees for board committee memberships are only granted in some of the larger, competing and listed companies. In Brazil, the audit committee is the only paid committee which is present in all SOEs. In Croatia, in some SOEs, audit committee members are usually paid per meeting held, and in some SOEs they receive a fixed monthly fee, which is generally lower than the fee for members of the supervisory board (e.g. HRK 1 500). In addition, if a member of the supervisory board is also a member of the audit committee, then his/her remuneration in the audit committee is in some instances even lower.
When additional fees for committee membership are granted, they are often capped (Estonia, Greece, Latvia, Lithuania, Peru, Portugal) (Box 2.1). For instance, In Latvia, while there can be additional fees for committee membership, the overall remuneration cannot exceed the cap set in Cabinet Regulations. Likewise, in Portugal, according to Article 29 of Decree-Law No. 71/2007 of 27 March, fees granted to non-executive board members for their participation in a committee are set by government according to a classification of SOEs into three groups.
In Estonia, while the remuneration of committee members is decided by the shareholder, some restrictions apply: i) committee members get paid only for the month when there was a committee meeting; ii) the monthly remuneration of a committee member can be up to 25% of the remuneration of a supervisory board member; iii) the aggregate fee for participating in the committees can be up to 50% of the remuneration of a board member; and iv) the chair of a committee can receive an additional 25% compared to ordinary members.
In Lithuania, board members are compensated for their membership in board committees (if such committees are established). Typically, a similar compensation model is used for both work at board level and at board committees. However, actual remuneration levels are lower than those granted for board membership. For example, the hourly rate ranges from EUR 30 to EUR 75 and in most cases cannot exceed 1/15 of the annual CEO salary. Based on data from 2020, committee members’ remuneration accounted for around 30-35% of board members’ annual remuneration, while it accounted for 45% of the remuneration of the chair of the committee. Overall, there is no unified regulation regarding remuneration of the committees and actual remuneration levels are set by shareholding entities and boards themselves.
In Peru, directors may receive additional compensation for their participation in board committees, with the following conditions: i) the compensation amount for board committee participation is equivalent to 50% of the remuneration that is granted to the directors for their participation on a board; ii) in the case of the chairpersons that receive monthly fixed compensation and attendance allowances per meeting, they cannot receive additional compensation for committee membership; iii) the directors can receive a maximum of one retribution per month for participating in one or more committees; iv) civil servants receive a payment for their participation in any board committee.
In Greece, committee members and chairs of listed SOEs receive an annual fixed compensation and attendance allowances (EUR 13 000 fixed fee for the board committee chair or EUR 11 000 fixed fee for committee members, plus EUR 400 per meeting), while committee members of non-listed SOEs receive in principle only attendance allowances (EUR 50 per committee meeting).
Source: Author, based on questionnaire responses.
In Sweden, for fees to be paid for service on a committee, the work involved has to be of a substantial extent. Likewise, in New Zealand, a case has been made for special fees to be granted to the chair of an audit and risk committee in case of particularly high workload, however, this is more of an exception. Under the Cabinet Fees Framework, chairs of committees can get a 10% loading if they are not simultaneously acting as board chairs or vice chairs. In the United Kingdom, while the vast majority of boards do not pay additional fees for chairing or sitting on a board committee, there are some instances where committee chairs may receive additional allowances, ranging from GBP 5k-10k per annum. Likewise, in Iceland, very few SOEs may grant additional fees for board committee membership, and include mainly the banks.
Overall, in the majority of surveyed countries, board members do not usually receive additional fees for committee membership (Chile, Colombia, Costa Rica, Ireland, Korea, Mexico, Turkey),6 or are only additionally compensated in special cases (Iceland, New Zealand, Sweden, United Kingdom).
The SOE Guidelines state that the remuneration of both SOE boards and executive management should be aligned with the long-term interest of the enterprise. With regard to the boards of directors, they further posit that “[t]here is a strong case for aligning the remuneration of board members of SOEs with private sector practices” (annotations to Chapter II point F).
Overall, board remuneration practices and levels seem to depend to a certain extent on countries’ ownership arrangements and their SOEs’ corporate characteristics. This section considers remuneration policies and practices applicable to supervisory board members (or non-executive directors) of unlisted and majority-owned SOEs, including the procedures in place for deciding remuneration amounts of board members, their remuneration components, as well as provisions regarding board composition (i.e. whether civil servants are allowed to serve on boards and are compensated).
2.3.1. Remuneration models
While board remuneration levels are formally approved by the AGM in almost all countries, different procedures exist across countries for setting the amounts of board fees. Evidence suggests that board remuneration policies and practices differ according to countries’ ownership model, the degree of corporatisation of SOEs, and board composition (i.e. majority of independent members or civil servants).7 In particular, in countries with mainly commercial SOEs, remuneration seems to either be proposed by SOEs’ remuneration committee or set by the central ownership unit based on private sector benchmarks. By contrast, in countries with policy-oriented SOEs – including those operating under monopoly situations, or with a majority of SOEs of “strategic interest”, remuneration tends to either be set by law or based on public sector wage grids. Such measures have also been introduced in countries severely impacted by the 2008 global financial crisis, and have remained in place for the past decade (Figure 2.4). Some countries also report different procedures according to SOEs’ corporate form, share of state ownership and listing status. Detailed information on individual countries’ approaches is provided in Table 2.4.
