CEOs of state-owned companies continue to enjoy big pay hikes

Three chief executives receive annual pay rises worth more than 30%

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In 2008, the CEOs of companies that are either partially or fully owned by the state gained an average increase of 10.6 % in their salaries and bonuses, while the pay increase an ordinary employee had to settle for was smaller by half, namely only 5.1 %.
      Helsingin Sanomat looked into the salary trend of the chief executives working for state-owned non-public companies last year. A total of 25 enterprises were involved, with a number of CEOs who were employed both in 2007 and in 2008.
      The salaries of only three chief executives were adjusted downwards, while 22 CEOs received pay hikes.
      The comparison covered both the basic salaries and performance bonuses. This group did not gain any bonuses with stock options, as no listed state-owned companies were included in the comparison.
     
Last year, the rises in salaries escalated compared with the previous year. In 2007, the salaries and bonuses gained by the chief executives working for companies in which the state owns shares were a couple of percentage points lower or 8.3 %. At the same time, the salaries, incentives, and fringe benefits of ordinary employees increased only by 3.3 %.
      When compared with the salary trend of listed companies, the CEOs of enterprises with state ownership did very well, as the salaries and bonuses of the chief executives at large listed companies declined by some 10 % last year.
      Apparently, the recession tends to reflect on the salary trend of listed companies sooner than on that of non-listed companies.
      The trend is obvious, even though the comparison between the executives of listed companies did not include stock option incentives either, just ordinary performance bonuses.
     
The highest pay hikes were concentrated in the hands of those who already had the biggest pay packets.
      The comparison shows that the biggest increases in their annual salary and pay incentives - a healthy 31% - were gained by Jukka Alho, the CEO of the Finnish postal services firm Itella, Jorma Wiitakorpi, the former CEO of the armaments manufacturer Patria, and Jukka Ruusunen, the CEO of the Finnish electricity transmission system operator Fingrid.
      Jorma Wiitakorpi was dismissed from his position at Patria in August of last year in connection with police suspicions of his involvement with a bribery and industrial espionage case in an arms deal with Slovenia. He received a hefty 279,000 euros of his total 2008 salary of EUR 488,000 in the form of short-term and long-term incentive bonuses.
      Jukka Laksovirta, the former CEO of the infrastructure and construction service company Destia, who resigned from his post at the end of last month amid suspicions of corruption (see earlier story from June 1st), was also in receipt of sizeable bonuses in 2007 and 2008. He was not among the 25 CEOs examined, since he only took up the position in the middle of 2007.
     
In general, the rise in remunerations was a consequence of the fact that the performance bonuses increased.
      However, if the bonuses went down for some CEOs, their basic salary increased, amounting to a considerable hike in total earnings.
      Helsingin Sanomat reported earlier that the CEOs of the companies in which the state has ownership have also better terms for their pensions than ordinary Finns enjoy.
     
The state has sought to reduce the benefits, while Minister of Defence Jyri Häkämies (Nat. Coalition Party), who is also responsible for matters related to state corporate ownership, has announced that the incentives paid by state-owned companies need to be ”within reasonable limits”.
      Häkämies has established a working group to draw up new guidelines for the granting of incentives and pension agreements at companies in which the state holds stock.
      The working group headed by Markku Pohjola is to submit its report to Häkämies today.


Previously in HS International Edition:
  Häkämies wants to "restore discipline" to state-owned companies (1.6.2009)
  Government to re-examine incentive programmes for state-owned companies (1.4.2009)

See also:
  Pensions still high for executives in state-owned companies (18.5.2009)

Helsingin Sanomat