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SOE salary reform policies to be rolled out

2015-03-11 08:51 Global Times Web Editor: Qian Ruisha

Key will be to publicize executives' pay information

China has implemented a new reform plan on payment to top executives at China's major State-owned enterprises (SOEs), and detailed policies to support the plan are likely to be announced later this month, the country's human resources minister said on Tuesday.

Senior executives of central government-administered SOEs will be paid according to the new salary structure which was made up of basic salary, performance-based payment and incentive income during their tenure, Yin Weimin, minister of human resources and social security, said at a press conference on the sidelines of the ongoing session of the national legislative body.[Special coverage]

Executives' basic salaries will be capped at twice the amount of average staff salaries and paid monthly while performance-based payments will not be more than twice their basic salaries and determined based on the operation scale and performances of the companies, Yin said.

Incentive income, determined based on performance review during their three-year tenure, will not exceed 30 percent of their combined basic salary and performance-based salary, Yin noted.

China passed a reform plan for the payment packages of executives of central SOEs at a meeting of the Political Bureau of the Communist Party of China Central Committee in August 2014.

The plan has been put into effect in January and executives of 72 SOEs including oil and gas producer China National Petroleum Corporation and telecommunication carrier China Mobile are subject to the new salary plan, media reported in January.

During the ongoing two sessions, some SOEs' executives revealed the amount of their salaries or commented on the changes to their salaries under the new plan.

Lu Qizhou, general manager of China Power Investment Corporation and a political advisor, said on Friday during a panel discussion that his basic salary is 7,800 yuan ($1,246) per month.

Xi Guohua, chairman of China Mobile and a political advisor, told reporters after a panel discussion on Friday that his pay has been lowered following the reform of executive pay at centrally administered SOEs.

Without disclosing the exact decline, Xi said his pay is currently linked to his performance.

"The key to reforming the salaries of SOE executives is to publicize the amount of their salaries to make it transparent and easy to be monitored," Xu Baoli, a director at the research center of the State-owned Assets Supervision and Administration Commission, told the Global Times Tuesday.

The salary reform is part of a broader reform plan for SOEs. China will seek to improve the modern enterprise system, reform the incentive and restraint mechanism for managers, and strengthen the supervision of State-owned assets to prevent their loss, Premier Li Keqiang said on Thursday in the annual government work report. "The aim of the salary reform is not to simply cut executives' salaries but change the unreasonable structure of their salary packages," Zhang Chunxiao, a research fellow at the Chinese Academy of Governance, told the Global Times Tuesday.

"The reform should proceed in an orderly way given the important role SOEs play in the economy and all related executives' salary information can be made public except if it involves State secrets and security," Zhang said.

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