China’s government has set limits on executive pay for 2008 at state-owned financial companies, reports the Wall Street Journal.
Total compensation last year was capped at 90 percent of the amount executives received in 2007, the Ministry of Finance said in a brief statement.
Around the world, executive pay has become an increasingly volatile issue as company performance has declined and CEO pay packages are viewed as excessive.
“In recent years, with the continued deepening of reform in China’s financial sector … compensation levels in the industry have increased rapidly,” which has “clearly widened the gap with average levels in society and among other employees,” the finance ministry said in its statement. The ministry’s pay caps were designed mainly to “help the fair distribution of income in society” and “protect the interests of the country and of shareholders,” the Ministry told the WSJ.
Concern over executive compensation isn’t limited to the state sector, and not all China’s financial firms have fared so well. Last month, Ping An Insurance of China–one of the few major financial companies in China that isn’t majority owned by the central government–said Chairman Ma Mingzhe had decided to forgo his salary for 2008 entirely.
In 2007, Ma received 66 million yuan, or about $9.6 million, in compensation, a level that prompted criticism from some Chinese commentators. Ping An this week reported a 99 percent plunge in net profit for last year, thanks to an impairment charge of about $3.33 billion on its stake in Dutch-Belgian financial firm Fortis NV and to losses on investments.