Follow up on high salaries: Can personal contributions support the "sky-high" salary?

　　Sino-Singapore Jingwei, January 12 (Gao Boning Lin Jian) ​​In the past year, the high salary and equity incentives of corporate management have become the focus of the market, causing several discussions: why some companies are heavily indebted, but executives are not With huge pay?

Why do some executives make limited contributions and still receive huge salaries?

　　In the voice of public opinion, the voices of "restricting super-high wages" and "paying according to labor" are endless.

At present, under the background of deepening the reform of income distribution and solidly promoting common prosperity, how to regulate the compensation of executives of listed companies and establish a long-term incentive mechanism between corporate governance and compensation structure is of practical significance.

The difficulty lies in deciphering the effective connection between the market mechanism and the restraint mechanism, and then balancing the interests of multiple parties.

Behind the sky-high price: the disparity in the compensation of A-share executives

　　The executive compensation of listed companies generally refers to the compensation of directors, supervisors and senior management personnel.

China has clear regulations and guidance on the formulation and disclosure of executive compensation of listed companies.

The "Company Law" stipulates that the remuneration and appraisal committee of the board of directors of listed companies is entrusted by the shareholders' meeting and is responsible for researching and reviewing the remuneration policies and plans of directors and senior management personnel, and listed companies shall regularly disclose to shareholders the information of directors, supervisors and senior management personnel from the company. Getting paid.

The "Governance Guidelines for Listed Companies" stipulates that the remuneration distribution plan for senior executives should be approved by the board of directors, explained to the general meeting of shareholders, and fully disclosed.

　　At present, there is a huge disparity in the compensation of executives of listed companies in China.

　　Recently, the "China Listed Company Governance Classification Index Report NO.20 (2021)" written by Gao Minghua, director of the Corporate Governance and Enterprise Development Research Center of Beijing Normal University, investigated and studied the overall executive compensation of 3,774 A-share listed companies in 2020. situation, and include the equity incentives obtained by executives into the statistics.

The survey results show that among the A-share listed companies included in the statistics, the maximum executive compensation in 2020 is 34.783 million yuan, and the minimum is only 11,900 yuan. The gap between the maximum and minimum values ​​is very large, and the median is 814,200 yuan, with an average of 1,156,900 yuan.

　　According to Gao Minghua, the average salary of the top three executives with the highest salary disclosed in the annual report of the listed company (including the stock options, restricted stocks and stock appreciation rights that will be exercised in 2020 are converted into cash compensation) to represent the listed company's high salary. In terms of the overall salary situation,

　　On this basis, Sino-Singapore Jingwei attempts to further unveil the "veil" of executive compensation of Chinese listed companies.

Since the latest fiscal year 2021 data has not yet been published, the fiscal year 2020 data has been selected.

　　According to Wind data, from the perspective of industry distribution, among the 30 A-share listed companies with the highest chairman salary, 7 companies belong to the real estate industry, 6 companies belong to the pharmaceutical, biotechnology and life science industries, and 3 companies belong to the medical care equipment and In the service industry, 3 belong to the technical hardware and equipment industry.

　　Specifically, in 2020, among the 4,628 A-share listed companies, there are 16 chairmen with an annual salary of over 10 million yuan, and 4 of them with a salary of over 20 million yuan.

In 2020, the chairman with the highest salary is Jiang Sihai, the then chairman of the private housing company Jinke Co., Ltd., with an annual salary of 25.9345 million yuan; Li Xiting, chairman of Mindray Medical, followed closely with an annual salary of 25.1762 million yuan; Pengding Holdings and Yili Co., Ltd. The chairman of the board receives an annual salary of 25.104 million yuan and 21.4866 million yuan respectively.

　　Sino-Singapore Jingwei checked the past data and found that the chairman of the above four companies is also at the forefront of the chairman's salary list in 2019.

It is worth mentioning that in the annual financial reports of the above-mentioned companies, there are similar expressions such as "the compensation of the company's senior management is linked to the company's operating performance indicators".

