Bonuses to Board Members of State-owned Companies
Bonuses to Board Members of State-owned Companies

Summary/Abstract: The paper presents the results of research into bonus systems for board members of State-owned companies. The rules of bonus award to board members are laid down in pertinent legislation. Under the legislation, management bonus levels should depend on the degree of achievement of the company's goals viewed in terms of financial performance, implementation of the company's strategy, improvement of its market position or implementation of rational HR policy. Supervisory boards of State-owned companies were responsible to tailor these objectives to industry specificity and competences of individual board members. A study conducted in two large conglomerates owned by the State shows that the objectives to assess achievement are not fully suited either to the type of activity pursued by the companies or the current market situation. Management bonus systems are measure chiefly short-term objectives, and the weights used for individual metrics do not reflect the competences of individual board members.

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