Mandiri boss gets 11.06% pay rise, but still not highest

Ika Krismantari ,  THE JAKARTA POST ,  JAKARTA   |  Tue, 05/05/2009 10:57 AM  |  Business

It pays dividends: Bank Mandiri president director Agus Martowardojo (center), along with bank directors, listen to a briefing during a press conference after a shareholder meeting in Jakarta, on Monday. The meeting allocated Rp 1,85 trillion (US$165 million), 35 percent of the bank’s 2008 net profits, to dividend payments. JP/J. Adiguna

Managing the country’s largest lender Bank Mandiri is not a guarantee for Agus Martowardojo of receiving the highest pay in the industry, not if the bank is controlled by the government.

In an unprecedented move Monday, the flamboyant-style Agus announced that he would get a salary rise by  11.06 percent to Rp 166 million (US$15,770) a month this year  following the bank’s solid performance last year when it recorded the highest net profit of Rp 5.31 trillion in its history.

Agus said that a shareholders’ meeting on Monday had approved the pay rise that would also be enjoyed by all Mandiri directors and commissioners.

“That means an additional Rp 16 million for my salary, making a total of about Rp 166 million every month,” he said after the meeting.

Aside from the pay rise, Agus said that the shareholders also approved the distribution of bonuses to the management this year due to  their hard work in keeping the business  strong despite the turbulent global financial crisis.

The bonuses are worth Rp 61.6 billion or equal to 1.16 percent of the bank’s net profits recorded in 2008. However Agus did not mention how much he would earn from the bonus.

There are 11 directors and six commissioners at Bank Mandiri.

Putting these figures aside, Agus’ statement on his salary could be the first such public disclosure by a bank executive in Indonesia, where talking about salaries in the open  has previously been deemed to be taboo and inappropriate.

Prior to these revelations made by the  Bank Mandiri president direc tor, the banking industry only knew reportedly of the take-home pay of the central bank governor, which   is said to amount to Rp 260 million a month.

According to a source in the banking industry, Mandiri’s president director is the second-highest paid executive in the industry after those of Bank Central Asia (BCA), the nation’s third largest lender by assets. BCA president director Djohan Emir Setijoso reportedly earns at least around Rp 180 million a month.

However, Djohan denied the figure, saying that his salary was actually slightly lower than that of Mandiri’s president director. He refused to give precise numbers.

Meanwhile, trailing behind BCA is Bank Rakyat Indonesia (BRI), the second largest lender, which is said to pay a salary to president director Sofyan Basir of between Rp 100 million and 120 million per month. Meanwhile BNI, the fourth largest bank by assets, is said to pay its president director Gatot Soewondo below Rp 100 million.

In response to the Mandiri pay rise and bonuses, economist Aviliani, who was also a commissioner in BRI, said that it was still in the industry’s acceptable range, as banks mostly posted better-than-expected results last year.

Indonesian big banks posted more than 20 percent increases in net profits last year as lending rose by 30 percent on average.

“It is still normal for a big bank like Mandiri to give that amount of money to its bosses, considering the bank’s huge assets,” Aviliani said.

The bank has an asset worth of more than Rp 300 trillion.

Danareksa chief economist Purbaya Sadewa echoed Aviliani, said such pay rises might be carried out to narrow the possibility of poaching of experienced top rank staff by higher offers from other banks.

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