　　It is not difficult to find that due to the different nature, industry, region, strategic objectives and operating performance of the company, the corresponding executive compensation levels are also different, but they all have one thing in common, that is, the source of income of executives Not just basic salary.

　　Generally speaking, the remuneration of executives consists of "basic annual salary, performance-based annual salary, tenure incentives, and medium and long-term incentives".

Wind data shows that in 2020, the annual salary of the chairman of 527 listed companies in A-shares shows zero, but such executives mostly receive salaries from affiliated units of listed companies, or hold high stock market value.

That is to say, despite receiving a very low annual base salary, they can still get a lot of wealth.

　　Taking Zhou Lichen, chairman of Heilan House as an example, although the company's financial report stated that his salary was zero yuan, the number of shares he held at the end of the reporting period was 5.6134 million shares, and the reference stock market value at the end of the period was 36.0378 million yuan.

The real estate company Yongji Co., Ltd. once responded to investors in a high-profile manner on the investor platform, saying that the company's chairman Deng Daixing's annual salary in 2020 will be 1 yuan.

At the same time, Deng Daixing's stock market value at the end of the period was 17.4698 million yuan, and he received remuneration from affiliated units of the listed company.

　　In recent years, the executive compensation level of companies to be listed has also attracted the attention of regulators.

Sino-Singapore Jingwei found that when the China Securities Regulatory Commission reviewed the (planned) listed companies, it repeatedly mentioned the issue of executive compensation.

Sino-Singapore Jingwei has roughly sorted out the IPO and refinancing feedback of various companies from 2018 to 2020, and found that when it comes to salary issues, the CSRC mainly focuses on whether the company has a salary system and compares the reasonable salary level of the same industry. , the compliance of its salary disclosure, and whether there is any abnormal fluctuation in the salary level compared with the past.

Equity Incentives: More Work and More Rewards or a Shortcut to "Gaining Wealth"

　　After sorting out the overall situation of executive compensation of listed companies in 2020, Sino-Singapore Jingwei found that equity incentives have become an important source of executive compensation.

For example, Lin Xiaohai, who will take over as CEO of RT-Mart in 2021, signed a service agreement with Sun Art Retail, a Hong Kong-listed company. According to the service agreement, Lin Xiaohai has the right to receive a remuneration of HK$1 per year for the CEO of Sun Art Retail.

　　It is not difficult to find that from the perspective of corporate governance, equity incentives have been recognized and used by more and more companies as a benefit distribution model that motivates core team members to forge ahead and share in the future.

Among them, the introduction of incentive plans to executives has become an effective means to enhance the core competitiveness of enterprises.

　　Tian Xuan, deputy dean of the National Institute of Financial Research of Tsinghua University, said in an interview with Sino-Singapore Jingwei that equity incentives combine corporate development with executive performance by turning executives into shareholders, helping the company's long-term development.

　　Sino-Singapore Jingwei noted that on August 13, 2016, the "Administrative Measures for Equity Incentives of Listed Companies" was officially implemented.

According to Wind data, in 2021, a total of 863 A-share listed companies have implemented equity incentives.

　　In Tian Xuan's view, the

　　Yang Baoquan, a labor law expert and senior partner of Zhongyin Law Firm, told Sino-Singapore Jingwei that at present, some corporate executives have a certain degree of autonomy in the formulation and implementation of equity incentive plans, especially when the constraints and supervision mechanisms are not perfect. Senior executives may use their status as an insider to control the arrangement of incentive plans, resulting in non-independent, objective, and unfair decision-making in the design and implementation of equity incentive plans. As a result, the implementation of equity incentives not only fails to exert a governance effect, but instead helps executives. Personalizing the interests of the enterprise provides a greater room for maneuver.

"In the equity incentive plan, there are many listed companies that are obviously suspected of transferring benefits.

Before launching the equity incentive plan, some companies intend to lower the performance of listed companies, thereby reducing the performance base of equity incentives. Some companies are not satisfied with the 'half price' Incentives', simply launch an incentive plan with a price of 'zero yuan', so that the company's executives can get a lot of equity incentive shares. said when.

