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Jesson Global — Home

**For Employers**[**Salary & Compensation**](https://www.jessonglobal.com/insights/topics/salary)Nov 4, 2026·12 min read

# Executive Compensation in Indonesia: The Law by Company Type

Executive compensation law in Indonesia: who sets director pay, OJK rules for listed firms and banks, SOE limits, tax on benefits and full employer cost.

![Jessica Baware](https://www.jessonglobal.com/_ipx/fit_cover&pos_top&q_76&s_44x44/cms-media/jessica-baware.jpeg)

By [**Jessica Baware**](https://www.jessonglobal.com/about#team)

Co-Founder & CEO, Jesson Global

Executive compensation in Indonesia is governed first by the Company Law: the shareholders' meeting (RUPS) sets the pay of directors and commissioners, and it can delegate director pay to the board of commissioners. Listed companies add OJK's nomination and remuneration rules, banks add OJK's remuneration governance rules with bonus deferral, and state-owned enterprises add ministry and Danantara limits. Executives who are employees rather than board members are also covered by labour law, so they get THR, social security and a place in the wage scale.

## Which law governs executive compensation in Indonesia?

No single statute covers executive pay; the rules stack by role and company type. The table maps the main layers, and the sections below explain each one.

| **Company or role** | **Who decides pay** | **Main rules** |
| --- | --- | --- |
| Any limited company (PT): directors and commissioners | RUPS, or the board of commissioners for directors if delegated | UU 40/2007 (Company Law) Articles 96 and 113 |
| Listed or public company | Board of commissioners runs a nomination and remuneration function | POJK 34/POJK.04/2014 |
| Commercial bank | Written policy, remuneration committee, deferral of variable pay | POJK 45/POJK.03/2015 |
| State-owned enterprise (BUMN) | RUPS, within ministry and Danantara limits | Permen BUMN PER-3/MBU/03/2023; Danantara circular of 30 July 2025 |
| Executive employed under a contract | Company wage policy | Labour law: wage structure, THR, BPJS |

Put simply, first ask whether the executive sits on the board or is an employee, and then ask what kind of company it is.

## Who sets pay for directors and commissioners?

The RUPS sets director salaries and allowances, and it can delegate that power to the board of commissioners, which then decides in a board meeting (Company Law Article 96). Commissioners' salary or honorarium and allowances are always set by the RUPS (Article 113). Both articles are quoted as current law in [~~BTN's AGM materials for financial year 2025~~](https://www.btn.co.id/-/media/Files/rups/bahan-materi/2026/IDN-%2D-Bahan-Materi-RUPST-TB-2025.pdf), for its meeting on 23 April 2026.

Because pay is a corporate decision, the body that set it can also change it. A cut to director pay falls within the authority of the RUPS or the board of commissioners and is not a disciplinary sanction, and company performance and finances can be weighed, according to [~~Hukumonline~~](https://www.hukumonline.com/klinik/a/bolehkah-gaji-direksi-dipotong-karena-performa-perusahaan-tak-memuaskan-lt6157053f22b9d/). In practice, a director's pay is only as fixed as the RUPS resolution behind it, so a board member should read that resolution as closely as any contract.

## Are company directors employees in Indonesia?

A director appointed by the RUPS has a corporate relationship governed by the Company Law, not an employment relationship, while a director appointed by the President Director has an employment relationship, according to [~~Hukumonline~~](https://www.hukumonline.com/klinik/a/besaran-gaji-thr-direksi-lt506f4ac6d0325/). The same source notes that THR under Permenaker 6/2016 Article 3(1) applies only to workers, and that BUMN directors receive THR of one month's salary under Article 86 of the BUMN ministry regulation.

| **Point** | **Board director (appointed by RUPS)** | **Employed executive (any title)** |
| --- | --- | --- |
| Legal relationship | Corporate | Employment |
| Pay set by | RUPS or board of commissioners | Employer, within the wage scale |
| THR under Permenaker 6/2016 | No | Yes |
| Can pay be cut by resolution? | Yes, by the RUPS or board | Only within labour law |
| Regulator approval | Required at banks and other financial institutions | Not for the employment itself |

At banks, insurers, finance companies and other financial institutions, a board appointee also needs OJK approval through its fit and proper assessment before acting, even after the RUPS has appointed them ([~~POJK 27/POJK.03/2016~~](https://ojk.go.id/id/regulasi/Pages/POJK-tentang-Penilaian-Kemampuan-dan-Kepatutan-bagi-Pihak-Utama-Lembaga-Jasa-Keuangan.aspx) Article 2). In simple terms, the title "director" on a business card does not decide which rules apply; the appointment does.

