EO standardizes pay
and perks of GOCC, GFI executives
February 11, 2011
Philippines – Malacañang has issued an executive order standardizing
the salaries and bonuses of executives in government-owned and
controlled corporations (GOCCs) and government financial institutions
(GFIs) to strengthen control over compensation levels.
Aquino III signed Executive Order No. 24 on Thursday to address deep
concerns on the excessive and unreasonable pay and perks received by
board members and trustees of GOCCs and GFIs that had unnecessarily
depleted government funds and caused demoralization within the
“This EO will serve as
a stop-gap measure to rein in excessive pay for GOCC board of
directors and trustees until a law is passed mandating such,”
Executive Secretary Paquito N. Ochoa Jr. said on Friday.
According to Ochoa,
one such measure is Senate Bill No. 2640 or the proposed GOCC
Governance Act of 2011 put forward by Senator Franklin Drilon, which
is now pending in Congress.
Secretary said the EO set out the policies on salaries, per diems,
allowances, bonuses, incentives and other benefits of the GOCC and GFI
board of directors and trustees “to a level that is reasonable,
justifiable and appropriate.”
“While we do not
begrudge GOCC execs for rewarding themselves for exemplary
performance, these financial rewards should be within reason. This EO
seeks to set the guidelines that will standardize pay rates to prevent
abuse,” Ochoa said.
He thanked the
Departments of Finance and Budget and Management for “working with us
to exhaustively study and review existing compensation policies. Their
input was invaluable in the drafting of these policy guidelines.”
The EO covers board
members and directors of GOCCs and GFIs regardless of classification
and whose compensation shall be subject to the approval of the
It also includes
representatives of GOCCs in the boards or private corporations wherein
the government or GOCCs have investments.
This means that all
chartered and non-chartered GOCCs – whether covered or exempted by the
Salary Standardization Law – and their subsidiaries are directed to
comply with the policies and guidelines on compensation and
reimbursable expenses set by the EO.
Under the new
guidelines, the peculiar nature of corporations in terms of size,
strategic positioning, nature of operations and financial capability
should be taken into consideration in determining a compensation
system that is consistent with the pay practices in public and private
corporations, as well as the principle of equal pay for work of equal
The maximum amount of
performance-based incentives to be granted to board members or
trustees should depend on the size of the GOCC and GFI, and should not
exceed 50 percent of the board member’s annual compensation received
for outstanding performance.
The EO says
reimbursable expenses cover performance of official functions such as
transportation going to and from the place of meetings, travel during
official trip, communication and meals during business meetings.
These, however, are subject to budgeting, accounting and auditing
rules and regulations.
“Let me emphasize what
the President said on GOCC Governance Day last January: The money
earned by GOCC belongs to our people and should be used for their
benefit, not the benefit of those who run GOCCs. Our people are our
boss, and this EO should help those who manage our GOCCs remember
that,” Ochoa said.