Transcript of "Legal Aspect of Executive’s salary in Stated-Owned Enterprises Banks"
Linda Pratiwi Darmadi –
• PER-07/MBU/2010 Year 2010 about
Income Guidelines for salary determination
of Directors, Board of Commissioners,
Board of Supervisors and State Owned
Enterprises ("SOEs Minister Regulation
• General Meeting of Shareholders
Bank Mandiri (October 2, 1998)
• Part of a restructuring program implemented by the government of
• In July 1999, four state banks merged into Bank Mandiri.
Bank BNI (1946)
• The first bank was founded and owned by Indonesian Government.
• It began to circulate the first official payment issued by the Government of
Indonesia called ORI on October 30 1946
• Focuses on lending and banking services for micro, small, and medium
• One of Indonesia's top three lenders.
• Pioneer in the field of micro loans, or small loans for encourage
The arrangement of compensation for CEO and others
BOD already based on PER-07/MBU/2010 Year 2010 as
these following some of clauses:
• Income decided in General Meeting of Shareholders and
• The forms of income are
salary, honorarium, facilities, allowances and bonus
• Decided income based on benchmark, the condition of
competition and the complexity of business also scarcity
of human resources.
• Tax from benefits should be paid by company.
• Income of executives should considered
income, assets, condition of the company's financial
ability, inflation rates and other relevant factors also not
against the legislations.
Every SOEs company should use this formula for calculating
salary and income for Board of Directors.
Take home pay/
1 Mandiri CEO 166.000.000 IDR Base salary not including benefits
BOD 705.000.000 IDR
Details of 11 BOD’s income during one
year: Salaries Rp.27, 57 billion,
allowance (THR, leave, medical and
mobile) of Rp. 17, 51 billion and bonus
of Rp. 48 billion. The amount is
equivalent to Rp. 7 billion per year or
Rp.705 million per month for each
member of the Board of Directors. That
does not include other facilities in the
form of housing Rp. 1 billion,
transportation Rp. 3.87 billion and
compensation of Rp 4.69 billion per
year for 11 BOD
3 BRI CEO
Not including benefits
BOD 333.000.000 IDR
Salaries and allowances for BOD Rp. 40.3
billion. So that the average director receives
income Rp. 4 billion / year or Rp. 333 million
/ month. That does not include bonuses,
incentives and bonus received by directors
and commissioners reached Rp. 159.9
4 BNI BOD 314.000.000 IDR
Salary and compensation received by
directors and commissioners in 2009
amounted to Rp. 42 billion. 9 directors of
BNI estimated income Rp. 34 billion during
2009. Thus earning the director of Rp. 3.7
billion / year or Rp. 314 million / month.
However, no further explanation about the
benefits and received a variety of facilities.
• BRI’s CEO got the highest base salary.
• The second highest salary received by
executives in Mandiri Bank.
• Amount of bonus that received by CEO of
Mandiri Bank bigger than BRI’s.
• Take home pay for BNI’s executives
probably around Rp. 314 million/ month for
• Income based legal aspect from ministry
Regulation, general meeting of Shareholder
and also Bank Indonesia
• Reason of giving big income
In order of remain such best person with good
quality, formerly SOEs minister arranging
payment based on benchmark and compare with
• Minister Already done make comparison and
benchmark with some private banks in Asia
• General meeting of shareholders decided executives’
salaries, salaries that given in the range that written in Ministry
• Shareholders also measure from side of the management of
business. Shareholders surely will adjust the compensation
with the job responsibilities and business risk.
• Central Bank will adjust the salary to boost management in
order to avoid taking high risk by executives.
• Central Bank will complete the policy related fit and proper test
and the function of general banks’ regulation.
• Gap of three Banks
Take home pay of executives in Mandiri bigger than BNI
and BRI. There probably some reason such:
Results from general meeting of shareholders
The share market
Facing more complexity business and bigger risk
Related to decided amount and form of compensation for
executives, there are some important points should be
• Always consider the risk that will be facing by Bank in next
• Always adjusted the income with performance quality.
• If any crisis facing by Banks, the amount of income should be
• Consider the condition of Country and company ability.
• General Meeting of Shareholders shall always obey the policy