　　Sino-Singapore Jingwei found that in addition to the possible loopholes in the transmission of interests, the actual operation of this mechanism is also worrying.

In corporate governance, the remuneration and appraisal committee under the board of directors of a listed company is responsible for formulating specific remuneration packages for all directors and senior managers.

　　Zheng Zhigang, a finance professor at the School of Finance of Renmin University of China, told Sino-Singapore Jingwei that in some companies that have not yet established a governance structure of standardized checks and balances, the excessive compensation of executives that does not seem to be "reasonable" is proposed by the board of directors and voted by the shareholders' meeting. issued in a "legal" way.

In his view, the emergence of the above phenomenon may be related to the "failure" of the compensation and appraisal committee of the board of directors.

"The committee isn't really independent, and it's heavily influenced by the executives who are being paid."

Remuneration setting: should be closely linked with personal contribution

　　Tiger ESOP is an employee equity option incentive solution service provider under Tiger International. The relevant person in charge of the company told Sino-Singapore Jingwei: "In the process of implementing equity incentives, companies will be relatively flexible and adapt to local conditions from the perspective of initiative. Design your own equity incentive plan. A good equity incentive plan must have two core elements: one is legal compliance, and equity incentives are implemented under the provisions of national policies. The second is the incentive effect of equity incentives. It is in line with the current situation and needs of the company’s business.”

　　Xingong Co., Ltd. is a company specializing in providing corporate management consulting services for listed companies, companies to be listed and their stakeholders.

Zhong Yuhui, a researcher in the company's industry research department, said in an interview with Sino-Singapore Jingwei that there are currently no relevant regulations on the rationality of executive compensation levels. Faced with the large gap in executive compensation levels between different companies, it is not possible to rely solely on the amount of salaries. To judge its rationality, specific cases should be analyzed in detail.

　　In Gao Minghua's view, the

"Listed companies with relatively high absolute value of executive compensation also have insufficient incentives, and companies with relatively low absolute compensation also have excessive incentives."

Several interviewed experts said that executive compensation should be linked to individual contributions.

Zheng Zhigang said that if there is a significant sensitivity between a company's executive compensation and corporate performance, it will be considered that the company's compensation incentives designed for executives are effective, and it is good to link compensation with performance. To incentivize executives to work hard, it is completely worthwhile to increase executive compensation to enable the company to achieve greater value enhancement.

　　There is no doubt that the construction of the compensation system of listed companies is gradually improving.

Sino-Singapore Jingwei noted that on September 30, 2018, the China Securities Regulatory Commission issued the revised "Governance Guidelines for Listed Companies" to regulate corporate governance and executive compensation incentive mechanisms.

　　So, how will the compensation system of Chinese listed companies be further improved?

　　Zhong Yuhui believes that

they need to express their opinions on the "equity incentive plan".

"Independent directors or the board of supervisors may, if deemed necessary, suggest that the listed company hire an independent financial advisor, and express professional opinions on matters such as the feasibility of the equity incentive plan and the impact on shareholders' interests. If the listed company fails to hire an independent financial advisor as recommended, it should A special note on this matter."

　　Tian Xuan told Sino-Singapore Jingwei that because decision-making results are interfered by various factors such as time lag and changes in the objective environment, it is often difficult to determine the degree of impact of executive decision-making on performance.

He suggested that listed companies can add some objective elements as auxiliary variables, set up dynamic models, and reasonably evaluate executive performance and compensation ranges on the basis of compensation performance sensitivity indicators.

"When formulating incentive plans, listed companies must strictly set up restraint mechanisms such as performance evaluation mechanisms, exercise conditions, and supervision mechanisms."

　　In Zheng Zhigang's view,

"Different roles in an enterprise have different contributions, and the final salary is naturally different. This is a reasonable result. In key positions, those who play key roles are motivated and receive high salaries. They can Better play its important role. But in addition, companies cannot ignore ordinary employees, whose benefits should match their dedication, not lagging behind.” (Sino-Singapore Jingwei APP)

(The opinions in this article are for reference only and do not constitute investment advice. Investment is risky, and you need to be cautious when entering the market.)

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