Source: Author’s own elaboration.
Remuneration is proposed by the remuneration committee for approval by the general shareholders’ meeting
In Belgium, Brazil, France, Iceland, Japan, Korea, the Netherlands and the United Kingdom, the board remuneration committee of individual SOEs formulates a board remuneration proposal, which is submitted for approval by the general shareholders’ meeting. Although this practice seems to be in place in countries with a mix of ownership models, this process – which is akin to private company practice – seems to be better suited for commercially oriented SOEs operating in competitive markets in order to attract competent professionals. While in Belgium, the role of the remuneration committee is provided by law, in France and Korea, after remuneration limits have been approved at the AGM, the board has full discretion on how to allocate this pool of fees among board members. In the Netherlands, the Ministry of Finance and the board usually try to find an agreement on the board proposal during informal meetings, before formalising the policy during the AGM. In the United Kingdom, while remuneration committees are generally responsible for benchmarking and establishing remuneration policies which are submitted to line ministries for approval, in certain cases secondary approval from the Chief Secretary to the Treasury may be required.
Remuneration is set by the central ownership unit based on private sector benchmarks
In Austria, Finland, Norway and Sweden, where ownership is centralised, board remuneration is set based on private sector benchmarks, and sometimes by an external consultant, with a view of setting competitive – but not market-leading – fees. For instance, in Sweden, ahead of the general meeting’s decision on directors’ fees, the Government Office carries out an analysis comparing fee levels with the fees paid by comparable companies (~300 listed companies, Nasdaq OMX). In Norway, the state carries out a specific assessment of each company’s remuneration of governing bodies before the general meeting, and comparable Norwegian companies will normally be used as a frame of reference when stipulating the remuneration. Overall, these countries report that board remuneration is usually on par with market levels.
According to the Report to the Storting on State Ownership:
Remuneration should reflect the board’s responsibility, expertise, time commitment and the complexity of the company’s activities, in accordance with the Norwegian Code of Practice for Corporate Governance. Comparable Norwegian companies will normally be used as a frame of reference when stipulating the remuneration.
Remuneration should be at a moderate level. This means that the remuneration shall not be higher than what is necessary to ensure relevant expertise on the board, and should reflect the board’s responsibilities and workload.
In practice, the Norwegian state carries out a specific assessment of each company’s remuneration of governing bodies before the general meeting. The state will normally propose, or, in companies with a nomination committee, endorse growth in line with the general wage growth in Norway in cases where the state considers the board’s remuneration to be at the correct level. This is both to ensure moderation and to maintain an appropriate level over time.
Of note, the state will only propose or endorse a bigger increase in remuneration if the level is considered to be too low to achieve the best possible composition of the board and seen in relation to an assessment of the board’s responsibility, expertise, time commitment and the complexity of the company’s activities. This means that an increase in remuneration that significantly exceeds general wage growth is only acceptable when it is necessary to contribute to ensuring that the remuneration is at the right level, especially to be able to attract the necessary expertise.
The state will propose or endorse zero growth if the level of remuneration is deemed to be too high. There may also be cases where there are grounds for reducing the remuneration, for example if the company’s scope of activities or complexity is materially reduced.
Overall, Norwegian companies will normally be used as the frame of reference in this assessment. Since 2010, the Norwegian Institute of Directors has conducted board remuneration surveys of companies listed on the Oslo Stock Exchange and companies with a state ownership interest. The 2018 survey shows that Equinor, Telenor, Yara International and Norsk Hydro, which are partly owned by the state and are among the biggest companies on the Oslo Stock Exchange in terms of market value, are not among the companies that pay the highest remuneration to the chair or members of the board.
Source: Norwegian Government (2019), Report to the Sorting, https://www.regjeringen.no/en/dokumenter/meld.-st.-8-20192020/id2678758/
Remuneration is set by the ownership entity based on a calculation methodology set by government
In Bulgaria, the Czech Republic, Estonia and New Zealand, where ownership tends to be decentralised (except for New Zealand), remuneration tends to be decided by the ownership entity following a calculation methodology set by the government owner, which may differ according to SOEs’ orientation and sector of operation. For instance, in Bulgaria, board and executive remuneration is calculated by the application of a total score determined by several variables, using key performance indicators (KPIs) provided by law (Annex 2 of the Implementing Rules of the Law in Public Enterprises). However, shareholding ministries have ultimate discretion on the policies, rules and guidelines of the remuneration of board members and executive managers of SOEs in their respective portfolio, and can thus decide to reduce remuneration levels by changing the value of the score unit. The terms of remuneration are included in management contracts of board and executive managers, and the calculations themselves are carried out by individual SOEs.
