China News Network, March 3 (Zhongxin Financial Reporter Xie Yiguan) "Last year's year-end bonus 'shrunk' was relatively sharp, compared with previous years, it was a little worse. An employee of a brokerage company in Beijing told reporters when talking about income.

For a long time, "elite industry" and "high income" have become the labels of the financial industry, and the topic of high salary in the brokerage industry has even appeared on the hot search many times. However, the reporter learned that in 2022, many brokerage employees have reduced their salaries.

A number of securities firms disclosed that the remuneration payable to employees decreased

Recently, the 2022 annual report released by China Merchants Securities showed that the business and management expenses in 2022 were 86.49 billion yuan, a year-on-year decrease of 21.86%. In this regard, China Merchants Securities explained that the decrease in performance-based pay was mainly due to the decline in revenue.

How much did the salary fall? According to the financial report, in 2022, the remuneration payable by China Merchants Securities to employees will be 65.59 billion yuan, a year-on-year decrease of 20.81%.

The screenshot is from the annual report of China Merchants Securities.

According to media reports, according to the total salary of the current period = the remuneration payable at the end of the period - the remuneration payable at the beginning of the period + the cash paid to employees and for the employees, in 2022, the total salary of employees of China Merchants Securities was 57.89 billion yuan, and the company had 12488,46 employees (including senior management) at the end of last year, based on this calculation, the per capita salary of China Merchants Securities was about 36,<> yuan.

According to the above calculation, in 2021, the per capita salary of China Merchants Securities will be about 68,96 yuan, which also means that in one year, the per capita salary of China Merchants Securities will drop by about 22,6 yuan.

Not only the decline in employee salaries payable by China Merchants Securities, as of press time, a total of 6 listed securities firms or brokerage parent companies of Cinda Securities, Founder Securities, Oriental Wealth, China Merchants Securities, Guoyuan Securities and Guoyuan Securities, the parent company of Essence Securities, disclosed their latest annual reports, except for Founder Securities and Orient Wealth, the other 4 showed a decline in employee compensation data in 2022.

In addition, some brokerage strategists told First Finance and Economics that the salary reduction process has been completed after the Spring Festival this year. "We went straight to the eight-fold discount." According to its understanding, most employees have some degree of salary adjustment.

"Relying on the sky to eat", resulting in a decline in the salary of brokers?

"In China, the salary of securities companies has the phenomenon of 'relying on the sky to eat', and the year with a good market earns more, and in a year with a bad market, it may face salary cuts or even layoffs." Dong Dengxin, director of the Institute of Financial Securities of Wuhan University of Science and Technology, told Zhongxin Financial Reporter.

In 2022, due to the volatility of the A-share market, the overall performance of the securities industry is relatively weak. According to statistics from the Securities Association of China, at the end of 2022, 140 securities companies achieved operating income of 3949.73 billion yuan, down 21.38% year-on-year, and net profit of 1423.01 billion yuan, down 25.54% year-on-year.

The reporter combed and found that the revenue of the above six listed securities companies or the parent company of securities firms, except for the national investment capital, the remaining five have declined; In terms of net profit attributable to shareholders of listed companies, China Merchants Securities, Guoyuan Securities, Guoyuan Securities and Orient Wealth decreased by 5.30%, 68.38%, 63.9% and 24.0% respectively from the previous year.

In contrast, due to the good performance of securities firms in 2021, the salary of securities company employees increased significantly. According to the Industrial Securities Research Report, in 2021, under the background of the continued upward trend of industry profitability, the salary scale of employees of listed securities firms achieved a general increase, and the total employee compensation scale of 17 sample securities companies increased by 18.7% year-on-year to 1270.26 billion yuan.

China Merchants Securities also mentioned in its 2021 annual report that revenue growth has led to an increase in performance-based pay. This is in stark contrast to 2022's "lower revenue leads to less pay for performance".

Data map: Beijing Financial Street. Photo by China News Agency reporter Hou Yu

Salary cuts in the financial sector are the trend of the times

In recent years, brokerage remuneration has become a topic of conversation many times. In January 2022, the suspected chief analyst of Zhongtai Securities posted an annual income salary slip of 1.224 million yuan on social platforms, which attracted the attention of netizens and was later denied by the parties; In July 2022, it was rumored online that the spouse of a trader at CICC posted her husband's income certificate, which once again made the topic of high income for brokerage employees very popular.

In order to improve the salary incentive and constraint mechanism of securities firms, in May 2022, the Securities Association of China issued the Guidelines for Securities Companies to Establish a Robust Remuneration System, which mentions that "the salary standards are determined based on the actual situation of the company and the market level, and the salary levels of personnel in different positions and positions are balanced", "excessive incentives are not implemented through independent assessment methods such as direct proportional sharing, and the salary income of employees is not directly linked to the income of projects they undertake or undertake".

In 2023, the website of the Central Commission for Discipline Inspection and the State Supervision Commission, and the website of the China Banking and Insurance Regulatory Commission have successively published articles, proposing to break the erroneous ideas such as "financial eliteism" and "money-only theory".

According to the 21st Century Business Herald, a number of securities insiders said that the decline in salary is already the general trend, and this round of salary cuts by securities firms may be the first for large securities firms, especially the state-owned asset system.

Recently, there is market news that a leading brokerage has officially issued a salary cut, and the salary reduction ratio of different levels is 30%~50%, but the news has not been confirmed.

In Dong Dengxin's view, from the perspective of the stability and long-term operation of financial institutions, their salary systems should also be structurally adjusted, and in terms of specific reforms, they can learn from some practices of mature markets in other countries. For example, in the Western financial industry such as the United States, especially investment bank brokers, the executive compensation is generally relatively reduced cash remuneration and expanded deferred compensation. "Most of this deferred remuneration has incentive mechanisms, such as stock options, performance-related bonuses, etc., which can be paid in installments in the future."

The reporter noted that the deferred payment mechanism has also been mentioned by relevant departments many times. The above-mentioned Guidelines for Securities Companies to Establish a Robust Remuneration System mentioned that when formulating a remuneration system, a securities company should establish a deferred payment mechanism for the chairman, senior management, heads of major business departments, heads of branch offices and core business personnel.

In August 2022, the Ministry of Finance issued the Notice of the Ministry of Finance on Further Strengthening the Financial Management of State-Owned Financial Enterprises, which also clarifies that for senior managers of financial enterprises and employees in positions that have a direct or important impact on risks, the basic salary is generally not higher than 8% of the total remuneration. More than 35% of performance-based remuneration shall be deferred payment, and the deferred payment period shall generally not be less than three years. (End)