Regulating by Complexity – Remuneration at State-Controlled Companies

In August 2026, a new government decree introduced new rules governing certain aspects of companies under significant state control. The regulation concerns, among other things, the composition and remuneration of boards of directors and supervisory boards, including the remuneration of their members and chairpersons, as well as the remuneration of executive employees. According to the preamble to the decree, companies subject to the regulation should be governed differently from companies generally, as they are considered to be more complex and therefore require rules that take their specific level of complexity into account.

Companies that are not included in either of the decree’s two exhaustive lists fall into the low-complexity category. By contrast, certain companies are expressly classified by the decree according to their level of complexity. For example, the Paks Nuclear Power Plant is classified as a high-complexity company, while Hungaroring Zrt. falls into the medium-complexity category. This classification is significant, as different rules apply depending on whether a company is classified as low, medium or high complexity.

For example, a high-complexity company may have a board of directors consisting of no more than five members and a supervisory board consisting of no more than six members. The decree also establishes maximum remuneration for the chairpersons of these bodies. In a high-complexity company, the chairperson of the board of directors or the supervisory board may receive remuneration of up to three times the statutory minimum wage. The remuneration of supervisory board members is also subject to category-specific limits. In a high-complexity company, a supervisory board member may receive remuneration of up to twice the statutory minimum wage. The corresponding ceiling is 1.5 times the statutory minimum wage for a medium-complexity company and 0.75 times the statutory minimum wage for a low-complexity company.

The decree also regulates the maximum remuneration of employees classified as executive employees. In a high-complexity company, the monthly gross base salary of an executive employee may not exceed 4.94 times the gross average monthly earnings published by the Hungarian Central Statistical Office (KSH) for the preceding year. The corresponding ceilings are 4.53 times the average monthly earnings for medium-complexity companies and 4.12 times for low-complexity companies. Another important provision concerns senior political office holders. From the effective date of the decree, senior political office holders are not entitled to remuneration in connection with serving as members or chairpersons of the management or supervisory bodies of companies subject to the regulation.

The decree also introduces a limit on performance-related premiums payable to executive employees. As a general rule, the annual premium may not exceed 20% of the employee’s annual base salary. The Government may, however, authorise an exception to this limit in accordance with the procedure set out in the decree. In addition, if the company’s after-tax profit from its business activities is negative, the entity exercising the ownership rights is required to inform the Government of this fact before the premium is paid.