In New Zealand, different methodologies exist for SOEs depending on their orientation. For Crown company boards, the Treasury advises the shareholding ministers on appropriate fees according to the Crown Company Fees Methodology, which evaluates companies under nine factors and then allocates a benchmarked points ranking. The Treasury then provides these rankings to an independent remuneration specialist, who provides comparative private sector rates. For non-company Crown entities, the Treasury advises the shareholding minister on remuneration in accordance with the Cabinet Fees Framework. Overall, the shareholding ministers annually approve a fees’ pool for each board, which then determines how to allocate this pool of fees. While the base rate used to calculate the fees’ pool for directorships ranges from USD 18 000 to USD 54 500 per annum per director, the actual rate depends on a number of factors, including the size and complexity of the company and the diversity of its operations and markets, and associated risk profile.
Remuneration is fixed and is set by law, by government decision or by a decision of the ownership entity
In Australia, Colombia, Costa Rica, Croatia, Ireland, Israel, Mexico, Peru, Philippines, Portugal and Turkey, where mixed ownership models exist, remuneration is usually fixed and set by law, by government decision, or by a decision of the ownership entity. It may be inferred that this model is used in countries where SOEs are mainly tasked with the delivery of public services and/or operate under monopoly situations, and as such may be viewed as an extension of the public sector (whereby public sector wage grids are to be used to determine the amounts of board remuneration). This model may also be in place in countries with a majority of SOEs of “strategic interest”, where board autonomy is limited. In countries severely impacted by the 2008 global financial crisis (e.g. Croatia, Portugal), board remuneration levels are set by law and have not evolved for the past decade. This is also the case for the Philippines, where the per diems, allowances, incentives, and compensation structure for the members of supervisory boards have been set out by the central ownership agency in 2011 according to five categories of SOEs (Annex A). These levels have been maintained since 2011.
While some countries may seek to determine a remuneration reference rate for directors that is commensurate with their roles and responsibilities and may also consider directors’ workload, private sector fees, and wage indices (e.g. Australia), some countries where remuneration is set by law report that as levels have remained static for the past decade (and are not indexed on inflation), this does not allow to attract competent professionals (e.g. Croatia, the Philippines).
In Costa Rica, remuneration policies are established in the legal framework of SOEs, either in their statutory laws or articles of incorporation. Overall, five different calculation methods exist:
Method 1: the board meeting attendance allowance is established by the Council of Ministers.
Method 2: the way to calculate the board meeting attendance allowance is set in the SOE statutory law.
Method 3: the board meeting attendance allowance is established as 10% of the base salary of the Comptroller General (the chief of the supreme audit institution).
Method 4: the board meeting attendance allowance is established as 10% of the fixed component of a congressperson’s monthly remuneration1.
Method 5: the board meeting attendance allowance is established by Law N. 7 138 “Extraordinary budget law” of 16 November 1989, which set the initial value at USD 4.8 and its automatic yearly adjustment according to the Consumer Price Index.
Of note, the methods are not mutually exclusive, and sometimes do overlap for some SOEs. For example, for the two state-owned banks and the insurance company, the statutory laws point to the Council of Ministers to set the remuneration (Method 1), and this Council chose to establish their remuneration as 10% of the base salary of the Comptroller General (Method 3).
← 1. As of July 2021, the fixed component of a congressperson’s monthly remuneration is USD 4.761. The source data can be found at: http://www.asamblea.go.cr/opendata.
2.3.2. Remuneration policies
Various policy approaches underpinning board remuneration exist across countries. In some countries, guidelines or principles on remuneration are set out in the state ownership policy, and are more or less detailed. In some countries, provisions are set by law. For instance, in Belgium the law provides for the formal role of the remuneration committee, while in Bulgaria the law sets KPIs to be negotiated between the ownership entity and the SOE. In some countries, there are no overarching policy/guidelines, but the law sets caps on remuneration. Overall, several factors need to be accounted for when devising a policy approach, including the prevailing laws and regulations, industry practices, size and complexity of the company, and their sector of operation.
Caps on remuneration
While caps on board remuneration exist in a large majority of surveyed countries (27 out of 36), they take various forms. They can be set at a percentage of the average annual remuneration of executive managers (e.g. Austria, Brazil, Lithuania, Portugal), based on the minimum or average monthly wages in the country (e.g. Bulgaria, Colombia, Latvia), as a multiple of the lowest basic monthly salaries of the public sector wage grid (e.g. Costa Rica), or at the absolute level (e.g. France, Korea). In countries where no cross-government caps exist, limits are usually established on an ad-hoc basis (based on a private sector benchmarking) by the ownership entity (e.g. Finland) or by the Prime Minister’s Office (e.g. Sweden). In some countries, a lower limit on remuneration is also established (e.g. Austria).
2.3.3. Remuneration components
There is considerable variation in the basis on which non-executive directors (including the members of supervisory boards) of SOEs across countries are remunerated, as well as the sums they receive. Non-executive directors can receive fixed fees, board meeting allowances, or a combination of both. Allowances to cover actual costs related to the board duties, including travelling, are in some cases added.
