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Brokers' profits, compensation fall

By Bi Xiaoning (China Daily)
Updated: 2009-02-12 08:04

The latest figures for 2008 from 50 stock brokerage firms show an average fall in profits of 68.91 percent and an 11.99 percent cut in annual executive pay.

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Analysts said the pay cut in 2008 would have been much deeper if not for deferred payment of 2007 bonuses.

Of the 50 firms, five said their average executive compensation was above 1 billion yuan, with Guotai Jun'an Securities Co topping the list with 3.07-billion-yuan total staff payout, up 96.8 percent from a year before. The other four were Guangfa Securities, China Merchants Securities, CITIC China Securities and Guoxin Securities.

The total staff payout of the five brokerages totaled 9.11 billion yuan, exceeding the combined 7.4 billion yuan of the other 45 companies.

A media report that Guotai Jun'an Securities, one of the largest brokerages in China, offered particularly fat paychecks to its senior executives has stirred a storm of controversy in an investment community that has yet to recover from the shock of the 2008 stock market crash.

Guotai apparently has not emerged unscathed from the market bloodbath: It reported that its profit for 2008 fell 24.24 percent from 2007.

If the 3-billion-yuan total compensation reportedly proposed by Guotai Jun'an is equally shared among its 3,200 employees, each would receive about 1 million yuan, or 88 times an average urban worker's annual income.

The company's spokesman recently said actual payment for the salary package in 2008 was 800 million yuan, down 44 percent from 2007. He said the average salary of top executives is 570,000 yuan and the company's chairman was paid about 830,000 yuan.

"The company's explanation is still unconvincing," said Su Hainan, head of the Institute for Labor and Wage Studies with the Ministry of Human Resources and Social Security.

"According to the accounting law in China, if the salary package is not prepared to be paid in the same year, it should be withdrawn and the company would remedy the enterprise income tax accordingly," said Su.

The Ministry of Finance recently drafted a salary management circular for executives with State-sector financial intuitions, which limits the compensation of top executives, including bonuses, to no more than four times their annual base salary. It's reported that the maximum amount was estimated to be 2.8 million yuan.