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Draft set to regulate SOE executives' pay

By Yu Hongyan (chinadaily.com.cn)
Updated: 2009-05-15 17:26

The draft to regulate payment of executives in China's State-owned enterprises (SOEs) is ready for review and approval from the State Council, the country's Cabinet, 21st Century Business Herald cited an unnamed source as saying.

A source from the Ministry of Human Resources and Social Security, the authorized agency to make the draft, told the paper that the regulation will set a guideline on salary structure, performance evaluation and other niches that would affect the salary package.

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The salary package would consist of three parts, including the basic annual salary, payment based on performance and mid- and long-term incentives, according to the source.

The source added that once passed, the regulation would narrow the income gap between SOE executives and employees, and set the gap at a reasonable level. The Ministry of Finance, the China Banking Regulatory Commission and the China Securities Regulatory Commission would jointly carry out details of the regulation.

In terms of listed companies, the source suggested amending the corporate law to make sure minor shareholders have a say in deciding the pay of high-level executives, and accelerating the information disclosure process.

Even with non-listed companies, information on high-level executives' pay should also be made public to some extent, a move which will make it easier for stakeholders to monitor, said the source.

Supervision agencies such as auditing, finance and human resource departments are also urged to check the income distribution in SOEs, including high-level executives' pay.