About the boards
Board member selection
In order to reinforce the transparency and efficiency of the activities of state-owned enterprises (hereinafter the SOEs) and as part of the introduction of the good governance principles, state-owned public and private limited liability companies shall have independent members elected to collegial bodies, and since 1 March 2015, the same will apply to members of boards of directors at state enterprises. Members of the SOE collegial bodies are nominated by the nomination committee, which has been approved by the Government.
The Governance Coordination Centre advises the institutions implementing owner’s rights on the formation of the boards of directors. The GCC also appoints one of the five members of nomination committee for the board of directors at state enterprises.
Requirements for independent members of collegial bodies
The key requirements for members of collegial bodies can be found in the Resolution of the Government of the Republic of Lithuania Approving the Schedule of Procedures for the Nomination of Candidates to the Board of Directors of a State or Municipal Enterprise and Candidates to the Supervisory or Governing Body of a State- or Municipality-owned Enterprise Elected by the General Meeting of Shareholders, and the Law on State and Municipal Enterprises. In addition to the above nomination criteria, we expect the following from members of collegial bodies:
- High ethical standards;
- Absence of conflicts of interest;
- Ability to dedicate sufficient time and have a good understanding of the specific nature of the company’s business;
- Board, executive officer or management level work experience;
- Critical thinking ability and ability to clearly convey thoughts;
- Ability to see the overall picture and make constructive proposals;
- Ability to work as part of a team.
Term of office of collegial bodies
As a general rule, the SOE supervisory board or the board of directors is elected for a four-year period.
Time commitments of a collegial body member
How much time the duties of a supervisory board or board member take depends on the specific nature of an individual company, the existing situation and the complexity of the issues encountered. On average, a board member should dedicate 2-3 days, while a chairman of the board, 3-4 days a month to the work related to board member duties and the preparation for the board meetings to be attended.
Remuneration
Members of collegial bodies receive remuneration, which is determined by the general meeting of shareholders. The Ownership Guidelines recommend that members of the board of directors or the supervisory board at state-owner enterprises be paid remuneration not exceeding 1/4 of the total salary fixed for the company manager, whereas the chairman of the board of directors, 1/3 of the above salary. The Law on State and Municipal Enterprises provides that monthly remuneration to be paid to a board member may not exceed 1/5 of the average monthly salary of the company manager.
Self-evaluation of the boards
The boards of directors (and supervisory boards) are under an obligation to perform the evaluation of own activities and the needs analysis, once a year, i.e. to establish what competencies are required of their members to achieve the SOE objectives. Upon receiving the results of the performance evaluation and the needs analysis, the GCC shall make proposals on having the collegial body reshaped.
