Law Summary
Policy Considerations for Compensation Rationalization
- Compensation rationalization aims to promote:
- Transparency, accountability, and prudent spending;
- Effective performance of developmental, social, commercial, proprietary, and regulatory functions by GOCCs;
- Attraction of highly qualified and competent individuals to the Boards;
- Enhanced monitoring, supervision, and evaluation of GOCCs;
- Standardized and reasonable remuneration preventing abuses in salaries, per diems, bonuses, and other benefits.
Definition of Key Terms
- GOCC: Government agencies organized as stock/non-stock corporations with at least 51% government ownership.
- Chartered GOCC: Created by special law including GFIs.
- Non-chartered GOCC: Organized under Batas Pambansa Bilang 68 (Corporation Code).
- GFI: Financial institutions with majority government ownership, supervised by the Bangko Sentral ng Pilipinas.
- Subsidiary: Corporation with majority voting stock controlled by a GOCC.
- Board Members: Includes Ex-Officio, Authorized Alternates, and Appointive/Elective members.
- Compensation Components: Per diems, salaries, allowances, bonuses, benefits, annual retainer fees, performance-based incentives, reimbursable expenses, and stock plans.
General Provisions on Compensation Principles
- Compensation system must be:
- Simple, understandable, manageable.
- Aligned with best practices in public and private sectors.
- Tailored to corporation size, nature, and financial capacity.
- Periodically reviewed.
- Compensation should be:
- Just and equitable.
- Comparable to private sector standards.
- Performance-based considering individual and organizational outcomes.
- Fair and mindful of fiscal constraints.
- Subject to Presidential approval.
Coverage
- Applies to all members of Boards of GOCCs (chartered or non-chartered), including subsidiaries.
- Excludes the Bangko Sentral ng Pilipinas.
- Includes GOCC representatives in private corporations where GOCCs have investments.
Local Water Districts
- Board members of Local Water Districts are subject to these policies.
- Separate classification and compensation rules will be issued for Local Water District Boards.
GOCC Classification for Compensation
- Based on size using assets and revenues:
- Class A: >= P100 Billion assets / >= P10 Billion revenues
- Class B: >= P25 Billion and <P100 Billion assets / >= P2.5 Billion and <P10 Billion revenues
- Class C: >= P5 Billion and <P25 Billion assets / >= P500 Million and <P2.5 Billion revenues
- Class D: >= P1 Billion and <P5 Billion assets / >= P100 Million and <P500 Million revenues
- Class E: < P1 Billion assets / < P100 Million revenues
- Assets based on prior year audited balance sheet.
- Revenues based on 3-year average audited income.
- Both criteria must be met.
- Department of Finance reviews classification changes, subject to Presidential approval.
Compensation Rules for Board Members
- No compensation for Ex-Officio members who are government secretaries/officers including their authorized alternates.
- Appointive/Elective members may receive compensation unless prohibited by law or charter.
- Compensation from subsidiaries or private corporations goes to the GOCC represented.
- Excess compensation from representation in private corporations must be remitted to the GOCC within 15 days.
Compensation Structure
- Composed mainly of per diems and performance-based incentives.
- Annual retainer fees and stock plans prohibited.
- Salaries, allowances, benefits, and bonuses not allowed unless law or charter specifically authorizes and with Presidential approval.
- Total compensation including per diems capped by limits in Sections 9 and 10.
Per Diems for Board Meetings
- Maximum per diem per meeting and annual limits by GOCC classification:
- Class A: P40,000 per meeting; P960,000 annually
- Class B: P20,000; P480,000
- Class C: P15,000; P360,000
- Class D: P10,000; P240,000
- Class E: P5,000; P120,000
- Board chairperson may receive up to 20% additional per diem.
- Actual rates consider GOCC nature and fiscal realities.
- Increases require Presidential approval.
Per Diems for Committee Meetings
- Maximum per diem per committee meeting is 60% of board meeting per diem, subject to annual caps.
- Same classification-based limits with fiscal and GOCC considerations.
- Increases subject to Presidential approval.
Performance-Based Incentives
- Allowed based on agreed metrics between Boards and supervising departments.
- Maximum amount linked to reasonable percentage of actual annual per diems received.
- Requires endorsement by Department of Finance and Budget and Management.
- Approval by the President is mandatory.
- Must employ performance rating systems and ensure statutory obligations are met.
Reimbursable Expenses
- Necessary expenses for official functions are paid by the GOCC directly.
- If advanced by Board members, reimbursement allowed for:
- Transportation to/from meetings
- Official travel expenses
- Communication costs
- Meals during business meetings
- Reimbursements subject to budgeting, accounting, and auditing regulations.
Compliance Requirements
- Chartered GOCC Boards must comply with compensation and reimbursable expense provisions.
- Non-chartered GOCC Boards must pass resolutions adopting these provisions.
Penalties for Non-Compliance
- Violations constitute insubordination, neglect of duty, or other administrative offenses.
- Appropriate administrative action will be taken.
Restitution of Excess Compensation
- Upon COA determination, excess amounts received by Board members must be immediately returned to the concerned GOCC.
Clarifications and Interpretations
- Requests for clarifications directed in writing to the Task Force on Corporate Compensation.
Separability Clause
- Invalidity of any provision does not affect other unaffected provisions, which remain in full force.
Repealing Clause
- Existing inconsistent orders, issuances, resolutions, and regulations are repealed or modified accordingly.
- Provisions not repealed remain effective.
Effectivity
- The Executive Order took effect immediately upon publication in a newspaper of general circulation.