Overall, other forms of remuneration such as short-term bonuses and performance-related compensation are generally not granted to supervisory board members. In cases where bonuses are granted, consideration should be given to the fact that they may closely align the interest of non-executive directors with those of executive managers, and as such may compromise the independence of directors by encouraging management to take excessive short-term risks. In addition, attention should be paid to carefully design performance targets so that they are not “gamed” to improve pay. Overall, while variable remuneration components can help attract and motivate directors, careful consideration should be given to the amount of a director’s pay that should be linked to performance targets.
Note: Data for basic components (including the “fixed fees”, “attendance allowances” and “both” categories) is based out of a total of 35 countries, as Lithuania stands in a category of its own (see Box 2.4). Data on variable components is based out of a total of 36 countries.
Source: Author, based on questionnaire responses and desk research. See Table 2.4 for details.
Basic component
Fixed fees
The majority of surveyed countries (54%) set fixed fees or pay for board members, where remuneration is not linked to board meeting attendance. However, some of the countries that follow this model also allow board meeting allowances to be granted on an ad-hoc basis. For instance, in Iceland, while most companies compensate board members on a monthly basis, some smaller companies only compensate board members for attending meetings as they have fewer meetings during the year.
In some countries, board members are also entitled to the reimbursement of their travel expenses in addition to their fixed compensation (Croatia, Hungary, Norway, United Kingdom). Some countries also grant special allowances in addition to the basic compensation paid to directors for attending their duties, including attending board and committee meetings, meeting preparation, stakeholder management, and any other agreed tasks. For instance, in New Zealand, crown companies may request approval for additional special purpose fees in response to an identified business need, and each request is considered by the responsible Ministers on its merits. Fees may also be granted for the professional development of directors, with a guiding rate of between NZD 2 000- 4 000 per director, and up to NZD 10 000 for attending courses at the Institute of Directors. There is no limit for these fees, as they are granted on a case-by-case basis. In only a few countries, remuneration is calculated based on the amount of the annual minimum wage (Hungary), or based on the average monthly or nominal wage (Latvia and the Slovak Republic, respectively).
Board meeting allowances
Eleven of the 36 surveyed countries compensate board members with board meeting attendance allowances only, which are usually calculated on the basis of the number of attended meetings. However, in some countries, some restrictions apply. For instance, in Chile, board members are paid for a limited number of sessions per month. Likewise, in Peru, directors are paid for only two meetings per month.
In Colombia and the Philippines, the maximum amount of allowances that board members can receive per meeting and per year is based on the national classification scheme, which takes into account their total amounts of assets (Table 2.3). Likewise, in Costa Rica, the methodology for calculating the amount of allowances that can be granted is set in the companies’ statutory laws or articles of incorporation (Box 2.3). On the other hand, in France, while the level of remuneration of board members is systematically calculated at the pro-rata of their participation in board meetings, compensation can also include a fixed component.
In some countries, board members are also eligible for the reimbursement of travel expenses (Colombia, Estonia, Finland, Germany, Peru). In Finland, in some companies, remuneration may be lifted by up to 50% for board members who live abroad. In Colombia, in order to incentivise the use of technology for remotely based board members, a recent decree (Decree 767 of 2020) allows board members attending meetings virtually to receive the same remuneration as those attending meetings physically, which was not previously the case.
Combination of fixed pay and attendance allowances
In only a few countries (5 out of 36), fixed pay and attendance allowances are combined. In Belgium and Mexico, board remuneration comprises a fixed amount, as well as a variable component consisting of attendance fees. In Korea, non-executive directors usually receive a monthly allowance and a monthly attendance allowance, while some institutions only grant board meeting attendance allowance without an additional fixed monthly component. While board members with similar duties basically receive similar pay, remuneration levels may slightly differ according to seniority.
Box 2.4. Board remuneration models in Lithuania
Three compensation models currently exist in Lithuania. Remuneration is most often based on hourly rates, whereby board members are required to fill in activity reports in order to get their reported hours compensated. While this model is mandatory for statutory enterprises, some limited liability companies have adopted this model as well. The rate usually ranges from EUR 50 to EUR 100 per hour.
Another common practice is to link remuneration to board meeting attendance, whereby board members are compensated based on the number of board meetings attended.
In such cases, the rate usually ranges from EUR 100 to EUR 300 per board meeting. A system of fixed annual remuneration may be used as well.
It is worth noting that the state plans to unify board remuneration systems by abandoning the hourly remuneration model (due to extensive administrative burdens and various inefficiencies), and shifting to the fixed annual remuneration model.
Source: Author, based on questionnaire responses.
Variable component
In the vast majority of surveyed countries (83%), SOE board members do not receive any performance-related compensation. Indeed, bonuses as a share of profit can be granted to board members of specific SOEs in only six of the 36 surveyed countries (Bulgaria, Chile, the Czech Republic, Peru, Philippines, the Slovak Republic). Of note, although this is legally allowed in Lithuania and Peru, this is not actually practiced by SOEs, as no such cases have been recorded to date.
