[HELSINKI] State-controlled but listed Finnair said on Wednesday its board member in charge of the airline's management compensation issues would quit at the next shareholder meeting following a row with the government.

The airline's board had approved a supplementary pension arrangement for chief executive Pekka Vauramo, counter to the state's recommendations for companies in which it holds significant stakes.

That prompted an angry comment from economy minister Mika Lintila, who said in October that he could propose changes to the board.

Finnair said on Wednesday that Jussi Itavuori, the chairman of the board's compensation and nomination committee, had informed the company he would quit the board at the next shareholder meeting on March 20.

The company proposed former Air Canada CEO Montie Brewer and Henrik Kjellberg, a former executive at travel company Expedia, as new board members.

Minister Lintila said he had been informed on the proposal in advance and that he hadn't pressured Mr Itavuori.

"He has made his own decision, I had nothing to do with it," he told Reuters.

The state owns 55.8 per cent of Finnair. Itavuori was not available for a comment.

The airline has faced many uproars over executives' compensation. In 2012, the government replaced six of its board members due to lack of openness in compensation decisions.

Boardroom pay is a sensitive subject in Finland, which has just gone through a long period of economic stagnation and where the government has recently cut workers' benefits.

CEO Vauramo was granted an annual supplementary pension of 20 per cent of his fixed compensation equal to about 130,000 euros (S$212,000).

In the past years, the government has looked into scrapping a clause that obliges the state to own more than 50 per cent of Finnair, but Mr Lintila said there were no such talks going on at the moment.

REUTERS