China Merchants Fund Management Asks Executives to Return Excess Pay to Promote Economic Equality | Reuters Exclusive
In a bold move to align with the government's push for economic equality, a top 10 Chinese fund manager, China Merchants Fund Management (China Merchants FM), has requested senior executives to repay income that surpasses a newly imposed cap of 3 million yuan ($421,330) for each year from 2019 to 2023. This initiative comes as part of the "common prosperity" campaign to address social and income inequality amidst slowing economic growth.
This crackdown on excessive salaries and pay recalls within state-owned companies highlights the government's stance against extravagant lifestyles among the financial elite. Fund managers, in particular, have faced scrutiny for their high profits despite lackluster performance in the stock market.
China Merchants FM has already taken steps to retrieve excess pay from portfolio managers last year, with around 60 executives being notified in June and repayments starting in July. The firm's efforts to enforce these pay caps have also been echoed by other fund managers in the industry.
Auditors from the National Audit Office have conducted reviews at China Merchants FM and several other fund managers, flagging excessive salaries and requesting the implementation of pay caps and claw-back policies. This heightened scrutiny underscores the growing pressure on the sector to promote fairness and transparency in compensation practices.
The China Salary Guide of headhunter Morgan McKinley reveals that base salaries for senior executives and department heads at Chinese fund managers range from 1.6 million yuan to 6 million yuan. With the government's focus on income equality and financial accountability, the financial industry is witnessing a paradigm shift towards more equitable compensation structures.
In conclusion, the crackdown on excessive pay within fund management firms reflects a broader trend towards promoting economic equality and social fairness in China. Investors and financial professionals should take note of these developments as they signal a shift towards more responsible and sustainable business practices in the industry.
