An environment in which both incentives and constraints are given equal importance within the bank, and where incentives for remuneration match performance risks will be formed
The wages you get may not necessarily be your own? Recently, the topic of banks’ “reverse salary payment” has aroused widespread concern in the society.
A few days ago, a civil second-instance judgment disclosed by the China Judgment Documents Network showed that the Tianjin Branch of Harbin Bank filed a lawsuit and appealed against the former president of its Binhai New Area branch, Mr. The above request was ultimately rejected by the court.
What is behind the “reverse salary claim” is that the bank’s performance remuneration recourse mechanism is working. According to incomplete statistics by reporters from China Business News, China Merchants Bank, Bohai Bank, Bank of Jiujiang and many other banks have disclosed in their latest annual reports the amount of recourse for bank performance remuneration. Among them, China Merchants Bank’s recourse and rebate amount in 2022 is as high as 58.24 million. In addition, in the 2022 annual reports of major banks, more than half of them involve statements related to recourse to rebates and deferred payment of performance compensation. Some people in the industry pointed out that with the further improvement of the recourse and kickback mechanism, in the future, methods such as “salary refund” and “reverse salary payment” will become “weapons” to restrain senior executives and key personnel in financial institutions, and incentives will be formed within banks. An environment that pays equal attention to constraints and matches incentives with performance risks.
Was “asked for salary” by the former boss after resignation
The whole story of this bizarre case can be restored from the details of the verdict.
In October 2010, Zheng joined the Tianjin branch of Harbin Bank and became the president of the bank’s Binhai New Area branch thereafter.
In 2017, Zheng seemed to usher in a “seven-year itch” with his old club. In November of that year, the Tianjin Branch of Harbin Bank made the “Decision on the Handling of Zheng and Wang XX” and decided to remove Zheng from the Binhai New District Sub-branch. Long-term position, the tentative technical sequence of the rank is 15, leaving the post for collection, and transferred to the branch asset collection center to work. The off-post collection period is half a year. After the expiration, the branch will determine the next step according to the progress of the collection and the recovery of losses. Handling measures. In its “responsibility determination” section, it listed the losses caused by Zheng’s poor management as the sub-branch president, including “the sub-branch’s stock credit business is generally not in place before the loan investigation”, “the evaluation report is false”, “the post-loan management is not due diligence” etc.
Since then, the bank believed that Mr. Zheng had no clearing results after taking the post of departure clearance, and continued to be absent from work from November 2020 to June 2021. 100% recourse is made for the performance pay, totaling 706,668.42 yuan.
However, what Zheng said was different from that of the bank. Zheng claimed that he had no violations and had not received performance salary from 2013 to 2016. The labor contract between the two parties has expired and terminated in October 2020. It is lack of factual and legal basis for the company to notify itself of its dismissal eight months after the labor contract was terminated.
In addition, Zheng said that the “Harbin Bank Performance Remuneration Deferred Payment and Salary Recovery Management Measures” was formulated after his resignation and would not be binding on him.
What is dramatic is that the “Harbin Bank Performance Remuneration Deferred Payment and Salary Recovery Management Measures” was issued on November 17, 2020. If we look at the expulsion time (June 2021) proposed by Harbin Bank Tianjin Branch If the labor contract is to be terminated in October 2020 as claimed by Mr. Zheng during the effective time of the management measures, his resignation time will come into effect earlier than the management measures.
Although the two sides insisted on their own opinions, and some details were deeply involved in “Rashomon”, the court finally rejected the appeal and upheld the original judgment in the second instance.
The court of second instance stated that after the two parties terminated the labor relationship, Harbin Bank Tianjin Branch issued a notice of “Harbin Bank Performance Remuneration Delay Payment and Salary Recovery Management Measures” to pursue performance recourse against Zheng, which lacked basis and had exceeded the arbitration statute of limitations. Not supported.
Some people in the industry told reporters that although the deferred payment of performance remuneration and the deduction of remuneration are also applicable to resigned personnel and retirees, judging from the current case, it is still necessary to pay attention to the limitation of arbitration in actual legal application. For example, in this case, the court pointed out in the first instance that the Tianjin Branch of Harbin Bank was aware of the relevant issues in November 2017 and dismissed Zheng. “Notice” on the recourse to the performance-based compensation paid during the period from 2013 to 2016, the arbitration statute of limitations has expired. According to relevant regulations, the limitation period for labor disputes to apply for arbitration is one year, and the limitation period for arbitration is calculated from the date when the parties know or should know that their rights have been violated.