Bulgaria
The members of the executive and supervisory bodies of the enterprises shall receive bonuses beyond the amounts of remuneration if the accounting profit increases during the accounting year compared to the previous year and provided that the company does not have an uncovered loss from previous years and arrears. The money shall be charged to the profit after its taxation and the allocation of statutory portions thereof to the reserve of the company, deductions from profits or a dividend in favour of the owner of the capital at an amount determined by the general meeting of the shareholders, from one to three average monthly remuneration received during the current year by the members of the executive and supervisory bodies. No other benefits or remuneration are foreseen.
Chile
Performance-related compensation is granted to board members, except for some SOEs (EFE, Correos, ENAP, CODELCO, TVN, BCO Estado, ENAMI). In port companies, the variable income for meeting goals can double the allowance for attending sessions. In the case of listed and unlisted enterprises, the variable remuneration can reach approximately 40% of the remuneration for meeting attendance.
This variable component is based on agreed objectives between the ownership entity (Sistema de Empresas Públicas – SEP) and the companies’ boards of directors, and are specified with indicators of strategic, financial, operational and corporate governance nature, among others.
Performance-related compensation is also capped, depending on the type of company and the position of the board member within the board of directors. The limits are annual and the maximum variable compensation for the year will be the product of a combination of parameters, including the percentage of compliance with the “Goal Agreement” (i.e. agreement on objectives), and the percentage of attendance of board meetings during the year.
Slovak Republic
A share on profit/royalties can be granted to supervisory board members of statutory SOEs (or “state enterprises” regulated by the Act No. 111/1990 Coll. on State Enterprise), and is calculated based on the amount granted to the CEO of the state enterprise.
In particular, while the monthly salary of the CEO of a state enterprise cannot exceed eight times the average wage of the previous year and the annual remuneration (share on profit/royalties) cannot exceed 10% of the disposal profit of the enterprise, the monthly salary of a supervisory board member cannot exceed five times the average wage of the previous year and the amount of the annual remuneration (share on profit/royalties) corresponds to 5% of the amount granted to the CEO of the state enterprise.
Source: Author, based on country responses to the OECD questionnaire, supplemented by desk research.
2.3.4. Provisions regarding civil servants and direct state representatives on boards
Remunerated civil servants on boards can give rise to potential conflicts of interest, as it may incentivise them to take on more directorships and to seek board membership in companies with the highest remuneration practices. As such, good practice calls for limiting the number of board seats that may be held by civil servants, as well as capping their remuneration. Overall, remunerated civil servants on boards should be treated like other independent members with regard to their selection, responsibilities and liabilities.
Civil servants/state officials can serve on boards under the same conditions as independent board members
In a third of surveyed countries, civil servants and other direct state representatives can serve on SOE boards under the same conditions as independent board members, including functions and remuneration (Austria, Belgium, Bulgaria, Chile, Colombia, the Czech Republic, Finland, Hungary, Latvia, Peru, Portugal). However, several of these countries have implemented limitations on the composition of boards, in particular regarding the number of board seats that may be filled by civil servants or state representatives, as well as on the number of boards that they are allowed to serve. Some of these countries have also implemented caps on the maximum compensation that civil servants or other state officials are allowed to receive (Box 2.6).
Provisions regarding the maximum number of boards seats that may be filled by civil servants
In Latvia, civil servants or direct state representatives can serve on SOE boards, provided that the board be composed of a majority of independent members. In addition, civil servants should participate in the open nomination procedure as any other candidate, and receive the same remuneration as other board members for conducting the same functions. Likewise, in Bulgaria, according to the Implementation Rules of the SOE Act, civil servants and other state representatives can serve on boards, granted that boards be comprised of at least one-third and not more than half of independent board members. In Colombia, according to Article 19 of Law 4 of 1992, public officials can receive remuneration from up to two boards. In Hungary, Act 122 of 2009 on the more efficient operation of SOEs provides that one person may be remunerated for a maximum of one management board member position and one supervisory board member position.
Caps on remuneration of civil servant board members
In the Czech Republic, the total sum of compensations paid to a civil servant for their membership in executive or supervisory bodies of SOEs for a calendar year should not exceed 25% of the annual amount of the highest state service pay tariff. In Chile, boards may include a maximum of two civil servants. In addition, senior state officials1 who receive special allowances may not serve on more than one board, and their monthly remuneration may not exceed the equivalent of USD 1 676. Of note however, civil servants cannot sit on the board of SOEs under the oversight of SEP. In Peru, while civil servants can serve on several boards simultaneously, they can only be remunerated for their participation on one of them, with the exception of teachers at public universities who are entitled to receive additional remuneration, as provided by Article 38 of Law no. 30 057 (Ley del Servicio Civil), and by FONAFE’s Guidelines for the Management of Directories and Directors. Civil servants also cannot be remunerated for integrating board committees. In addition, while other state officials are allowed to serve on boards albeit unremunerated, no such cases have been recorded to date.
← 1. These officials include the President of the Republic; Ministers of State and Undersecretaries; Intendants and Superior Heads of Service; and those performing functions classified as critical.
Source: Author, based on questionnaire responses.