## What must listed companies do?

Listed and public companies must have a nomination and remuneration function under [~~POJK 34/POJK.04/2014~~](https://peraturan.bpk.go.id/Download/120716/POJK%2034.%20Komite%20Nominasi%20dan%20Remunerasi%20Emiten%20Atau%20Perusahaan%20Publik.pdf), run by the board of commissioners, which may set up a committee for it. A committee has at least three members, is chaired by an independent commissioner, and may include outside members or a manager below the board who is responsible for HR.

The function drafts the structure, policy and amount of remuneration, and the structure can include salary, honorarium, incentives and fixed or variable allowances. It must weigh pay at similar companies in the industry, the duties and authority of the role, individual performance targets, and the balance between fixed and variable pay. The policy must be evaluated at least once a year, the committee meets at least once every four months, and the company discloses the function in its annual report and on its website.

Put simply, a listed company cannot let the CEO set the board's pay informally; there has to be a documented process, led by an independent commissioner, that is reviewed every year.

## What extra rules apply to banks?

Commercial banks follow [~~POJK 45/POJK.03/2015~~](https://ojk.go.id/en/kanal/perbankan/regulasi/peraturan-ojk/Pages/POJK-concerning-Implementation-of-Governance-for-Commercial-Banks-in-the-Provision-of-Remunerations--.aspx), which splits pay into fixed remuneration (not linked to performance or risk) and variable remuneration (linked to both, such as bonuses). The rules that change a pay package most are below.

| **Rule** | **Article** |
| --- | --- |
| Written remuneration policy with pay scales by level and position | Art. 3 and 4 |
| Remuneration committee chaired by an independent commissioner; directors may not be members | Art. 7 |
| Listed banks pay a set share of variable pay in shares or share-based instruments | Art. 17 |
| In a loss year, variable pay may be withheld or kept small | Art. 19 |
| No unconditional guarantee of variable pay, except in the first year of service | Art. 21 |
| Material risk takers have part of their variable pay deferred for at least three years | Art. 22 to 24 |
| Malus and clawback allowed; no hedging of deferred pay | Art. 26 and 27 |
| Remuneration policy disclosed in the annual governance report | Art. 28 |

In practice, a senior banker's bonus is paid partly later, partly in shares at a listed bank, and can be reduced or taken back if risks from earlier decisions appear. OJK said in November 2025 that it can require a bank to adjust remuneration when bonus policy could hurt its finances or conflict with governance ([~~Infobanknews~~](https://infobanknews.com/ojk-ungkap-dampak-penghapusan-tantiem-dan-bonus-bankir-danantara/)).

## How do state-owned enterprises differ?

BUMN director and commissioner income is set by the RUPS under the BUMN ministry regulation PER-3/MBU/03/2023, as quoted in the BTN materials above, but profit-sharing (tantiem) has extra conditions. Kontan reported in August 2025 that the regulation ties tantiem to an unqualified audit opinion, a health rating of at least BBB and KPI achievement of at least 80% ([~~Kontan~~](https://nasional.kontan.co.id/news/prabowo-bakal-hapus-tantiem-direksi-dan-komisaris-bumn-berapa-besarannya)).

Danantara's circular S-063/DI-BP/VII/2025 of 30 July 2025 then removed tantiem for commissioners, and it limited directors' tantiem to a calculation based on operations or revenue ([~~Infobanknews~~](https://infobanknews.com/danantara-pastikan-aturan-tantiem-direksi-komisaris-bumn-sudah-berlaku/)). Put simply, profit-linked pay on SOE boards is now narrower, so tantiem figures in annual reports from before the circular may not reflect current SOE board pay.

## What labour rules cover employed executives?

An executive on an employment contract is a worker, so the wage, THR and social security rules apply in full, whatever the seniority. Employers must build and apply a wage structure and scale that considers grade, position, tenure, education and competence, and must tell every worker individually, under PP 36/2021 Article 21 as amended by PP 49/2025 ([~~DDTC copy~~](https://perpajakan.ddtc.co.id/en/legal-resource/central-tax-regulations/peraturan-pemerintah-49-tahun-2025)).

