Chinese Execs Paid A Pittance

It is difficult to determine exactly what Chinese managers are earning, but it appears the answer is “peanuts.” Of course, dollars do go farther in China.

Research also indicates that few managers are taking advantage of their stock options, essentially leaving money on the table.

The Economist:  Senior executives’ cash pay was low by global standards: $180,000 a year on average. Almost every firm awarded stock options, worth an average of $140,000, giving bosses healthy top-ups as well as equity stakes—if those options were exercised. Remarkably, a lot never were. At more than half of the firms, no options were exercised within four years of vesting.

The article also speculates as to why the managers aren’t vesting their options:

There are many possible reasons. Cultural pressure may explain why bosses do not want visible income. Companies may meet the cost of cars, housing and school fees in other ways. And state-controlled companies’ bosses may be compensated in a different fashion. Executives’ tenure at red-chip companies is brief: only three years, against five at big Western firms. Managers who do a good job are often “promoted” from one company to another by the largest shareholder—the state. Their rewards are more opaque than salary and options, and could even be imperilled by overt signs of affluence. All Mr Chen and his colleagues can conclude is that there is ample room for further study.

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