Civil servants – but not other state officials – can serve on boards under the same conditions as independent board members
In another quarter of surveyed countries, civil servants – but not other state officials – are allowed to serve on SOE boards. In some cases, they are subject to the same remuneration conditions and limitations as other board members (Brazil, Croatia, Estonia, Germany, Greece, Spain). In Croatia, this is provided by the Law on the Prevention of Conflicts of Interest. In Estonia, Secretary Generals of ministries are also not allowed to serve on boards, as they are members of the Nomination Committee whose role is to propose candidates to SOE supervisory boards.
While civil servants are allowed to serve on SOE boards in Costa Rica, the Philippines and Turkey, their remuneration is conditional to certain provisions. In Costa Rica, civil servants may only receive attendance allowances if board meetings are not held during the working hours of their affiliated institution. In some cases, the statutory laws or articles of incorporation of certain SOEs designate civil servants on boards without voting rights. In the Philippines, public officials can be appointed to boards, and can only receive remuneration for their participation to board committee meetings (limited to the rates under EO No/ 24). They are also eligible to receive performance-based incentives. However, they are not eligible to receive any other form of compensation (such as salaries, allowances, benefits and bonuses). In Turkey, civil servants may serve on SOE boards and receive the same compensation as other members. However, if they become a member of the board of more than one corporation, they can only receive compensation from one corporation, in addition to their primary salaries as civil servants.
Civil servants/state officials can serve on boards and are uncompensated
On the other hand, in seven of the 36 surveyed countries, civil servants or other direct state representatives may be appointed to SOE boards subject to conflict of interest provisions, but do not receive compensation (France, Israel, Lithuania, Mexico, the Slovak Republic, Sweden, United Kingdom). In France, SOEs are legally required to include at least one civil servant or state representative on their boards. Civil servants serve on boards subject to conditions relative to cumulative employment and their remuneration is the same as for other board members, although it is systematically paid in full to the state. Likewise, in Lithuania, civil servants may serve on SOE boards and are required to conduct the same functions as other board members. While civil servants who serve on SOE boards are not compensated, statutory SOEs incur costs related to civil servants’ performance as board members, but remuneration is transferred to the state budget. In the United Kingdom, civil servants or direct state representatives may serve on SOE boards, with special clauses inserted in their contracts to enable them to continue in both roles and deal with any potential conflicts. While they are not usually remunerated as per government’s policy, they are however indemnified for legal protection. In the Slovak Republic, Act No. 55/2017 Coll. on service in state administration provides that civil servants or state representatives are not entitled to any remuneration when acting on the boards of commercially oriented SOEs. In Sweden, civil servants may be remunerated only in special cases following a decision by the general meeting, although in practice this usually never happens as investment directors who are board members are not remunerated, and other civil servants on boards are extremely rare.
Civil servants are appointed on boards only under exceptional circumstances, or are not allowed to serve on boards
In a minority of countries, civil servants may be appointed to SOE boards only in exceptional circumstances or for special reasons, such as major restructuring (Australia, Iceland, Japan, New Zealand, Switzerland). In Japan, when civil servants are appointed on boards, they generally have no voting rights. Overall, civil servants are not allowed to serve on SOE boards under any circumstances in only three of the surveyed countries (Korea, the Netherlands, Norway). In Ireland, as a general rule, neither civil servants nor other state officials serve on the boards of commercial state entities.
Source: Author. See Table 2.4 for details.
The SOE Guidelines state that SOEs should ensure high levels of transparency regarding the remuneration of board members and key executives. In all but three of the surveyed countries, SOEs are required to disclose information on the remuneration levels of board members to the general public, albeit with varying levels of granularity: 22 countries require SOEs to do so for individual members, while they are required do so for the board as a whole in 11 countries (Figure 2.7). In Switzerland, SOEs are required to disclose individual remuneration levels for the chair of the board only, and an aggregate disclosure for the remuneration of the board as a whole. Some countries report that SOEs are also required to disclose the remuneration policy (Greece, Hungary, Korea, the Netherlands, New Zealand, Philippines, United Kingdom).8
2.4.1. Medium for disclosure
The medium for such disclosures also varies across countries. While in a majority of countries, SOEs mainly release this information in their annual reports, which are subsequently made publicly available on their websites, some countries require SOEs to disclose this information in a dedicated remuneration report9 (Belgium, Sweden). Some countries also display interesting venues for disclosure by SOEs. For instance, in Brazil, SOEs make this information publicly available on a dedicated webpage of their websites, and in Norway, the state expects SOEs to publish on their webpage the minutes from the general meeting with information regarding the remuneration decided by the general meeting, including fixed remuneration and remuneration for committee membership. In addition, the Accounting Act requires all companies that are not small to disclose the aggregate salary provided to the board. From 2023, most SOEs (including unlisted entities) will be required to publish an annual remuneration report. In Sweden, this information is also made public through the nomination decision made by government, and through the AGM minutes which are made public on companies’ webpages under the corporate governance section.
