On the evening of December 28, China Merchants Bank issued an announcement on the resolution of the board of supervisors, stating that it had deliberated and passed the "Proposal on the Recourse and Clawback of China Merchants Bank's 2022 Performance Compensation". In its 2022 annual report released in March this year, China Merchants Bank disclosed that in 2022, 2,876 employees were reclaimed for performance-based compensation, and the total amount of performance-based compensation was 58.24 million yuan. It is understood that under the regulatory requirements, domestic financial institutions have generally established a performance-based pay recourse clawback system in recent years, which is also known as "reverse salary bargaining" by market participants. Although many employees of financial institutions have been retained for bonuses, there is not much information disclosed by the institutions.
Last year, many banks disclosed the recourse and clawback of employees' performance-based pay, but most of them did not provide detailed data
According to the annual report of China Merchants Bank, in 2022, the Remuneration and Appraisal Committee of the board of directors of the bank deliberated and approved the "Administrative Measures for the Recourse and Clawback of Performance Compensation" and the deferred payment of remuneration for senior managers. In order to alleviate various operational and management risks, CMB has established relevant mechanisms for deferred payment of remuneration and recourse clawback of performance-based remuneration in accordance with regulatory requirements and operational management needs. During the reporting period, China Merchants Bank pursued 2,876 employees who pursued the recourse and clawback of performance-based compensation, with a total amount of 58.24 million yuan. On December 1, the announcement of the resolution of the board of directors of China Merchants Bank showed that the "Proposal on the Recourse and Clawback of Performance Compensation of China Merchants Bank in 2022" had been deliberated and approved. According to the total number of employees of China Merchants Bank last year of 113,000, the number of employees who were required to "retire" last year accounted for more than 2.5%.
Bohai Bank, a Hong Kong-listed company, also announced the clawback of performance-based pay. In accordance with the relevant remuneration management measures, the bank implemented the deferred payment and recourse clawback of performance-based remuneration, including the recovery of paid performance-based remuneration and the suspension of payment of unpaid performance-based remuneration, and the employees who were chased for wages were the relevant responsible persons for violations of rules and disciplines, excessive exposure to risks within the scope of their duties due to obvious negligence or failure to fulfill their prudential management obligations, and a total of 17.6 million yuan of performance-based remuneration was recovered for 370 people in 2022. As of the end of 2022, Bohai Bank has 13,286 employees, and based on this data, the proportion of employees who have been recourse to clawback compensation accounts for 2.78% of all employees.
A reporter from Beijing Youth Daily found that there are not many listed banks like China Merchants Bank and Bohai Bank that disclose the number of salary refunds and the specific amount.
Jiujiang Bank said that the amount of performance recourse deductions during the reporting period was 1.63 million yuan, but the report did not disclose the specific number. Jiangxi Bank only disclosed the specific reason for the clawback, but did not disclose the number and amount of the clawback. Jiangxi Bank said in its annual report that the bank had established and improved a mechanism for deferred payment of performance-based pay and recourse clawback. The personnel responsible for the formation of non-performing assets shall be determined according to the size of the principal of the non-performing liability, and the corresponding performance remuneration shall be recovered.
More banks only announced in their annual reports that they had established a performance-based pay clawback mechanism and that they had taken relevant measures, but only in general terms and without providing further details.
For example, a major state-owned bank said in its annual report last year that the bank's employee compensation consisted of basic salary, performance-based compensation and welfare income. The level of performance-based remuneration depends on the performance measurement results of the bank as a whole, the institution or department to which the employee belongs, and the individual employee, and the performance-based remuneration of senior managers and employees in positions with significant impact on risks is subject to deferred payment and recourse clawback mechanisms to promote the balance between risks and incentives.
The bank said that during the reporting period, in accordance with the relevant measures, employees who were disciplined or otherwise dealt with due to violations of rules and disciplines or excessive exposure to risks and losses within their duties were deducted, stopped payment or recourse to be remedied.
Leavers can't escape "retirement"
"I've been detained myself, and I think this system is more reasonable. Because some of the bank's business withdrawal rewards are in the front, the risk exposure lags behind. Mr. Zhao, who used to work in a bank, said that he had indeed been deducted money because a loan had become non-performing before. At the beginning, the loan was relatively normal, so the bank issued a performance bonus, and then the loan company did not repay the debt, resulting in a bad performance, and the bank deducted the part of the bonus that had been issued.
A person from a city commercial bank said that most banks have implemented deferred payment of performance-based pay many years ago, but the recourse clawback system has only been promoted in recent years. Combined with the internal penalty system, the head of the bank's branches was deducted 80% of their performance last year.
It is understood that employees who have left the company cannot escape the "reverse salary bargaining", and some banks will also set up a recovery team to specifically pursue performance-based pay.
