Undeserved benefits

Special Report:Global Financial Crisis

BEIJING, Feb.9 -- Despite the economic downturn, some State-owned financial companies are still offering their executives lavish salaries. Their failure to recognize the nature of the crisis and take responsibility has upset the public. We demand the firms exercise restraint.

A case in point is Guotai Jun'an Securities Co, a

leading State-controlled brokerage firm. It is reportedly ready to pay a total

of 3.2 billion yuan ($470 million) in salaries and welfare costs for its 3,200

employees.

It is natural that China's average workers,

especially people who lost heavily by investing in A shares, are enraged by

this.

The company's argument that the payroll consists of

accumulated surplus from previous years has done nothing to assuage the public

dismay. People wonder if it is the right thing to do at this time - handing out

such a big fortune when the economic slowdown has led to loss of jobs and

reduction of salaries for many.

Many firms are slashing executive pay and practicing

tighter budgets. These are better alternatives to layoffs to get through the

crisis.

In recent years, executives in China's financial

firms have been arguing that they should be paid on par with their Western

counterparts. And in 2007 their salaries grew more than 200 percent in general.

While their US counterparts got a salary cap for

bailout out of what President Obama called 'basic common sense', some Chinese

executives do not seem to share such a sense and still hold onto short-term

gains.

The Guotai Jun'an case reflects not only a

narrow-minded pursuit of self-interest. It also serves as a reminder of the need

to set up a fair and open mechanism to align executive compensation with job

performances. The Ministry of Finance's recent measures to regulate executive

compensation in State-owned financial institutions are an encouraging move

toward this end.

However, as the case in point illustrates, for some

State-owned firms it is difficult to tell whether their success is a result of

executive performance or administrative privilege or their monopolistic

position.

Guotai Jun'an has the muscle to fork out a big sum

for salaries because it received 4.5 billion yuan by cashing in corporate shares

last year. But it could not have obtained the corporate shares at extremely low

prices without its status as a major State-controlled brokerage firm.

Therefore it is wrong to attribute the profits to the

performance of company leaders and grant them bonuses accordingly. Some critics

are not without reason in equating it with stealing State assets.

Such a practice is glaringly irresponsible at such a

difficult time. For the long-term health of our economy, a clear line must be

drawn between good job performance and monopoly on a pay scale. It is wrong to

reward executives for failures. It is also unfair to reward them for success in

which their contribution is purely fortuitous.

(Source: China Daily)

Guotai Junan's incredible large

payroll: 1 mln yuan per

person


BEIJING, Feb. 5

-- The year 2008 wasn't a lucky year for domestic securities firms -- the

Chinese stock market experienced the worst performance in its history and the

Shanghai Composite Index plunged by about 65 percent in just one year. Almost

all securities firms have been reducing expenses by making pay cuts and layoffs.

However, based on a recent internal report obtained by National Business Daily,

the Guotai Junan Securities Co. (GTJA), a leading brokerage firm in China,

apparently isn't suffering such problems.