2.4.2. “Proactive” and “reactive” disclosure
While in the majority of surveyed countries, SOEs are required to “proactively” disclose this information, in some countries, SOEs that are subject to the transparency act disclose this information only when requested (e.g. Mexico, Costa Rica, the Slovak Republic). However, in the Slovak Republic, some cases have been brought before the courts claiming that SOEs do not qualify as “public entities” subject to the transparency act, and thus do not have such a duty.
2.4.3. Comparing requirements for listed and non-listed SOEs
In terms of how SOEs fare against listed companies’ practices, it is interesting to note that in some countries, more stringent provisions exist for unlisted SOEs than for listed SOEs (Brazil, the Czech Republic), while in other countries, provisions are more restrictive for listed SOEs than for unlisted SOEs (Croatia, Israel). In some countries, the same requirements apply to both listed and unlisted SOEs indifferently (Lithuania, Sweden). In the Netherlands, the Ministry of Finance requests SOEs to abide by a practice that is mandatory for listed companies, and which entails publishing a compliance report describing how the remuneration policy has been implemented.
Source: Author, based on questionnaire responses and desk research.
2.4.4. Disclosure practices by the state or ownership entity
On average, individual SOEs disclose board remuneration information of greater granularity than the state. However, in Iceland, the opposite is true with the government being more transparent than individual SOEs regarding the level of granularity of information disclosed. While SOEs disclose information on the remuneration of the board as a whole in their annual reports, the ministry publishes information about the board members, name, gender balance for each board and monthly remuneration for individual board members on the Ministry’s website.10
In some countries, a central online portal aggregating all remuneration information by all SOEs in the state’s portfolio has been set up either by central government (Australia,11 Korea12), the ownership entity (Portugal13) or the central ownership agency (Peru14), making this information readily accessible. In Bulgaria, the ownership agency discloses information on the remuneration of the management and control bodies of large public enterprises only in its annual aggregate report, which is made publicly available on the agency’s website.
While in some countries, the state does not “proactively” publish information about board remuneration levels, it publishes a compliance report on the implementation of disclosure requirements by SOEs. For instance, in Costa Rica, the Presidential Advisory Unit on State Ownership does disclose whether specific SOEs are complying with their responsibility to publish the required board and management remuneration information, as part of the analysis included in the annual State Ownership’s Aggregate Report on SOEs.
The state does not publish information on board remuneration in 17 of the 36 surveyed countries. In some cases, this is explained by the fact that it is deemed unnecessary, as remuneration levels are harmonised or capped, and these thresholds are already made public in the legal frameworks of SOEs (e.g. Croatia, Israel, Turkey), or because the company itself is required to publish granular information on board members’ remuneration, so the state does not have to do so (Hungary).
In other cases however, information is made “indirectly” available by the state, because as public officials, supervisory board members are obliged to disclose their remuneration, and such disclosures are then made publicly available on the government’s online state revenue service database (Latvia). Likewise in the Slovak Republic, “public officials” are required to make their remuneration available on the parliament’s website.
References
[1] Afanador, S., A. Bernal and A. Oneto (2017), “Efectividad y estructura de los directorios de las empresas de propiedad estatal en América Latina y el Caribe”, Políticas públicas y transformación productiva, Vol. 26, http://scioteca.caf.com/handle/123456789/1018.
[6] Australian Post (2021), Australian Postal Corporation Annual Report 2019-20, https://www.transparency.gov.au/annual-reports/australian-postal-corporation/reporting-year/2019-20-99.
[7] European Commission (2016), State-Owned Enterprises in the EU: Lessons Learnt and Ways Forward in a Post-Crisis Context, https://ec.europa.eu/info/publications/economy-finance/state-owned-enterprises-eu-lessons-learnt-and-ways-forward-post-crisis-context_en.
[2] Focus Orange (2019), EVALUATIE COMMISSARISSENBELONING BIJ STAATSDEELNEMINGEN, https://www.rijksoverheid.nl/binaries/rijksoverheid/documenten/kamerstukken/2021/01/29/evaluatie-commissarisbeloningen/evaluatie-commissarisbeloningen.pdf.
[9] IBP (2014), Transparency of State-Owned Enterprises in South Korea, https://www.internationalbudget.org/wp-content/uploads/Hidden-Corners-South-Korea.pdf.
[11] IDB (2016), State-owned enterprise management: advantages of centralized models, https://publications.iadb.org/publications/english/document/State-owned-Enterprise-Management-Advantages-of-Centralized-Models.pdf.
[15] IMF (2017), State-Owned Enterprises in Emerging Europe: The Good, the Bad, and the Ugly, https://www.imf.org/en/Publications/WP/Issues/2017/10/30/State-Owned-Enterprises-in-Emerging-Europe-The-Good-the-Bad-and-the-Ugly-45181.
[12] IMF/ERBD (2019), Reassessing the Role of State-Owned Enterprises in Central, Eastern, and Southeastern Europe, https://www.imf.org/en/Publications/Departmental-Papers-Policy-Papers/Issues/2019/06/17/Reassessing-the-Role-of-State-Owned-Enterprises-in-Central-Eastern-and-Southeastern-Europe-46859.
