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<p>This study examines how executive remuneration structure is linked to financial performance within Indonesia’s largest state-owned oil conglomerate, the Pertamina Group. Grounded in Managerial Power Theory (MPT), the analysis disaggregates executive compensation into fixed salary and four non-salary components—bonuses, facilities, pensions, and housing allowances—to distinguish between entitlement-based pay and performance-linked rewards. Using subsidiary-level panel data from 2020 to 2022, the findings reveal that fixed salary is negatively associated with financial performance, while bonus-based and facility remuneration exhibit positive and statistically significant effects. Pension and housing allowances show no significant impact. Robustness tests using return on equity (ROE) confirm the stability of the core results, particularly the performance-enhancing role of bonuses. Overall, the study demonstrates that remuneration effectiveness in state-owned enterprises depends less on total pay and more on its structure and performance sensitivity. These findings extend the empirical application of Managerial Power Theory to emerging-market SOEs and offer policy-relevant insights for designing accountable and performance-oriented executive compensation systems.</p>

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Remuneration structure and financial performance in an Indonesian oil conglomerate from a managerial power perspective

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年4月29日

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  • Yohanes Saptiadi Baptista Nugroho,
  • Djoko Suhardjanto,
  • Wahyu Widarjo,
  • Supriyono

摘要

This study examines how executive remuneration structure is linked to financial performance within Indonesia’s largest state-owned oil conglomerate, the Pertamina Group. Grounded in Managerial Power Theory (MPT), the analysis disaggregates executive compensation into fixed salary and four non-salary components—bonuses, facilities, pensions, and housing allowances—to distinguish between entitlement-based pay and performance-linked rewards. Using subsidiary-level panel data from 2020 to 2022, the findings reveal that fixed salary is negatively associated with financial performance, while bonus-based and facility remuneration exhibit positive and statistically significant effects. Pension and housing allowances show no significant impact. Robustness tests using return on equity (ROE) confirm the stability of the core results, particularly the performance-enhancing role of bonuses. Overall, the study demonstrates that remuneration effectiveness in state-owned enterprises depends less on total pay and more on its structure and performance sensitivity. These findings extend the empirical application of Managerial Power Theory to emerging-market SOEs and offer policy-relevant insights for designing accountable and performance-oriented executive compensation systems.