THR of one month's wages is due after 12 months of service, pro rata for shorter service, paid in full at least seven days before the religious holiday ([~~Setneg, March 2026~~](https://www.setneg.go.id/baca/index/terbitkan_edaran_thr_keagamaan_2026_menaker_harus_dibayar_penuh_tak_boleh_dicicil)). Social security adds less than it seems at executive pay levels, because the pension (JP) contribution is capped at a wage of IDR 10,547,400 according to [~~BPJS Ketenagakerjaan~~](https://www.bpjsketenagakerjaan.go.id/penerima-upah.html), and the 4% BPJS Kesehatan employer share is capped at a wage of IDR 12 million under Perpres 64/2020 ([~~DDTC copy~~](https://perpajakan.ddtc.co.id/sumber-hukum/peraturan-pusat/peraturan-presiden-64-tahun-2020)).

| **Monthly gross salary** | **Employer cost a year (13 months plus BPJS)** | **In USD at 18,161** | **Rough share the executive keeps after tax** |
| --- | --- | --- | --- |
| IDR 150m | IDR 2,034,611,376 | 112,032 | 73.7% |
| IDR 200m | IDR 2,710,051,376 | 149,224 | 72.8% |
| IDR 250m | IDR 3,385,491,376 | 186,415 | 72.2% |

The cost column uses 12 months of salary, one month of THR, the lowest work-accident tier and no bonus. The tax column is our rough estimate: income tax brackets applied to 13 months of pay minus the IDR 54 million allowance for a single person, before the job-expense deduction and worker contributions. The dollar values use the [~~Bank Indonesia JISDOR rate~~](https://www.bi.go.id/id/statistik/informasi-kurs/jisdor/default.aspx) of IDR 18,161 on 2 November 2026. In simple terms, an executive on IDR 200 million a month costs the company about IDR 2.7 billion a year and keeps a little under three quarters of gross pay after income tax.

## How is executive pay taxed?

Employment income is taxed under PPh 21 at progressive rates of 5% up to IDR 60 million a year, 15% to IDR 250 million, 25% to IDR 500 million, 30% to IDR 5 billion and 35% above that, with an allowance of IDR 54 million for a single person ([~~CNBC Indonesia, December 2025~~](https://www.cnbcindonesia.com/news/20251224091852-4-696923/cek-hitungan-pajak-2026-bagi-karyawan-gaji-umr-rp-10-juta)). Employers withhold monthly at effective rates (TER), but TER does not change the year's total, because the year-end calculation still uses the Article 17 brackets ([~~DJP~~](https://www.pajak.go.id/index.php/en/node/104043)).

Benefits in kind have been taxable since 1 July 2023 under PMK 66/2023 ([~~DJP~~](https://www.pajak.go.id/en/node/99241)), with exempt limits that matter for executive packages. DDTCNews lists them: individual housing up to IDR 2 million per month, work tools such as laptops and phones without a limit when they support the work, and gifts up to IDR 3 million a year, while a company car is exempt only for staff whose average gross income over the last 12 months is IDR 100 million or less ([~~DDTCNews~~](https://news.ddtc.co.id/berita/nasional/1807294/begini-perincian-batasan-natura-dan-kenikmatan-yang-bebas-pph)).

Put simply, the car and the house in an executive package are now taxed as income above those limits, so price them as pay rather than as free extras.

## What changes for foreign executives?

A foreign executive adds the DKPTKA levy of USD 100 per position, per person, per month under Permenaker 8/2021, according to a [~~Hukumonline summary~~](https://pro.hukumonline.com/a/lt609a45e479561/regulation-of-the-minister-of-manpower-no-8-of-2021-on-the-implementing-regulation-to-regulation-of-the-government-no-34-of-2021-on-the-recruitment-of-foreign-workers/). That is USD 1,200 a year, which is small next to an executive salary but must be budgeted with the permit timeline. The [~~general manager salary guide for Jakarta~~](https://www.jessonglobal.com/insights/general-manager-salary-jakarta) shows the same levy inside a full-cost table.

