SOE executives comment on salary cuts at two sessions economic forum

By Yuen Yeuk-laam Source:Global Times Published: 2015-3-9 0:08:03

Several senior State-owned enterprises (SOE) executives recently offered their comments on heavy salary cuts after new reform measures were implemented.

During an economic gathering held on Friday as part of the ongoing two sessions' legislative meetings, Lu Qizhou, a political adviser and general manager with China Power Investment Corporation, said his basic salary is 7,800 yuan ($1,245) a month.

He Tongxin, chairman of China General Technology Group, said his salary was cut by nearly half.

Liu Zhenya, chairman of the State Grid Corporation of China, said his income decreased the most of anyone in his company, the Xinhua News Agency reported.

Much discussion followed reform to senior SOE executives' compensation early this year, aiming to limit their income after a meeting of China's leading reform group last year stated that "unreasonably high and excessive incomes must be regulated" in order to push forward SOE structural reforms and balance income gaps in the giant enterprises.

Han Meng, a research fellow with the Institute of Economics of the Chinese Academy of Social Sciences, told the Global Times that the salary cuts are also a result of slower economic growth.

He explained that the salary of senior SOE executives can be divided into three parts: monthly basic salary, performance incentives, and term bonuses.

He added that the reform does not necessarily mean a decrease in their income, since executives could earn more from incentives. Also, incomes may vary in different industries.

"If there is a huge market demand for the industry, the profits of the company will be higher and that would affect the income of the executives directly," he said.

Many netizens have argued that executives should disclose their full incomes, as compensation from incentives could be enormous, leaving huge gaps with compensation for normal employees.

But Han said people should not only look at the amount of salary, but consider the average payment level in the company, the economy and commodity prices to get a bigger picture.

Posted in: Politics

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