[3] Norwegian government (2019), Report to the Storting, https://www.regjeringen.no/en/dokumenter/meld.-st.-8-20192020/id2678758/.
[16] Norwegian Institute of Directors (2019), Board Remuneration Survey: listed and State-owned companies.
[10] OECD (2022), Monitoring the Performance of State-Owned Enterprises: Good Practice Guide for Annual Aggregate Reporting, https://www.oecd.org/corporate/ca/Monitoring-performance-state-owned-enterprises-good-practice-guide-annual-aggregate-reporting-2022.pdf.
[4] OECD (2021), Ownership and Governance of State-Owned Enterprises: A Compendium of National Practices, https://www.oecd.org/corporate/ownership-and-governance-of-state-owned-enterprises-a-compendium-of-national-practices.htm.
[22] OECD (2020), Implementing the OECD Guidelines on Corporate Governance of State-Owned Enterprises: Review of Recent Developments, OECD Publishing, Paris, https://doi.org/10.1787/4caa0c3b-en.
[17] OECD (2020), OECD Review of the Corporate Governance of State-Owned Enterprises: Brazil, http://www.oecd.org/corporate/soe-review-brazil.htm.
[8] OECD (2020), Transparency and Disclosure Practices of State-Owned Enterprises and their Owners, OECD Publishing, Paris, http://www.oecd.org/corporate/transparency-disclosure-practices-soes.
[18] OECD (2018), Ownership and Governance of State-Owned Enterprises: A Compendium of National Practices, https://www.oecd.org/corporate/ca/Ownership-and-Governance-of-State-Owned-Enterprises-A-Compendium-of-National-Practices.pdf.
[21] OECD (2015), OECD Guidelines on Corporate Governance of State-Owned Enterprises, https://www.oecd.org/corporate/guidelines-corporate-governance-soes.htm.
[19] OECD (2015), OECD Review of the Corporate Governance of State-Owned Enterprises in Latvia, https://www.oecd.org/daf/ca/oecd-review-corporate-governance-soe-latvia.htm.
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[13] OECD (2011), Corporate Governance of State-Owned Enterprises: Change and Reform in OECD Countries since 2005, OECD Publishing, Paris, https://doi.org/10.1787/9789264119529-en.
[5] World Bank (2016), International experience in governance of state-owned enterprises and parastatals.
[14] World Bank (2014), Tendencias del Gobierno Corporativo de las empresas publicas en América Latina : Tendencias y Casos de Países, https://openknowledge.worldbank.org/handle/10986/19983?locale-attribute=es.
Notes
← 1. In Greece, for SOEs in the portfolio of the Ministry of Finance, monthly allowances range between EUR 200 to EUR 800.
← 2. The study indicates that from the sample of five countries where SOEs use board meeting attendance allowances as the method of board remuneration (15 companies, including all participating Costa Rican SOEs), the allowance amount stands between USD 74 and USD 995, for an average monthly board meeting attendance allowance of USD 467.
← 3. However, in Chile, in port state companies the vice president earns the same as any other board member.
← 4. In Estonia, while the remuneration of the chair of the supervisory board is typically double the amount of a regular supervisory board member remuneration, in some instances the difference is smaller.
← 5. In Costa Rica, SOEs with an Executive President include: ICE, INS, AyA, INCOP, JAPDEVA, INCOFER, FANAL. SOEs with non-executive chairs include: JPS, BCR, BNCR, RECOPE S.A., Costa Rican Mail Service S.A., and SINART S.A.
← 6. For instance, in Chile, the chair of the board committee of commercially oriented SOEs and its members receive all the same allowance for attending board meetings, except for ENAP and CODELCO where remuneration levels differ. Likewise, in Colombia, the Assets Committee set the same threshold of payment for board and committee meetings in 2013. As such, approximately 70% of the majority-owned SOEs pay the same amount to board members and board committee members. In Costa Rica, attendance allowances of board committee meetings are similar for the committee chair and the rest of its members, and do not present significant variations across SOEs.
← 7. Of note, it may be inferred that these variables are intertwined insofar as countries with mainly commercial SOEs might have adopted a centralised ownership model, and require boards to be comprised of a majority of independent members appointed according to strict selection criteria. Details on ownership models are provided in (OECD, 2021[4]).
← 8. Of note, in France, although SOEs are not required to disclose information on remuneration levels to the general public, they usually do publish information on remuneration levels of the board as a whole (after it has been approved by the AGM and shareholders) and on the remuneration policy in their annual reports.
← 9. As required by the EU Directive: https://ec.europa.eu/info/sites/default/files/rrg_draft_21012019.pdf.
← 10. https://www.stjornarradid.is/verkefni/rekstur-og-eignir-rikisins/felog-i-eigu-rikisins/
← 11. https://www.transparency.gov.au
← 13. http://www.dgtf.pt/sector-empresarial-do-estado-see/informacao-sobre-as-empresas
← 14. https://www.fonafe.gob.pe/centrocorporativo/buengobiernocorporativo