Top brass may get no pay hikes

Posted 2009-3-10

 

 

Senior executives at nearly a quarter of Chinese companies would see no increase in their compensation packages this year, a survey by human resources consulting firm, Mercer, has found.
In all, 59 companies in China were included in the survey, of which 76 percent were listed companies and 39 percent, multinationals.

Around 34 percent of the surveyed companies said executive bonuses for 2008 would decrease. The average bonus level in Asia was 40 percent for 2008.

The global financial crisis has pushed companies to review executive compensation mechanisms. This is being done to tighten the relationship between executive pay and company strategy.

Around 49 percent of companies in China may adjust their performance evaluation standards in the next 12 months. Nearly 33 percent said they would adjust long-term evaluation standards, the survey revealed.

About 71 percent of the companies surveyed said they had a long-term incentive plan designed to retain talent. Due to the sluggish market, around 14 percent of the companies said the value of their long-term incentive plan (that will be met this year) would be lowered.

Mercer conducted similar surveys in other Asian nations, including India, South Korea, Japan and Singapore.

"In Asia, one-third of the companies surveyed said their senior executives' salaries wouldn't increase in 2009. The proportion in China is a little smaller than the average, indicating that the country is less impacted by the financial crisis," said Zheng Wei, managing director for the Asia executive remuneration business at Mercer.

"Considering the deferred impact on China's market, we expect more companies in China to take similar measures to limit senior executives' pay this year," Zheng added.

Ma Mingzhe, the chairman of Ping An Insurance (Group) Co, received the highest pay package for 2007 in the financial industry, at 66 million yuan. This was a nearly four-fold jump from his 2006 salary and was widely criticized.

About two thirds of Ma's salary in 2007 came from the long-term incentive plan. "Because of the financial crisis, companies should pay much more attention to the validity and rationality of the salary mechanism and make it palatable to staff and public supervisors," said Zheng.


 

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