PNoy signs EO standardizing pay, perks of GOCC executives

UPDATED 1:00 p.m. - In the wake of controversies over the excessive pay and perks received by executives of government-owned and –controlled corporations (GOCCs) and government financial institutions (GFIs), the President has signed an executive order (EO) standardizing their salaries and bonuses, a palace official announced Friday. "This EO seeks to set the guidelines that will standardize pay rates to prevent abuse," Executive Secretary Paquito Ochoa said in a statement. He announced that President Benigno Simeon Aquino III on Thursday signed EO 24 laying out the policies on salaries, per diems, allowances, bonuses, incentives and other benefits of the GOCC and GFI board of directors and trustees. Ochoa said the salaries and perks were set at “a level that is reasonable, justifiable and appropriate." He added: “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." Ochoa mentioned Senate Bill 2640 or the proposed GOCC Governance Act of 2011 filed by Senator Franklin Drilon. Aquino's SONA The President had criticized the excessive remuneration received by board members and trustees of GOCCs and GFIs in his State of the Nation Address on July 26 last year. Aquino cited the case of the Metropolitan Waterworks and Sewerage System (MWSS), saying that problems in its delivery of service to the public did not stop MWSS officials from rewarding themselves with bonuses. "Just recently, people lined up for water while the leadership of the MWSS rewarded itself even though the pensions of retired employees remain unpaid," Aquino said. "The entire payroll of the MWSS amounts to 51.4 million pesos annually. But this isn’t the full extent of what they receive: they receive additional allowances and benefits amounting to 81.1 million pesos. In short, they receive 211.5 million pesos annually," he added. Financial rewards Ochoa reminded GOCC and GFI executives that the money earned by government entities belongs to the people and should be used for their benefit, not those who run GOCCs. “While we do not begrudge GOCC execs for rewarding themselves for exemplary performance, these financial rewards should be within reason," Ochoa said. The EO covers the board members and directors of GOCCs and GFIs whose compensation are subject to the approval of the President. The order also includes representatives of GOCCs in the boards or private corporations where the government or GOCCs have investments. 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 EO 24. Under the new guidelines, the nature of corporations — their size, strategic positioning, nature of operations and financial capability — will be considered in determining a compensation system. The pay system must be consistent with the pay practices in public and private corporations and the principle of equal pay for work of equal value, the EO said. The maximum amount of performance-based incentives to be granted to board members or trustees will depend on the size of the GOCC and GFI. These incentives will not exceed 50 percent of the board member’s annual compensation received for outstanding performance. The EO also states that reimbursable expenses cover performance of official functions such as transportation going to and from meetings, travel during official trips, communication, and meals during business meetings. However, these expenses are subject to budgeting, accounting and auditing rules and regulations. Ochoa 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." – VVP/YA, GMA News