Banks’ “reverse salary asking” may gradually become normalized
In fact, this “reverse salary claim case” is not an isolated case. The bank’s performance-based remuneration recourse mechanism is gradually improving and playing a role.
The deferred payment and recourse kickback system of performance compensation means that the senior executives of financial companies and employees in positions that have a direct or important impact on risks fail to perform their duties diligently and perform major violations of laws and regulations or cause major risk losses. Financial companies can not only stop paying some or all of the unpaid salary, but also recover the performance salary that has been paid.
This mechanism can be traced back to 2010 when the former China Banking Regulatory Commission issued the “Commercial Bank Steady Salary Supervision Guidelines”, which required commercial banks to formulate regulations on deferred recourse and deductions for performance-based compensation; Guiding Opinions on the Salary Recourse and Kickback Mechanism”, further improving the relevant clauses of the performance remuneration recourse and kickback mechanism. And continue to carry out on-site inspection and evaluation of salary deferred payment. On August 2, 2022, the Ministry of Finance announced the “Notice on Further Strengthening the Financial Management of State-owned Financial Enterprises” again clearly proposing to establish and improve the salary distribution and deferral system and the accountability and salary recovery mechanism, which stipulates that this system is also applicable to resigned personnel and Retirees.
In fact, with the continuous improvement of the mechanism, many institutions have begun to “enter the game” and implement the system of deferred payment of performance salary and recourse kickback. According to information from the China Banking and Insurance Regulatory Commission in March this year, as of March, more than 95% of banking and insurance institutions have formulated and implemented performance-based salary deferred payment and recourse kickback systems. Especially in some high-risk institutions, relevant systems have played an important role in holding executives accountable for violations and recovering asset losses.
In addition, a reporter from China Business News found that in the 2022 annual reports of listed banks, China Merchants Bank, Bohai Bank, and Bank of Jiujiang have announced the specific amount of recourse deductions, and more than half of the banks have involved recourse deductions and extensions in their annual reports. Representation of pay for performance.
The 2022 annual report of China Merchants Bank shows that during the reporting period, there were 2,876 employees who performed performance remuneration recourse and deduction, and the total amount of recourse rebate performance remuneration was 58.24 million yuan. If estimated based on the total number of employees disclosed in the annual report of the year, about 2.6% The average employee was 20,300 yuan when they encountered the situation of recourse and deduction. In addition, according to the disclosure of the China Banking and Insurance Regulatory Commission in March, during the merger and reorganization period of five city commercial banks in Shanxi, 61 senior executives and key personnel were sought to deduct 33.59 million yuan in performance-based remuneration.
Compared with the above-mentioned two banks, although the overall recourse and rebate scale of China Bohai Bank is not large, the amount of “salary refund” per capita is quite high. The bank’s annual report shows that within 2022, 370 people will be recouped for performance compensation of 17.6 million yuan, with an average of 47,600 yuan per capita.
In addition, although many banks did not disclose the amount of recourse rebates, they all included related expressions of recourse rebates in their annual reports. For example, China Construction Bank, Industrial and Commercial Bank of China, and Agricultural Bank of China mentioned in their annual reports that if there is an abnormal risk exposure, etc., they will “recover the performance pay that has been paid within the corresponding period” and “stop paying the unpaid part”, etc. ICBC mentioned in its 2022 annual report that as of the date of disclosure, senior managers of the head office and employees in positions that have a significant impact on the risk of the head office will not be involved in performance-based remuneration in 2022.
It is worth noting that, in addition to recourse to rebates, deferred payment of performance salary has also become a key word mentioned in the bank’s annual report. For example, Bank of China, Bank of Communications, and China Everbright Bank have made regulations on the proportion and time of deferred payment of performance compensation: (for executives and key positions, etc.) the proportion of deferred payment should be at least 40%, and the deferred payment period should not be less than 3 years. Industrial Bank stipulates that the proportion of deferred payment of performance-based compensation for key senior management personnel is 50%.
Xu Weibo, an expert on market-oriented management mechanism reform of Zhiben Consulting, pointed out in his article that from the perspective of enterprises, it is necessary to establish a recourse and kickback mechanism for performance remuneration. Governance structure, risk management and control are of great significance. He suggested that enterprises can establish a system of recourse and kickback of performance remuneration based on their own actual conditions. Clear regulations on internal supervision and accountability have been made to avoid labor disputes and legal risks when the performance compensation of relevant personnel is claimed and deducted due to imperfect systems.
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