Netizen Xiaolin resigned from a bank three years ago, but not long ago, she received a call from the bank, saying that the two loans she had handled before had become non-performing, and she was mainly responsible for returning two months' performance.
There are eight situations that will be "reversed wages"
It is understood that performance pay is the performance remuneration paid by commercial banks to employees and the remuneration for increasing revenue and reducing expenditure, which is mainly determined according to the results of the current year's business performance assessment, and the performance pay should reflect sufficient various risks and various cost deductions and the incentive and restraint requirements of the bank's sustainable development.
As early as 2010, the former China Banking Regulatory Commission (CBRC) issued the Guidelines for the Supervision of Sound Remuneration for Commercial Banks, which required commercial banks to formulate provisions on deferred recourse and clawback of performance-based remuneration.
In February 2021, the former General Office of the China Banking and Insurance Regulatory Commission (CBIRC) issued the Guiding Opinions on Establishing and Improving the Recourse and Clawback Mechanism for Performance-based Remuneration of Banking and Insurance Institutions (the "Guiding Opinions"), requiring banking and insurance institutions to recover improperly paid performance-based remuneration based on their risk exposure and strengthen the consistency between remuneration and risk-taking. The Guiding Opinions make it clear that under eight circumstances, the performance-based remuneration and other incentive remuneration of senior managers and personnel in key positions of banking and insurance institutions shall be recovered. Performance-based pay clawbacks, including recovery of paid performance-based pay and cessation of unpaid performance-based compensation.
Specifically, in one of the following four circumstances, a banking and insurance institution may recover all performance-based remuneration and other incentive remuneration that has been overpaid to senior management personnel and personnel in key positions: (1) the banking and insurance institution has restated its financial statements, resulting in a major adjustment of the financial information on which the performance-based remuneration is based; (2) the performance appraisal results have been falsified; (3) the remuneration management procedures have been issued without authorization or the remuneration incentive items have been increased without authorization; and (4) the remuneration has been issued in violation of regulations or based on incorrect information。
In addition, if one of the following four circumstances occurs, a banking and insurance institution shall seek to recover all the performance-based remuneration of the senior management personnel and personnel in key positions who bear the main responsibility within the corresponding period, and to recover part of the performance-based remuneration of other responsible personnel within the corresponding period: (1) the important regulatory indicators are seriously not up to standard or deviate from the reasonable range; (2) the CBIRC and its dispatched agencies or other financial regulatory authorities take risk disposal measures such as takeover; (3) major risk events occur; Fourth, other situations that cause major damage to the property and reputation of banking and insurance institutions.
The Guiding Opinions also require that banking and insurance institutions should increase the disclosure of relevant information on performance-based pay recourse clawbacks when disclosing remuneration information, and continuously strengthen the comprehensiveness and transparency of remuneration information disclosure.
According to the Guiding Opinions, performance-based pay recourse clawback includes the recovery of paid performance-based remuneration and the suspension of unpaid performance-based remuneration. The regulatory authorities encourage banking and insurance institutions to study and explore ways to recover and clawback performance-based pay, and can take other effective ways to achieve recourse and clawback of performance-based pay based on their own actual conditions.
More than 95% of the banking and insurance institutions have formulated relevant systems
In August last year, the Ministry of Finance issued the "Circular on Further Strengthening the Financial Management of State-Owned Financial Enterprises" If senior management personnel and employees in positions with direct or important impact on risks fail to perform their duties diligently, resulting in major violations of laws and regulations or causing major risk losses to financial enterprises, financial enterprises shall recover part or all of the performance-based remuneration that has been paid within the corresponding period and stop paying part or all of the unpaid remuneration after performing corporate governance procedures in accordance with laws and regulations. In principle, the period for the recovery of performance-based pay is consistent with the period for the conduct of the relevant responsible person. Performance-based pay clawback provisions apply to employees who have left or retired.
The former China Banking and Insurance Regulatory Commission issued a document in March this year saying that the three-year action to improve corporate governance in the banking and insurance industries has achieved remarkable results. By that time, more than 95% of institutions had developed and implemented a system of deferred payment of performance-based pay and recourse clawback. Especially in some high-risk institutions, the relevant system has played an important role in holding non-compliant executives accountable and recovering asset losses. For example, during the merger and reorganization of five urban commercial banks in Shanxi, 61 senior executives and key positions were retained 33.59 million yuan in performance compensation.
In May this year, the Guangdong Supervision Bureau of the State Administration of Financial Supervision said that in recent years, it has strictly implemented the performance pay recourse clawback system, carried out special actions for the salary governance of city commercial banks, guided the risk institutions after the restructuring to revise the salary management system in a timely manner, recourse 16 million yuan of performance pay for senior executives and key position personnel, and froze and stopped paying 12 million yuan of deferred pay for departed personnel.
Text/Beijing Youth Daily reporter Cheng Jie
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