China’s securities regulator has called on the country’s 160 mutual fund houses to establish a performance-based salary mechanism, as part of efforts to uproot elitism from the industry.
The China Securities Regulatory Commission (CSRC) has drawn up guidelines governing asset managers’ pay perks, suggesting that the performance of the funds they run should factor up to 80 per cent in determining their annual salaries, according to a report on Monday by the official Securities Times.
The Shenzhen-based newspaper said the regulator was soliciting opinions from industry officials, without elaborating on the timetable for enforcing the new rules. The CSRC could not be reached for comment on Monday.
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Beijing decided to cap the annual salaries of financial services industry workers at 3 million yuan (US$424,322) last year, as it sought to narrow the wealth gap among professionals in various sectors.
“Linking managers’ salaries with their funds’ performances is fair,” said Ding Haifeng, a consultant at the Shanghai-based financial advisory firm Integrity. “Technically, some of the managers, though overseeing multi-billion-yuan mutual funds, will not be able to get a high salary if they cannot generate good returns for investors.”
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The proposed guidelines underscore China’s crackdown on industry executives.
Senior managers in mainland China’s top fund-management firms previously received annual salaries as much as 6 million yuan, ranking among the highest paid professionals in the world’s second largest economy. Part of their pay package was based on the size of the mutual funds that they managed.