in order to mobilize the enthusiasm of independent directors, Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) waved a big hand and raised the salary of three independent directors by more than three times.
On February 22, Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) announced that the board of directors of the company had considered and approved a new proposal to adjust the allowance of independent directors from 120000 yuan / year before tax to 500000 yuan / year before tax.
On the same day, Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) closed at 26.9 yuan / share, up 3.38%, with a total market value of 20.36 billion yuan.
three independent directors benefited
Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) said that the decision to raise the salary of independent directors was “justified”, which not only based on the relevant provisions of the rules for independent directors of listed companies and Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) articles of association of China Securities Regulatory Commission, but also referred to the salary level of the industry and regional economic development, but also combined with the actual operation, profitability, workload and professionalism of independent directors.
So why raise the salary of independent directors? Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) said that this is conducive to fully mobilize the work enthusiasm of the company’s independent directors, strengthen the awareness of diligence and responsibility of the independent directors, and promote the sustainable and stable development of the company.
At present, Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) has three independent directors, Zhao Tianbo, Wang Jun and pan Tongwen, whose term of office is from January 10, 2020 to January 9, 2023.
According to the company’s annual report, Zhao Tianbo graduated from the University of Nottingham, UK, with a master’s degree in international commercial law and a Chinese lawyer practice certificate; Wang Jun is a doctor of economics of the Central University of Finance and economics, a postdoctoral and researcher in finance of the Chinese Academy of Social Sciences, and once served as director of the Political Research Bureau of the Policy Research Office of the CPC Central Committee and director of the Information Department of the China Center for international economic exchanges; Pan Tongwen graduated from Zhongnan University of economics and law. He is a master of accounting and a Chinese certified public accountant.
Interestingly, two of them also serve as independent directors of other companies. In addition to Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) , Wang Jun also serves as an independent director of China Kings Resources Group Co.Ltd(603505) , while pan Tongwen also serves as independent directors of Shenzhen Tagen Group Co.Ltd(000090) , hasby and Sinopec Oilfield Equipment Corporation(000852) .
the overall salary level is low
The adjusted annual salary of 500000 is also very prominent in Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) their own management. According to the salary level in 2020, only 7 of the 28 directors and supervisors of the high school have an annual salary of more than 500000 yuan.
In the capital market, the salary increase of independent directors is not an individual case. According to the statistics of the international finance news, since the second half of last year, 17 A-share companies have issued announcements to increase the allowance of independent directors, such as Ncs Testing Technology Co.Ltd(300797) raising the annual salary of independent directors from 60000 yuan to 120000 yuan and Beijing Yupont Electric Power Technology Co.Ltd(688597) from 50000 yuan to 120000 yuan.
On the whole, the salary level of independent directors is still low.
According to the data, as of December 31, 2021, A-share listed companies had 14478 independent directors, 70% of whom had an annual salary of less than 100000 yuan, and only more than 4000 more than 100000 yuan. Among them, the annual salary of less than 50000 yuan accounted for 12.08%; The annual salary between 50000 yuan and 100000 yuan accounted for the most, up to 57.35%; Followed by 100000 yuan to 200000 yuan, accounting for 26.08%; The annual salary is more than 200000 yuan, accounting for less than 5%; Only 49 independent directors have an annual salary of more than 500000 yuan, and the highest salary is Shanghai Junshi Biosciences Co.Ltd(688180) independent director Chen Lieping. In 2020, Chen Lieping received a total pre tax remuneration of about 5.4308 million yuan in Shanghai Junshi Biosciences Co.Ltd(688180) .
Not only with “low salary”, but also with “high risk”. After the “Kangmei case”, this contradiction in the post of independent director was exposed to public view and triggered extensive discussion.
On November 12, 2021, Guangzhou intermediate people’s court made a judgment of first instance. This time, Kangmei pharmaceutical shall be liable for the loss of 2.458 billion yuan to investors, of which the independent directors Jiang Zhenping, Li anding and Zhang Hong need to bear 10% joint and several compensation, and the independent directors Guo Songhui and Zhang Ping need to bear 5% joint and several compensation.
