Today (December 29th), #China Merchants Bank reversely asked employees for nearly 60 million # entries and rushed to the first place in Weibo's hot search
On the evening of December 28, China Merchants Bank issued an announcement on the resolution of the board of supervisors, stating that the meeting deliberated and passed the "Proposal on the Recourse and Clawback of China Merchants Bank's 2022 Performance Compensation"
The time goes back to the 2022 annual report of China Merchants Bank, which was disclosed in March this year.
According to the annual report, in order to alleviate various operational and management risks, the bank has established a mechanism for deferred payment of salary and recourse and clawback of performance pay according to regulatory requirements and operational management needs. In 2022, 2,876 employees will be reclaimed for performance-based compensation, with a total amount of 58.24 million yuan.
This means that the average "salary refund" per person is 20,300 yuan, and the number of employees who are required to "return salary" accounts for more than 2.5% of all employees of China Merchants Bank.
Many netizens said "it's the first time I've heard of it"
What is the trend behind the "salary chasing"? Is this move of China Merchants Bank maverick and has no policy basis?
Is there a precedent for "salary retirement"?
It is understood that the regulator disclosed in March this year -
- 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.
- This year, Bohai Bank also claimed and deducted 17.6 million yuan in the performance pay of 370 people in 2022, equivalent to 47,600 yuan per capita.
Judging from the 2022 annual reports of domestic listed banks, the "recourse clawback mechanism" is also mentioned in the annual reports of many banks——
- In its 2022 annual report, ICBC emphasized that "the performance-based remuneration of senior managers and employees in positions with significant impact on risk shall be deferred and clawback mechanisms shall be implemented to promote the balance between risks and incentives".
- China CITIC Bank also claimed that "for employees who violate rules and disciplines, fail to perform their duties, etc., their corresponding performance pay will be deducted according to the decision of accountability".
However, the reporter of Nandu Bay Finance Society noticed that the focus of this attention was on "performance pay". According to the consensus of the industry, performance-based remuneration is the performance remuneration paid by commercial banks to employees and the remuneration for increasing revenue and reducing expenditure, which is mainly determined based on the results of the current year's business performance appraisal.
A banker told a reporter from Nandu Bay Finance Agency that performance-based pay is not a basic salary income, and the latter is generally not affected by the recourse clawback system.
What is the policy basis for the recourse clawback mechanism?
In fact, behind the mechanism of salary deferral, recourse and clawback is the exploration of the development of the financial industry
- As early as 2010, the former China Banking Regulatory Commission (CBRC) issued the Guidelines for the Supervision of Sound Remuneration for Commercial Banks, which clarified that commercial banks should formulate provisions on deferred recourse and clawback of performance-based remuneration, and if the risk losses of their senior managers and relevant employees within the prescribed period are excessively exposed, commercial banks have the right to recover all the performance-based remuneration that has been paid within the corresponding period and stop paying all the unpaid part.
- 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, clarifying that under eight circumstances, performance-based remuneration and other incentive remuneration for senior managers and personnel in key positions of banking and insurance institutions shall be recovered, including the recovery of performance-based remuneration that has been paid and the unpaid performance-based remuneration that has not been paid.
- In the article "Three-year Action to Improve Corporate Governance in the Banking and Insurance Industry Achieved Remarkable Results" released on March 24 this year, the former China Banking and Insurance Regulatory Commission said that as of that time, more than 95% of institutions had formulated and implemented a performance-based pay deferred payment and recourse clawback system. Especially in some high-risk institutions, the relevant system has played an important role in holding non-compliant executives accountable and recovering asset losses.
On the whole, the main goal is to prevent the occurrence of imprudent behavior of banking employees due to improper incentives or excessive incentives and insufficient risk-related linkage.
What conditions can trigger a "reverse bargain"?
Under certain circumstances, the remuneration of senior executives and key positions of banking and insurance institutions can be recovered. According to the industry, in the event of any of the following circumstances, banking and insurance institutions may recover all performance-based remuneration and other incentive remuneration that has been overpaid to senior executives and personnel in key positions. For example-
- The banking and insurance institution has restated its financial statements, resulting in a major adjustment of the financial information on which the performance remuneration is based;
- There is fraud in the performance appraisal results;
- Violating the salary management procedures to issue performance-based pay or increase salary incentive items without authorization;
- Other violations or payment of remuneration based on incorrect information, etc.
Some analysts in Shenzhen's financial industry believe that there may be two main factors behind the recourse of China Merchants Bank to relevant personnel for the clawback of performance-based remuneration: the performance of managers is not up to standard or there is malfeasance.
Is there an expiration date for deferred payment of executive performance compensation?
In August last year, the Ministry of Finance issued the "Notice on Further Strengthening the Financial Management of State-owned Financial Enterprises", pointing out that financial enterprises should comprehensively consider market conditions, performance, risk-taking, remuneration strategies and other factors, scientifically set salary standards for different positions, and reasonably determine a certain proportion of performance-based compensation.
The reporter of Nandu Bay Finance Society combed and saw that the "Notice" for senior managers of financial enterprises and employees who have a direct or important impact on the risk, the basic salary is generally not higher than 35% of the total salary, and the performance pay is deferred according to the business income and risk assessment of the business in question, and more than 40% of the performance pay should be deferred, and the deferred payment period is generally not less than 3 years, so as to ensure that the performance pay period matches the risk duration of the corresponding business.
Source: The Paper, Securities Times, Morning News Editor|Wang Qiutong