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China: Executive Pay Limits for State-Owned Financial Institutions

(Apr. 15, 2009) The Ministry of Finance (MOF) published a circular on April 10, 2009, setting a pay cap for top executives at state-owned financial institutions. Their maximum compensation for the year 2008 is now fixed at 90% of what they received for the year 2007.

The executive compensation regulated by this circular refers to pre-tax incomes including salary, bonus, social insurance, and other benefits. The MOF circular further requires that for institutions whose business performance declined in 2008 compared with 2007, an additional 10% pay decrease must be applied to their top executives. For the year 2009, state-owned financial institutions could pay their top executives up to half of the amount determined for 2008, until further administration rules are promulgated. (Guanyu guoyou jinrong jigou 2008 niandu gaoguan renyuan xinchou fenpei youguan wenti de tongzhi [Notice on 2008 Top Executive Compensation at State-Owned Financial Institutions] [in Chinese], CJ [2009] No. 23, Apr. 7, 2009, MOF official website, available at

It was reported to be the second time the MOF has set such pay limits this year. According to the Xinhua news agency, the MOF ordered in a circular in February that the 2008 salary for top executives of State-owned financial institutions should be limited to RMB2.8 million (about US$410,000). (China Sets Further Executive Pay Limits for State-Owned Financial Institutions, XINHUANET, Apr. 9, 2009, available at