2014-2015 Executives Compensation Survey Report in A-share Market

According to the report, total labor cost made up for 8% of A-share companies’ operating revenue in average, and companies were facing an increasing pressure from labor cost. However, for each RMB labor cost input, company only got 1.12 RMB net profit output in average, reaching the lowest point in the past three years. The highest compensation paid to executives at A-share companies averaged at RMB 856,500, with a steady increase around 5.6%. In general, the pay level across all industries remained stable in the past three years but the gap among industries was getting bigger: Finance, real estate and wholesale & retail trade industry kept their leading positions; culture, sports & entertainment industry notched the biggest increase (12.5%); agriculture industry still gave the lowest payment. Moreover, among the highest compensation gainers, about 50% of them are in the position of chairman, about 30% are in the position of CEO and about 20% are in the position of other executives. From the aspect of controlling shareholders, the executive compensation of foreign-owned enterprises maintained the highest with a slight increase (2.4%), while the executive compensation of state-owned enterprises showed a modest increase despite of the decrease in 2013. The report also indicated that executives in South China continued to enjoy the highest payment in the country. Shanghai outran Beijing with executive compensation averaged at over 1 million RMB.

As for the equity incentive research, the passion of regulated stock-based incentive plans continued growing. Restricted-share was a more popular tool than Stock-option, with 75% of the sample companies. A-share companies started to launch employee stock ownership plan in June, 2014, and later in January, 2015, the SOEs' employee stock ownership plan restarted. Meanwhile a large number of innovative incentive plans (Partnership plan, Co-investment plan, Entrepreneurial plan, Asset Management Plan, etc.) emerged, which indicates the long-term incentive mechanism need innovation.