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Executive salaries outpace profits

By Zhou Yan (China Daily)
Updated: 2009-03-05 07:54

Although most Chinese publicly traded firms posted gloomy 2008 annual earnings reports, the average management salaries at some of these companies still saw distinct climbs.

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According to financial data provider Wind, among 80 listed companies that had released their full-year earnings reports as of Feb 24, the annual management incomes of these firms rose 43.8 percent year-on-year to 2.93 million yuan on average in 2008.

The average net profit of the same companies only increased 18.48 percent to 142 million yuan in the same period. And 1,009 companies that had their annual or preliminary financial reports released by Feb 25 posted an average decline in profits of 43.61 percent to 173.6 billion yuan for 2008.

"Historical figures showed that during economic hardship like the 1997 Asian financial crisis, executive payments were mostly decoupled with the companies' performance," a source from headhunting firm Russell Reynolds Associates Inc said.

But he added the recent salary climbs still showed a failure of corporate governance that emphasizes the maximization of investors' interest rather than personal interests.

Top-level managers in the sagging real estate industry earned the most, with salaries at 13 property developers more than doubling in 2008.

In contrast, the average net profit of these 13 property developers only rose 58 percent from a year ago to 401 million yuan.