Statistics show that as of March 24, 2022, a total of 420 listed companies in Shanghai and Shenzhen have disclosed their 2021 annual reports, and a total of 1274 independent directors have received a total allowance of 118 million yuan, with a per capita allowance of 93000 yuan.
From the existing data, the problem of low salary and large gap of independent directors is prominent, and the gap between the highest and lowest salary is up to 20 times. Nearly 70% of the independent directors have an annual salary of less than 100000 yuan. In order to encourage independent directors, listed companies that have disclosed their annual reports have taken the initiative to increase the remuneration of independent directors by more than 20%.
“With the full implementation of the new securities law, the responsibility of independent directors is gradually compacted.” Lawyer Yang Zhaoquan of Beijing wino law firm told the reporter of Securities Daily that, especially in the case of Kangmei pharmaceutical, the court ruled that the independent director should bear joint and several liability of hundreds of millions of Yuan due to the fraud of listed companies, which makes the independent director seem to be a “high-risk” position.
nearly 70% of independent directors have an annual salary of less than 100000 yuan
According to the latest disclosed annual report data, there are 387 independent directors with a salary of more than 100000 yuan in 2021. In terms of industries, the remuneration of independent directors of financial listed companies is generally high, and 17 companies pay more than 200000 yuan. So far, the highest salary of industrial companies is Foxconn Industrial Internet Co.Ltd(601138) , the salary of independent directors reaches 462000 yuan, and the salary of independent directors of China Telecom Corporation Limited(601728) 458000 yuan ranks in the forefront Wuxi Apptec Co.Ltd(603259) , Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) , China National Medicines Corporation Ltd(600511) independent directors’ remuneration is higher than 200000 yuan.
Statistics show that the number of independent directors with an annual salary of 100000 yuan to 200000 yuan accounts for 24.8%, and 69.62% of independent directors have an annual salary of less than 100000 yuan. At the end of the salary list, the salary of independent directors of some companies is only 30000 yuan, a difference of 20 times from the highest 640000 yuan.
According to the data, from 2019 to 2020, the average salary of independent directors in the two cities was 81000 yuan and 85000 yuan respectively. Generally speaking, the performance of listed companies is good, while the salary of independent directors is relatively high. But there are also a few companies that offer high salaries to independent directors even if their performance is at a loss Huaneng Power International Inc(600011) 2021 lost more than 10 billion yuan, while the remuneration of the five independent directors was 300000 yuan.
Kuang Yuqing, founder of lens research, told reporters: “when establishing the independent director’s allowance, listed companies mainly depend on the company’s professional needs, combined with its professional value, industry salary and work intensity.”
In terms of the feasibility of the listed company’s investment, the independent director expressed the hope that the independent director would give a certain level of help to the senior managers of the company in terms of the investment strategy and other issues. “In terms of the feasibility of the independent company’s investment, the independent director expressed the hope that the independent director would give a certain level of help to the listed company.”
listed companies raise salaries for independent directors
The reason why the remuneration of independent directors has attracted attention is that the financial fraud case of Kangmei pharmaceutical leads to the need for independent directors to bear high fines.
On November 12, 2021, Guangzhou intermediate people’s Court of Guangdong Province issued a civil judgment on the class action case of Kangmei pharmaceutical securities, ordering Kangmei pharmaceutical to compensate about 52000 investors for investment losses of 2.459 billion yuan. In this class action case, the five independent directors need to bear joint and several liability for compensation, and the total amount of compensation is up to about 369 million yuan. Public information shows that the salary of the five punished independent directors of Kangmei pharmaceutical over the years is mostly 120000 yuan, and the salary obtained from part-time work is in strong contrast to the “sky high price” ticket.
Followed by a wave of resignation of independent directors. Taking the Kangmei pharmaceutical case as the time point, according to the reporter’s incomplete statistics, from November 12, 2021 to March 24, 2022, a total of 274 companies in the two cities issued the resignation announcement of independent directors. In the last two months of 2021 alone, a total of 132 independent directors proposed to leave.
Kuang Yuqing believes that the key to determining whether the independent director can remain in office lies in the company’s own governance compliance risk, and the salary is only the second.
In order to retain independent directors, listed companies have successively issued announcements on adjusting subsidies for independent directors. According to the data of China stock market news choice, since November last year, a total of 20 companies have issued announcements to increase the remuneration of independent directors.
Among them, Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) announced that the company plans to adjust the independent director’s allowance from 120000 yuan / year before tax to 500000 yuan / year before tax. According to the company, this move refers to the salary level of the industry and the regional economic development, combined with the actual operation and profitability of the company, as well as the workload and professionalism of the independent directors of the company.
According to statistics, among the 420 listed companies that disclosed the annual report, 91 companies have raised the salary of independent directors. According to the data, the highest increase rate of Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) independent director’s allowance was 316.67%, and the increases of Beijing Yupont Electric Power Technology Co.Ltd(688597) , Ncs Testing Technology Co.Ltd(300797) independent director’s allowance were 140% and 100% respectively.
In addition, Shanghai Material Trading Co.Ltd(600822) , Shanghai Rightongene Biotechnology Co.Ltd(688217) and other independent directors’ allowances increased by less than 50%, and that of Sino-Platinum Metals Co.Ltd(600459) , Shaanxi Construction Engineering Group Corporation Limited(600248) and Shaanxi Construction Engineering Group Corporation Limited(600248) companies increased by 50%.
In an interview with reporters, Lawyer Wang Zhibin of Shanghai Minglun law firm said: “In the system of listed companies, independent directors mainly play the role of supervision. From the perspective of position setting, the salary of independent directors depends on their professional resources and background, as well as the supervision role played by independent directors. For example, companies often have some investment business, and generally investment companies with accounting background may review the subject matter, which will also have a larger workload. Generally speaking, the professional background and workload of independent directors are related. ”