## What do executives in Indonesia earn?

The newest named ranges are Adecco Indonesia's 2026 guide, as reported by [~~detikFinance~~](https://finance.detik.com/berita-ekonomi-bisnis/d-8562275/daftar-pekerjaan-dengan-gaji-minimal-rp-100-juta-di-indonesia), which states its figures as gross monthly salary.

| **Role (Adecco 2026)** | **IDR a month, gross** |
| --- | --- |
| CEO / Managing Director | 150m–300m |
| CFO | 150m–250m |
| COO | 150m–250m |
| General Manager | 100m–200m |
| Country Manager | 100m–150m |

These are employed-executive ranges, not the pay of board members at large listed groups, whose total remuneration is disclosed only as a board total. For role-by-role detail, see the [~~CFO salary ranges in IDR and USD~~](https://www.jessonglobal.com/insights/cfo-salary-indonesia), and for how to combine sources, the [~~salary benchmark guide~~](https://www.jessonglobal.com/insights/salary-benchmark-indonesia). Readers who work in Bahasa can use the [~~guide to director and commissioner remuneration~~](https://www.jessonglobal.com/insights/remunerasi-direksi-komisaris), which covers the same rules for boards in more depth.

## What is changing in 2026?

Parliament passed the UU Pelindungan Ketenagakerjaan (Labour Protection Law) on 6 October 2026, but on 22 October the Minister of Manpower said the text was still being processed at the State Secretariat ([~~Pasardana~~](https://pasardana.id/news/2026/10/22/menaker-uu-perlindungan-ketenagakerjaan-sedang-dalam-proses-di-setneg)). We found no law number on 4 November 2026. In practice, the wage, THR and social security rules above stay in force until the new law is promulgated and its own transition starts, so review employed-executive contracts once the official text appears.

## Executive compensation checklist

Use this list before you approve an executive package. Each item points to the rule behind it.

1. Confirm whether the person is appointed by the RUPS or employed, because that decides whether labour law applies (Company Law; Permenaker 6/2016).
2. Check that a valid RUPS resolution, or a delegation to the board, covers the pay (Company Law Article 96).
3. For a listed company, route the package through the nomination and remuneration function and keep the minutes (POJK 34/2014).
4. For a bank, set the deferred share of variable pay, the malus and clawback terms and any first-year guarantee (POJK 45/2015 Articles 21 to 27).
5. For an SOE, check tantiem against the ministry conditions and the Danantara circular.
6. For an employee, place the salary in the wage scale and budget THR and capped BPJS contributions (PP 36/2021 as amended; Perpres 64/2020).
7. Price housing, cars and other benefits as taxable income above the PMK 66/2023 limits.
8. Add DKPTKA for a foreign hire (Permenaker 8/2021).

## Need help hiring an executive in Indonesia?

Jesson Global runs [~~executive search~~](https://www.jessonglobal.com/executive-search) for Director-level and C-suite roles across Indonesia and Southeast Asia, led by a senior consultant on every search. A shortlist of 3 to 5 vetted profiles usually follows within 4 to 6 weeks, which gives your board time to settle the package and the approvals above.

## FAQ

### **Who approves executive pay in Indonesia?**

For directors and commissioners of a limited company, the shareholders' meeting (RUPS) approves pay under Company Law Articles 96 and 113, and it may delegate director pay to the board of commissioners. Listed companies must also run the decision through a nomination and remuneration function under POJK 34/2014. For employed executives, pay is set by the employer within its wage structure and scale.

### **Do listed companies in Indonesia disclose executive pay?**

Listed and public companies must disclose their nomination and remuneration function in the annual report and on their website under POJK 34/2014. Banks must also disclose their remuneration policy, including deferred variable pay and malus and clawback terms, under POJK 45/2015 Article 28. Media figures for bank boards are usually board totals from financial statements, not pay for each named person.

### **Are company directors entitled to THR in Indonesia?**

THR under Permenaker 6/2016 applies to workers, so a director appointed by the RUPS, who has a corporate rather than employment relationship, is not covered by that rule. A director appointed by the President Director is an employee and is covered. BUMN directors receive THR of one month's salary under the BUMN ministry regulation.

### **How are executive benefits taxed in Indonesia?**

Since 1 July 2023, benefits in kind are taxable under PMK 66/2023, with exempt limits. Individual housing is exempt up to IDR 2 million a month, work tools are exempt when they support the work, and a company car is exempt only for staff whose average gross income over the last 12 months is no more than IDR 100 million. Above those limits, the benefit is taxed as employment income.

### **What is tantiem?**

Tantiem is a share of profit paid to directors and commissioners after the financial year closes, and banks treat it as variable remuneration under POJK 45/2015. For state-owned enterprises, Danantara's circular of 30 July 2025 removed tantiem for commissioners and limited directors' tantiem to a calculation based on operations or revenue.

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