MANILA, Philippines?(UPDATE) President Aquino on Wednesday ordered the suspension until Dec. 31, 2010 of all allowances, bonuses and incentives of board members of government-owned and -controlled corporations, including government financial institutions.
In issuing Executive Order No. 7, Mr. Aquino also stopped increases in the salaries and other benefits of board members and operating officers and regular employees exempted from the Salary Standardization Law.
?The grant of allowances, bonuses, incentives and other perks to members of the board of directors/trustees of GOCC?s and GFI?s, except reasonable per diems, is hereby suspended until Dec. 31, 2010, pending the issuance of new policies and guidelines on the compensation of these board members,? the EO states.
The order signed and released on Wednesday also creates a Task Force on Corporate Compensation that will review all remuneration granted to members of the boards, officers and rank-and-file employees of GOCC?s and GFI?s.
One of the functions of the task force is to recommend measures ?to rationalize the compensation system and the use of discretionary funds in specific GOCC?s and GFI?s including putting a cap on total compensation.?
According to the EO, the considerations in setting the compensation levels in GOCC?s and GFI?s include: coverage of the GOCC/GFI under the salary standardization law; strategic position of the GOCC/GFI in its industry; proprietary nature of operations; requirement for highly technical or specialized skills and expertise in corporate operations; comparability of the compensation package with prevailing industry practices; financial capability and viability of the GOCC/GFI; proportion of personal services expenditures to total corporate operating budget; privatization plans and other relevant factors.
?The TFCC shall submit a report on its findings and recommendations to the President within 90 days from issuance of this order,? the order states.
President Aquino also ordered all GOCC?s and GFI?s to submit to the task force information on all salaries, allowances, incentives and other benefits under both direct and indirect compensation, as well as discretionary funds.
The rationalization order also covers provident fund benefits, additional health insurance and other benefits.
The EO takes effect immediately upon publication.
?(While) government-owned and -controlled corporations and government financial institutions by the nature of their operations are accorded greater flexibility to funcion properly and efficiently under a market environment, such flexibility shall nevertheless be consistent with the precept of public accountability,? the EO says.
The EO also adverts to Congress? Joint Resolution No. 4 s. 2009 stating that agencies exempted from the salary standardization law ?shall observe the policies, parameters and guidelines governing position classification, salary rates, categories and rates of allowances, benefits, incentives prescribed by the President.?
The order came after a Senate inquiry into the compensation packages of some GOCC?s and GFI?s revealed they far exceed those of other government officials and staff.
A Senate resolution called on President Aquino to suspend the payment of huge compensation to the concerned GOCC and GFI officials and employees.