OPINION> Commentary
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OPINION> Commentary
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Undeserved benefits
(China Daily)
Updated: 2009-02-09 07:40 Despite the economic downturn, some State-owned financial companies are still offering their executives lavish salaries. Their failure to recognize the nature of the crisis and take responsibility has upset the public. We demand the firms exercise restraint. A case in point is Guotai Jun'an Securities Co, a leading State-controlled brokerage firm. It is reportedly ready to pay a total of 3.2 billion yuan ($470 million) in salaries and welfare costs for its 3,200 employees. It is natural that China's average workers, especially people who lost heavily by investing in A shares, are enraged by this. The company's argument that the payroll consists of accumulated surplus from previous years has done nothing to assuage the public dismay. People wonder if it is the right thing to do at this time - handing out such a big fortune when the economic slowdown has led to loss of jobs and reduction of salaries for many. Many firms are slashing executive pay and practicing tighter budgets. These are better alternatives to layoffs to get through the crisis.
In recent years, executives in China's financial firms have been arguing that they should be paid on par with their Western counterparts. And in 2007 their salaries grew more than 200 percent in general. While their US counterparts got a salary cap for bailout out of what President Obama called 'basic common sense', some Chinese executives do not seem to share such a sense and still hold onto short-term gains. The Guotai Jun'an case reflects not only a narrow-minded pursuit of self-interest. It also serves as a reminder of the need to set up a fair and open mechanism to align executive compensation with job performances. The Ministry of Finance's recent measures to regulate executive compensation in State-owned financial institutions are an encouraging move toward this end. However, as the case in point illustrates, for some State-owned firms it is difficult to tell whether their success is a result of executive performance or administrative privilege or their monopolistic position. Guotai Jun'an has the muscle to fork out a big sum for salaries because it received 4.5 billion yuan by cashing in corporate shares last year. But it could not have obtained the corporate shares at extremely low prices without its status as a major State-controlled brokerage firm. Therefore it is wrong to attribute the profits to the performance of company leaders and grant them bonuses accordingly. Some critics are not without reason in equating it with stealing State assets. Such a practice is glaringly irresponsible at such a difficult time. For the long-term health of our economy, a clear line must be drawn between good job performance and monopoly on a pay scale. It is wrong to reward executives for failures. It is also unfair to reward them for success in which their contribution is purely fortuitous. (China Daily 02/09/2009 page4) |
