- Public anger has made executive pay a focus in China
- Chinese academics and analysts say problem is pay is too low
- Higher salaries could be used as a way to discourage corruption
Under chairman Jiang Jianqing, the Industrial and Commercial Bank of China raked in $38.5bn in net profits last year, making it the world's most profitable bank. For his efforts, Mr Jiang was paid $185,000, less than 1 per cent of the overall package awarded to Lloyd Blankfein, chairman of Goldman Sachs.
Mr Jiang fared well compared with other Chinese financiers -- he was the best paid among the bosses of the country's biggest banks.
Chinese executives at state-owned groups have long been among the lowest paid of their global peers, according to their officially declared salaries. But even their apparently meagre pay generates controversy at a time when executive salaries at public companies globally attract scrutiny.
In China, it is not a case of shareholder revolt -- the government is the controlling shareholder of virtually all major Chinese companies and has the power to easily change salaries. Rather, public anger about inequality and corruption has made executive pay a focus for media attacks, even from official outlets.
The government-run Xinhua news agency said in an editorial: "If the top executives of state-owned companies just fatten themselves, giving themselves high salaries and rich benefits, this is a departure from the original intent of the founding of these companies."
The People's Daily, the mouthpiece of the Communist party, said: "High pay for high-level executives and low pay for ordinary employees is immoral.
"If the pay for high-level executives is severely out of balance with the pay for ordinary employees, then the management has a problem." The harshest criticism was directed at China International Marine Containers. Net profits fell by 47 per cent last year, but group president Mai Boliang was the best paid of the top managers of the country's state-owned companies, pulling in $1.6m. The People's Daily noted that salaries of CIMC's top executives had risen 13-fold in the past four years, while the average pay for employees rose just 32 per cent.
Executives at other state-owned groups cut their pay because of poor performance. Wei Jiafu, chairman of China Cosco, China's biggest shipper, decided to take home $97,000, half of what he was due, after the company lost $1.5bn.
It is an unpopular view, but some Chinese academics and analysts say the main problem with executive pay at state-owned companies is that much of the time it is too low.
Tang Jie, a researcher at Renmin university's school of finance, says the government has tried to develop better incentive systems at state-owned companies by linking pay to performance, but that it is some way off from achieving this.
"This issue derives from the history of the government's management of state-owned companies. Executive pay is very low when compared to their contributions, their abilities and their responsibilities," says Mr Tang. "State-owned companies need professional managers. They should be paid according to market standards, with compensation adjusted according to objective performance criteria."
Proponents of better executive pay point to the idea of gaoxinyanglian -- the theory that higher salaries could be used as a way to discourage corruption.
The fall of Communist party leadership hopeful Bo Xilai last year, exposed the extent to which officials have enriched themselves despite small salaries. Mr Bo's official pay was $1,600 a month, but his family had net assets of $130m, according to Bloomberg.
Even in cases without extreme corruption, Chinese corporate executive have grey sources of income. Top bankers have low official salaries and small bonuses, but they often receive homes, cars, free schooling and more.
Fabrice Isnard, head of financial services in the Shanghai office of Robert Walters, a recruitment consultancy, says foreign banks in China can rarely afford to lure talent away from local banks because of the way pay is structured.
"We have seen that at local banks, senior positions have better packages than [at] foreign banks," he says. "If you add up all the benefits it becomes too expensive for the foreign banks to hire them."