Latvian companies are classified according to three criteria - number of employees, net turnover, and total balance sheet. If at least two of these criteria exceed the medium, the company is considered large. Of the more than 60 state-owned companies, a third are large companies. This group includes Riga Airport, Latvian Railways, Passenger Rail, Latvenergo, Latvian Postal Service and others. Many have more than 250 employees, a net turnover of more than €40 million a year, and a balance sheet total of more than €20 million.
Next year, the large companies will be joined by a single Latvian public media (LSM) employing more than 800 people. Currently, Latvian Television and Latvian Radio are medium-sized separate state-owned companies, with the portal LSM.lv legally under Latvian Television.
Under the current rules, members of the board of directors of large state-owned companies cannot receive a salary that is more than ten times the average gross monthly remuneration of the previous year. Last year, the average monthly gross or before-tax salary received by Latvian citizens was EUR 1,530. So this year, managers of large companies can receive no more than €15,300 per month, excluding possible bonuses.
The salaries of board members must be at least 10% lower than those of chairpersons. This is up to around €13 800 before tax. With the national average salary rising every year, the wallets of boards are getting fatter.
LSM's planned remuneration of more than EUR 10,000 for its board has caused a lot of controversy. President Edgars Rinkēvičs has called for a two-year salary freeze for the boards and councils of state and municipal companies. In turn, in companies where state support exceeds 80% of revenues, salaries should be 20% lower than in private companies of a similar size.
The President intends to present the initiative to the Parliament this week. If the Saeima approves it, then in the case of LSM, the members of the board will earn €1,500 less than expected. The President's initiative sounds reasonable to Leila Rasima (Progressives), head of the responsible committee of the Saeima.
"What should not exist is a huge imbalance between what the top jobs get and what the rest of the staff get. So far, we have not seen this new salary model as a committee. [..] If we compare with neighboring countries, we actually should not cut it very significantly now and in the long term, because we also want to have a strong media, like in Lithuania and Estonia," Rasima said.
The state does not set a minimum salary for company boards, but a look at several large companies shows that management is underpaid, for example in the health sector. At the Pauls Stradins Clinical University Hospital, the CEO received €8,000 a month last year, while board members a few thousand euros less. At the Riga Psychiatric and Narcology Center, only the head of the company earned more than €5,000 a month last year. The board of the Latvian National Opera and Ballet earns up to €7 800 this year.
The most generously remunerated is, for example, the board of Latvian Railways, whose chairman receives €12 000. The CEO of Latvian State Forests receives up to €13,700, while the chairwoman of Riga Airport is paid the highest – more than €15,000 a month.
Of the more than 20 large public corporations, the projected salary of the LSM Board will be roughly in the middle, as stated by Dzintra Gasūne, head of the State Chancellery's Capital Company Management Division, who has compiled an analysis of remuneration in the boards of state-owned companies. It turns out that the State Chancellery has no information on how much the managers of the companies earn.
Gasūne pointed out that the State Chancellery has no information on how the Council of Public Electronic Media (SEPLP) decided to set the monthly salary of a media company's board at more than €10,000.
"It is necessary to see the individual calculation, what was the basis from which the calculation started. What might be a bit confusing here is the fact that [LSM] is a capital company almost entirely financed from the budget. The remuneration for that should probably be at the low end, but because there are going to be big changes, the Board has probably seen that as a significant challenge, and that is why the remuneration has been increased," Gasūne noted.
