Professionals in business management and other fields are invited to the boards of SOEs
The Governance Coordination Center informs that new boards and supervisory boards will be formed in at least ten state-owned enterprises (SOEs) in 2024. Professionals in business management, strategic planning, economics and finance and other fields are invited to prepare and actively participate in next year’s public selections for the collegial bodies of SOEs and their subsidiaries. Independent board members of SOEs are promised at least a quarter of the remuneration of the company’s manager.
Next year, independent board members will be sought for large SOEs, such as Lithuanian Airports, Ignalina Nuclear Power Plant, Lithuanian Post Office, Lithuanian Road Administration and others. The selection of independent board members will also take place in some of the subsidiary companies of SOEs, including Litgrid, Amber Grid, Baltpool, „Valstybės investicijų valdymo agentūra“, „Kauno kogeneracinė jėgainė“, and others.
“An independent, competent and motivated board is one of the essential factors of effective SOE management. In recent years, more and more independent members have been recruited to SOE boards and supervisory boards, bringing not only knowledge, but also good business management experience and competences, which strengthen and improve SOE management. Practice shows that it is important that the board of SOEs has members with the widest possible range of competences, therefore we invite professionals in their field to actively participate in public selections for next year’s newly formed boards and supervisory boards of SOEs”, says Vidas Danielius, head of the Governance Coordination Center.
Those who, with their knowledge, experience and good business management practices, want to contribute to the improvement of the governance of SOEs, are already invited to register in the database of governance experts created by the Management Coordination Center https://governance.lt/kolegialus-organai/#informavimas. Those who have registered and expressed interest in getting involved in SOE management will be separately informed about each new SOE-initiated selection and will be provided with detailed information on applying for a specific company’s collegial body.
Requirements for candidates: from reputation to industry knowledge
The selection of boards and other collegial bodies is carried out according to the standard established by the Government, in compliance with international principles of good governance. “A proper board selection process is the first step to ensure that the formed SOE board functions efficiently and transparently.” In recent years, all SOEs have been forming boards in accordance with the principles of public selection and standardized selection procedures, and other good practices are also increasingly being used, such as the involvement of professional executive search agencies, the creation of competence matrices and clearly communicated qualification requirements in selection announcements on the basis of this,” he emphasizes. V. Danielius.
For candidates for independent members of SOE collegial bodies, the Governance Coordination Center has prepared a detailed memo on how the selections are carried out.
According to legal acts, general, independence and special requirements are set for independent members of the boards of SOEs. Each candidate for the collegial body of the SOE must meet the general requirements, that is, they must have a higher education, be of impeccable reputation and not be a shareholder or their representative of the SOE or its subsidiary or related company to which they are applying. Special requirements usually include competences in management, financial management, strategic planning and the branch of economy in which the SOE operates. “Taking into account the needs of a specific SOE and the missing or desired competencies of a collegial management body, other competencies can be determined. When forming the board, it is important that it is competent both as a collegial body and in evaluating individual members of the board,” emphasizes V. Danielius.
The remuneration of members of collegial bodies of SOEs is growing
Independent members of collegial bodies of SOEs are paid remuneration, which is usually fixed. V. Danielius points out that the practice is currently being switched to when the fixed remuneration paid to SOE board members is linked to the average earnings of the company’s manager.
“Global practice shows that the remuneration paid to independent members of SOE boards must motivate and encourage the attraction of competent and motivated professionals to SOE boards. The newly implemented remuneration policy stipulates that independent members of SOE boards and supervisory boards must be paid at least 1/4 of the company manager’s average monthly salary, and it is recommended that the presidents of SOE collegial bodies be paid at least 1/3 of the company’s manager’s average monthly salary of wages,” explains V. Danielius, head of the Governance Coordination Center.
Last year, the average monthly remuneration of an independent SOE board member was EUR 1,277, and that of the chairman of the board was EUR 1,797. In 2022, the actual remuneration of the members of the collegial bodies of SOEs increased by 43 percent, and that of the chairpersons by 35.1 percent.
Currently, the chairmen of all SOE boards and supervisory boards are independent, and the share of independent members in the elected collegial bodies of SOEs has increased to almost 64 percent. This is consistent with OECD good governance practices and principles of balanced representation.
