Ethiopia’s Sovereign Fund Ties SOE Board Pay to Profitability, Governance

June 2, 2026

Mintesinot Nigussie

Ethiopian Investment Holdings has introduced a new compensation framework that links the remuneration of state-owned enterprise board members to profitability, audit performance and dividend payments, tightening financial and governance standards across federal companies.

The changes replace fixed annual payouts with a performance-based model aimed at pushing boards toward commercially driven oversight, as reported by Addis Fortune.

Under the framework, directors serving on loss-making enterprises will not receive annual cash remuneration. Boards will also lose eligibility for payouts if their institutions fail to secure an unqualified external audit opinion or delay dividend payments owed to the state.

The policy introduces a layered assessment system combining institutional and individual performance metrics. State-owned enterprises will be evaluated on governance quality, operational strength and financial results, while directors themselves will be measured on participation, engagement and professional development.

Sixty percent of the assessment process will be conducted at subsidiary level, while EIH will oversee the remaining 40 percent. Boards ranked in the lowest performance category will automatically forfeit annual remuneration.

Chairpersons will receive rates 15 percent higher than ordinary directors to reflect additional responsibilities and legal exposure. At the same time, the directive bans non-cash privileges including equity awards, in-kind benefits and personal use of company assets.