PROJECT

DATE CLIENT08/03/2012 SITI KANIA MEVIANTI / 19009108

Executive Compensation in PT TelkomMB 4015 – Compensation Management

INTRODUCTION

Compensation Management

The remuneration received by the employees in return for his/her

contribution to the organization

An organized practice which involves balancing work-employee relation by providing monetary and non-monetary benefits.

Assignment Content

This paper aims to study about the executive compensation of state owned company, especially PT Telkom as the scope of project, and relate them with the implementation of legal aspects, whether it have been compatible or not.

LEGAL ASPECTS IN COMPENSATION MANAGEMENT

Legal Aspects Analyzed

Cash Compensation

Base Salary

Merit/Cost of Living

Short-Term Incentives

Long-Term Incentives

Benefits

Income Protection

Work/Life Balance

Allowances

...all factors based on George T. Milkovich on “Compensation”

Legal Aspects related: Ministerial Regulations PER-07/MBU/2010

About Income Guidelines for Directors, Commissioners, and the Supervisory Board of SOE’s

IMPLEMENTATION OF LEGAL ASPECTS

OF STATE OWNED COMPANIES IN INDONESIA

Company Position Base SalaryTake Home

PayDetails

Bank Mandiri

CEOIDR 166 M /

monthNA Allowances not included

BOD NAIDR 705 M /

monthSalary IDR 27.57 B ; Allowances 17.51 ; Bonus IDR 48

B ; Housing IDR 1B ; Transportation IDR 3.87 B

Bank Rakyat Indonesia

CEOIDR 167 M /

monthNA -

BOD NAIDR 333 M /

monthIncome per year: IDR 4 B

Bonus, incentives and tantiem: IDR 159.9 B

Bank Negara Indonesia

BOD NAIDR 314 M /

monthIncome per Year: IDR 3.7 B

PT Aneka Tambang

CEOIDR 105 M /

monthNA Incentives, bonus and allowances not included

BOD NAIDR 250.8 M / month

Income per Year: IDR 3.01 B(Salary and Allowances)

PT Timah Tbk

BOD NAIDR 80 M /

monthIncome per Year: IDR 962.2 M

(Salary)

CASE STUDY

Company Profile

Largest telecommunication and network service provider in Indonesia

Encompass a broader portfolio of TIME (Time, Information, Media, and

Edutainment)

Committed to ongoing innovation, positioned as a strongly competitive new wave company

IMPLEMENTATION OF LEGAL ASPECTS

IN PT TELKOM INDONESIA

Position Base Salary Take Home Pay Income per Year Details

CEO IDR 118 M/month IDR 602 M/month IDR 7.22 B

Take Home Pay income already includes salary, allowances and

insurances.

BOD NA IDr 544 M/month IDR 6.53 B

Income already includes salary, allowances, and

insurances.

Type Implemented Legal Aspect

Cash Compensation

Base Salary Yes MR PER-07/MBU/2010 Article 4

Merit/Cost of Living Yes MR PER-07/MBU/2010 Article 2

Short Term Incentives Yes NA

Long Term Incentives Yes NA

Benefits

Income Protection Yes NA

Work/Life Balance

Home Office Yes MR PER-07/MBU/2010 Article 26

Transportation Yes MR PER-07/MBU/2010 Article 21

Housing Yes MR PER-07/MBU/2010 Article 15

Allowances

Health Yes MR PER-07/MBU/2010 Article 22

Clothes Yes MR PER-07/MBU/2010 Article 11

Pension Yes MR PER-07/MBU/2010 Article 10

Communication Yes MR PER-07/MBU/2010 Article 9

Religious Holiday Yes MR PER-07/MBU/2010 Article 8

(Cuti Tahunan) Yes MR PER-07/MBU/2010 Article 13

(Cuti Besar) Yes MR PER-07/MBU/2010 Article 14

Professional Associations Yes MR PER-07/MBU/2010 Article 23

Legal Protection Yes MR PER-07/MBU/2010 Article 25

Club Membership Yes MR PER-07/MBU/2010 Article 27

Representation Cost Yes MR PER-07/MBU/2010 Article 28

Utility Cost Yes MR PER-07/MBU/2010 Article 16

Critical Review/Analysis

Compared to other state owned companies, PT Telkom had implemented most of the compensation factors based on the legal aspects.

One of many reasons that keeps PT Telkom one step ahead of its competitors.

Suggestion

PT Telkom has provide enough compensation for their executives, all factors stated in

Milkovich’s book has already covered.

In order to keep pace with the competitors, PT Telkom just need to maintain their compensation

system or maybe improve them.

CONCLUSION

No wonder that people all over Indonesia are eager to apply to PT Telkom, since they offers complete

package of compensation for the executives.

‘dream company’ for employees...Research: Warta Ekonomi

Better understanding about compensation system of SOE’s in Indonesia, and its legal aspects.

Better consideration in choosing company to work on in the future.

Conclusion

Thank You