工商银行CEO薪酬——公司治理

Project: Case analysis

--CEO remuneration of ICBC(Industrial

and Commercial Bank of China) Course name: Corporate Governance Professor: Weishao Wu

New Huadu Business School,Grade3

Winter Semester, October 2012

Team member Chinese name Student ID

Lin Zhou 周琳120101702118

Li Lin 林莉120101702120

Bifeng Jian 简碧凤120101702122

Weiqiang Ai 艾伟强120101702115

Hang Wang 王航120101702130

Cijian Wu 吴赐建120101702145

Agenda

1. Introduction

1.1 Brief company introduction

1.2 CEO introduction

2. CEO’s remuneration

2.1 Remuneration structure

2.2 How to determine the remuneration

3. Incentive and restraint mechanism

4. Compared with other banks

5. Conclusion

6. Data sources

1. Introduction

1.1 Brief company introduction

As China's largest commercial banks, ICBC(Industrial and Commercial Bank of China) is a state-owned bank, which was established in January 1, 1984 . After 27 years reforms, ICBC has already reached the development of scale economy accordance with the efficiency and effectiveness. ICBC that has largest part of consumers in China is also one of the Fortune Global 500.

1.2 CEO introduction

Since October 2005 Kaisheng Yang whose age now is 62 years old is the vice chairman, executive director and CEO but not the shareholder of ICBC.

In 1985 he began to work in ICBC, and he once was appointed as vice director of Supervisory Office, director of the Planing Information Department, CEO of Shenzhen branch, vice President of ICBC, CEO of China Huarong Asset Management Company. He graduated from Wuhan University and got the PHD of economics.

2. CEO’s remuneration

2.1 Remuneration structure

According to the remuneration committees report, the remuneration of CEO consists of three parts:

Here, we find the statistics and make it as a pie chart to show the ratio of the ratios of basic annual salary, performance bonus and various social security benefits and housing allowance. And we can see that the CEO's performance makes a relatively large influence on the his remuneration.

In the annual report we find the component of CEO's total income. Total income = monthly income + the annual salary complement at the end of the year + annual incentive bonus +

additional wages.

2.2 How to determine the remuneration

ICBC has set up a Remuneration Committee to design the remuneration of chairman, CEO and other senior directors. Because ICBC is state-owned, Chairman’s and the CEO’s annual salary is restrained by the Ministry of Finance. Besides, ICBC has authorized the Ministry of Finance this right to restrain the salary of the chairman, CEO and other senior directors.

3. Incentive and restraint mechanism

The performance bonus annual salary implement a deferred payment, the deferred payment is recorded as debts in the company accounts which depends on the results of operations over three years. And each year the CEO just is payed for 1/3 of the bonus. The performance bonus is correlated to the CEO and company's performance. Moreover, if the CEO outperform the company's target economic indicators, he can get a extra annual extra awards directly from the company.

And there are some extra incentive awards for CEO. They are Chuangxin Jiang, Youxiujianyi Jiang, Bole Jiang, Quanqin Jiang and Qitateshu Jiang like Jianyiyongwei.

However, the annual report says ICBC has not endowed the CEO share options.

4. Compared with other banks

We can see that the ratios of basic annual salary, performance bonus and various social security benefits and housing allowance of the four banks, ICBC CCB(China Construction Bank of China), BoC(Bank of China) and Bank of Communications, are almost the same. Because all of them are state-owned, and the ratio is largely influenced by the government.

And in this table, though ICBC, CCB and BoC had higher net profits than Xingye Bank and Zhaoshang Bank, their CEOs'

remuneration instead turned at rather lower level.

5. Conclusion

we know ICBC is a state-owned bank, unlike share-holding banks, its system, operation and corporate governance are partly regulated and controlled by the government. Compared the share-holding banks' CEO remuneration, somehow we can say, ICBC's CEO remuneration is not overestimated.

Share option, as a long-term incentives, is well developed and practical in developed countries, which can make CEO's interests accordance better with shareholders. In ICBC's 2011 annual report, ICBC will carry out the long-term incentives plan after ICBC gets the appropriate permissions.

However, in China, share option is not so popular in developed countries. Maybe we can use it for reference to develop a more mature long-term incentive system.

6. Data sources ICBC Official websites Other websites

ICBC Annual Reports