State-owned companies still fall short of transparency on executive perks

One in three companies do not disclose managers’ extra pensions

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One in three Finnish companies with partial or complete state ownership continue to keep the size of the additional pensions of their CEOs a secret, even though the state has instructed the companies in which it has a holding in to be as open as possible.
      The size of bonuses is also not always regulated in the way that the state would like.
      Helsingin Sanomat has investigated how well state-owned companies follow the new openness policy that was implemented in the autumn of 2009. A questionnaire was sent to a total of 48 companies in which the state has a holding of 10-100 per cent. There were 39 responses.
     
In companies in which the state has a holding of more than 50 per cent, the state is effectively in control of all decisions.
      Even with a holding of less than a majority of shares, the state representative can largely dominate shareholders’ meetings, because not all shareholders attend the meetings.
     
The airline Finnair and the domestic energy company Vapo continue to keep the extra pensions of their CEOs a secret. The state has a majority holding in both companies.
      Ten companies had no extra pension schemes. One company, Tietokarhu, refused to disclose even the annual salary of its CEO, saying that the shareholder contract forbids such disclosure.
     
The so-called emergency brake on extra payments has been implemented in 26 companies. This means that at least 13 companies have not yet implemented the policy instituted by the ministerial committee on economic policy, under which the payments can be postponed in a situation in which conditions have become disadvantageous for the companies.
      The state owners added the emergency brake provision after Mikael Lilius, CEO of the energy company Fortum and refused to scale back his share and stock option benefits, which amounted to EUR 5-10 million a year.
      Of the larger companies StoraEnso has not managed to implement the emergency brake.
     
Most of the respondents, 28 companies, or 77 per cent of all who respondents, had implemented a rule under which an annual bonus may not exceed 40 per cent of basic salary. Ignoring the rule are Kemira, Metso, Sampo, Outokumpu, and Tikkurila, where the ceiling for the annual output bonus is 75 per cent of basic salary.
      Companies with state ownership have been fairly compliant with state policy aimed at raising the retirement age of corporate management to 63.
      Those in the present generation of executives are generally retiring at the age of 60.


Previously in HS International Edition:
  Government to re-examine incentive programmes for state-owned companies (1.4.2009)
  State-owned companies tight-lipped about executive bonuses (21.5.2007)
  Energy company Fortum to scale back lucrative perks to management (16.3.2006)

Helsingin Sanomat