Although the proportion is small, several independent directors have to bear compensation costs of nearly 245 million yuan and 122 million yuan respectively based on 2.458 billion yuan. The 2020 annual report shows that the annual salaries of Jiang Zhenping, Guo Songhui, Zhang Ping and Li anding are only 120000 yuan, 120000 yuan, 50900 yuan and 168000 yuan.
In an interview with the international finance news, PI Haizhou, a well-known financial commentator, said that the “Kangmei case” is the main driving factor for listed companies to choose to increase the allowance for independent directors recently. Independent directors bear greater responsibility, but their annual salary is generally not high. For the sake of retention, the company chose to increase the salary level.
can the salary increase improve the system
Independent directors refer to the directors who are independent of the company’s shareholders and do not work within the company, have no important business or professional contact with the company or the company’s managers, and make independent judgments on the company’s affairs. The independent director system is an imported product, which originated in the United States in the 1930s. The system aims to change the structure of decision-making power of managers through the establishment of independent directors, so as to achieve the role of supervision and balance, and prevent the internal control of controlling shareholders and management from damaging the overall interests of the company.
In 2001, the independent director system was officially introduced into China. In August of that year, the CSRC issued the guidance on establishing an independent director system in listed companies, requiring listed companies to establish an independent director system in accordance with regulations. But 20 years later, in A-share listed companies, the existence of many independent directors has been acclimatized. It has been criticized for its lack of independence and is often jokingly called “neither independent nor sensible”, “fat and poor with eyes closed” and “vase”.
GUI Haoming, chief market expert of Shenwan Research Institute, once wrote that from the problems exposed in reality, there are not many cases in which independent directors give up the principle and cooperate with the actual control of artificial fake, but it is quite common not to take the initiative to find problems and not question suspicious data.
The outside world is more concerned about whether the salary increase can promote the improvement of the independent director system?
Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) mentioned that the salary increase “is conducive to fully mobilize the work enthusiasm of independent directors of the company and strengthen the awareness of diligence and responsibility of independent directors”. But this seems to stay more at the level of persuasion, without substantive measures.
At present, the candidates for independent directors are mainly nominated by major shareholders, which can not guarantee their independence, and the role of supervision and balance is even more impossible. In addition, according to relevant regulations, in principle, independent directors can hold concurrent posts in up to five listed companies, and the effective working time for the listed companies they serve each year shall not be less than 15 working days in principle. Data show that nearly one third of the tens of thousands of independent directors of listed companies still serve as independent directors of more than one listed company, and about one tenth also serve as independent directors of three or more listed companies. By the end of 2020, there were 111 A-share directors serving as independent directors of five listed companies. The proliferation of part-time jobs has greatly reduced the focus and professionalism of independent directors.
Liu Jipeng, who resigned as Valiant Co.Ltd(002643) independent director earlier, suggested that “an independent director association should be established in the association of listed companies, which should be recommended to listed companies by the association of listed companies, rather than elected by major shareholders. At the same time, he also advocated that the remuneration of independent directors should be increased.” He also proposed that independent directors should have money, power and leisure. The highest status should be independent directors instead of accountants. Independent directors must not be hired by major shareholders, and independent directors should be able to compete with major shareholders.
PI Haizhou told the international finance news that “it is possible to increase money, but more importantly, it is necessary to clarify the scope of responsibilities of independent directors, and the reform of the independent director system is inevitable. Independent directors need to change from part-time independent directors to professional independent directors. They must fully exercise the functions and powers of independent directors and comprehensively understand and supervise listed companies, otherwise it is difficult for independent directors to correctly perform their duties.” He also pointed out that in the case of becoming a professional independent director, an independent director can only serve as an independent director in two or three companies at most. As long as the independent director is not an iron man, it is impossible to work part-time in more than four companies.
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