This document analyzes the executive compensation system at the state-owned telecommunications company PT Telkom in Indonesia. It finds that PT Telkom implements most compensation factors identified in the legal regulations, such as base salary, incentives, benefits, and allowances. Compared to other state-owned companies, PT Telkom offers a more complete compensation package, which may be one reason for its competitive advantage. The document concludes that PT Telkom provides sufficient compensation and is considered a "dream company" for employees in Indonesia.

1. PROJECT
DATE CLIENT
08/03/2012 SITI KANIA MEVIANTI / 19009108
Executive Compensation in PT Telkom
MB 4015 – Compensation Management

2. INTRODUCTION

3. Compensation
Management
The remuneration received by the employees
in return for his/her contribution to the
organization
An organized practice which involves balancing
work-employee relation by providing monetary
and non-monetary benefits.

4. Assignment Content
This paper aims to study about the executive
compensation of state owned company, especially
PT Telkom as the scope of project, and relate them
with the implementation of legal aspects, whether it
have been compatible or not.

5. LEGAL ASPECTS IN
COMPENSATION MANAGEMENT

6. Legal Aspects
Analyzed
Cash Compensation
Base Salary
Merit/Cost of Living
Short-Term Incentives
Long-Term Incentives
Benefits
Income Protection
Work/Life Balance
Allowances
...all factors based on George T. Milkovich on “Compensation”
Legal Aspects related: Ministerial Regulations PER-07/MBU/2010
About Income Guidelines for Directors, Commissioners, and the Supervisory Board of SOE’s

7. IMPLEMENTATION OF LEGAL
ASPECTS
OF STATE OWNED COMPANIES IN INDONESIA
Company
Positi
on
Base
Salary
Take Home
Pay
Details
Bank
Mandiri
CEO
IDR 166
M / month
NA Allowances not included
BOD NA
IDR 705 M /
month
Salary IDR 27.57 B ; Allowances 17.51 ; Bonus
IDR 48 B ; Housing IDR 1B ; Transportation
IDR 3.87 B
Bank
Rakyat
Indonesia
CEO
IDR 167
M / month
NA -
BOD NA
IDR 333 M /
month
Income per year: IDR 4 B
Bonus, incentives and tantiem: IDR 159.9 B
Bank
Negara
Indonesia
BOD NA
IDR 314 M /
month
Income per Year: IDR 3.7 B
PT Aneka
Tambang
CEO
IDR 105
M / month
NA Incentives, bonus and allowances not included
BOD NA
IDR 250.8 M
/ month
Income per Year: IDR 3.01 B
(Salary and Allowances)
PT Timah
Tbk
BOD NA
IDR 80 M /
month
Income per Year: IDR 962.2 M
(Salary)

8. CASE STUDY

9. Company
Profile
Largest telecommunication and network service
provider in Indonesia
Encompass a broader portfolio of TIME
(Time, Information, Media, and Edutainment)
Committed to ongoing innovation, positioned as a
strongly competitive new wave company

10. IMPLEMENTATION OF LEGAL
ASPECTS
IN PT TELKOM INDONESIA
Position Base Salary Take Home Pay Income per Year Details
CEO
IDR 118
M/month
IDR 602
M/month
IDR 7.22 B
Take Home Pay
income already
includes salary,
allowances and
insurances.
BOD NA
IDr 544
M/month
IDR 6.53 B
Income already
includes salary,
allowances, and
insurances.

11. Type Implemented Legal Aspect
Cash Compensation
Base Salary Yes MR PER-07/MBU/2010 Article 4
Merit/Cost of Living Yes MR PER-07/MBU/2010 Article 2
Short Term Incentives Yes NA
Long Term Incentives Yes NA
Benefits
Income Protection Yes NA
Work/Life Balance
Home Office Yes MR PER-07/MBU/2010 Article 26
Transportation Yes MR PER-07/MBU/2010 Article 21
Housing Yes MR PER-07/MBU/2010 Article 15
Allowances
Health Yes MR PER-07/MBU/2010 Article 22
Clothes Yes MR PER-07/MBU/2010 Article 11
Pension Yes MR PER-07/MBU/2010 Article 10
Communication Yes MR PER-07/MBU/2010 Article 9
Religious Holiday Yes MR PER-07/MBU/2010 Article 8
(Cuti Tahunan) Yes MR PER-07/MBU/2010 Article 13
(Cuti Besar) Yes MR PER-07/MBU/2010 Article 14
Professional Associations Yes MR PER-07/MBU/2010 Article 23
Legal Protection Yes MR PER-07/MBU/2010 Article 25
Club Membership Yes MR PER-07/MBU/2010 Article 27
Representation Cost Yes MR PER-07/MBU/2010 Article 28
Utility Cost Yes MR PER-07/MBU/2010 Article 16

12. Critical
Review/Analysis
Compared to other state owned companies, PT
Telkom had implemented most of the compensation
factors based on the legal aspects.
One of many reasons that keeps PT Telkom one step
ahead of its competitors.

13. Suggestion
PT Telkom has provide enough compensation for
their executives, all factors stated in Milkovich’s book
has already covered.
In order to keep pace with the competitors, PT Telkom
just need to maintain their compensation system or
maybe improve them.

14. CONCLUSION

15. No wonder that people all over Indonesia are eager to apply
to PT Telkom, since they offers complete package of
compensation for the executives.
‘dream company’ for employees...
Research: Warta Ekonomi
Better understanding about compensation system of SOE’s
in Indonesia, and its legal aspects.
Better consideration in choosing company to work
on in the future.
Conclusion

16. Thank You