Many of China's State-owned enterprises (SOEs) cut the salaries of their senior executives in 2015 after the country implemented SOE salary reform last year, according to annual reports released by the firms.
Among the 48 listed SOEs supervised by the State-owned Assets Supervision and Administration Commission of the State Council, chief executives of 18 SOEs have had their annual salaries cut, including oil and gas producers the China National Petroleum Corp and Sinopec Corp.
The biggest salary cut was in Guodian Nanjing Automation Co., Ltd, which cut the salary of its general manager from 518,000 yuan ($80,082) in 2014 to 164,000 yuan in 2015.
The salary reform was passed at a meeting of the Political Bureau of the Communist Party of China Central Committee in August 2014 and was put into effect in January 2015, first beginning with executives of 72 SOEs including PetroChina and telecommunication carrier China Mobile.
Shift in payment structure
The annual salaries of the 48 SOEs' senior executives varied greatly from 60,000 yuan to as much as 6.37 million yuan in 2015, the Beijing Times reported based on the annual reports.
"The aim of 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, previously told the Global Times.
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 losses, Premier Li Keqiang said in March in the annual government work report.
According to the reform, senior executives of 72 central government-administered SOEs will be paid according to the new salary structure which was made up of basic salary, performance-based payments and incentives, Minister of Human Resources and Social Security Yin Weimin, told the press in March.
The 72 central SOEs mostly operate in the finance, energy and telecommunications sectors in which State companies have a monopoly, Zhang Juwei, another research fellow at the Chinese Academy of Social Sciences, told the Global Times.
Linking the reform with the government's campaign against extravagance, President Xi Jinping also emphasized that apart from necessary expenditures permitted by financial and fiscal regulations, SOE executives will enjoy no hidden perks.
The reform now only applies to executives directly appointed by the government, so the salaries of managers who are directly employed by the SOEs are not yet affected, said Lu Qizhou, general manager of the China Power Investment Corporation and a national political advisor, The Beijing Times reported on Wednesday.
Four out of the 48 SOEs actually doubled or even quadrupled the salaries of their senior executives in 2015, including Shanghai Zhenhua Heavy Industry Co., Ltd, which increased the annual payment of its president from 205,300 yuan in 2014 to 894,000 yuan in 2015.
Tightened belts
Before the reform was implemented, many listed companies were criticized for paying huge salaries to their senior executives despite the companies seeing their profits drop.
Baoshan Iron and Steel Co, a Shanghai-listed subsidiary of Baosteel Group Corp, one of the 113 central SOEs, posted a 44 percent fall in net profit in 2013 compared to a year earlier. However, the total payment for its top three executives increased by 10.7 percent year-on-year to 3.55 million yuan in 2013, the company's financial reports showed.
Separately, the annual profits of 42 listed coal producers decreased by 24.3 percent year on year in 2013, while the top three executives in the energy sector were all at coal companies, The Beijing News reported on Wednesday.
In 2015, all the senior managers from the energy firms among the 48 SOEs were paid less after the reform when those companies were performing poorly, said The Beijing News.
The yearly salary of Han Jiangguo, president of the Shenhua Group decreased from 1.23 million yuan in 2014 to 731,000 yuan in 2015, and the salaries of the presidents of Sinopec and PetroChina were also reduced by 46 percent and 35 percent respectively in 2015.
The heads of the "big four" State-owned banks had their salaries cut in half in 2015, news portal chinanews.com reported.
The heads of the above-mentioned State-owned banks, which are all listed, earned less than 1 million yuan in 2015, while none of their yearly salaries was less than 1 million in 2014.
About 631 senior executives from China's listed companies were paid over 1 million yuan last year, and 33 of them were paid over 5 million yuan in 2015, according to the annual report on listed companies, news portal chinanews.com reported on Thursday.
