Autumn and Winter Check-in Challenge
Recently, China Merchants Bank issued an announcement on the recourse clawback of performance pay in 2022, which has attracted widespread attention in the market. The announcement pointed out that in 2022, China Merchants Bank will have 2,876 employees who will pursue the recourse and clawback of performance pay, and the total amount of performance pay reclaimed will reach 58.24 million yuan. This measure not only reflects the great importance that banks attach to risk prevention and control, but also reflects that the financial industry is gradually realizing the governance concept of sharing risks and responsibilities when dealing with risks.
As major participants in the financial market, banks assume the important responsibility of ensuring financial security and maintaining market stability. The occurrence of financial risks is often closely related to factors such as internal management loopholes and illegal operations of employees. Therefore, the establishment of a sound salary management system, especially for employees in high-risk positions, the implementation of performance-based pay deferred payment and recourse clawback mechanism, can effectively prevent and control financial risks.
For senior managers of financial enterprises and employees in positions that have a direct or significant impact on risk, their basic remuneration is generally not higher than 35% of the total remuneration. This regulation reflects the financial industry's deep understanding of the balance between risk and return. By deferring more than 40% of pay-for-performance, banks are able to ensure that risk factors are fully considered in pursuit of business benefits, so that more prudent and responsible decisions can be made.
In fact, this system of deferred payment of performance-based pay and recourse clawback is not original to CMB. In recent years, an increasing number of banks have begun to establish and implement similar systems. Whether it is a large state-owned bank, a joint-stock bank, or even some local banks, all of them are actively promoting this mechanism. This not only reflects the consensus of the banking industry in risk prevention and control, but also reflects the recognition of the entire industry on the concept of risk and responsibility sharing.
It is important to note that this recourse clawback mechanism is not limited to active employees. For those who have left or retired, they are also at risk of recourse to performance-based pay if there are irregularities or significant losses. This undoubtedly further strengthens the bank's ability to prevent and control risks, and also reminds everyone working in the financial industry to always maintain a sense of awe of risks, strictly abide by relevant regulations, and earnestly perform their duties.
However, in the process of implementing this system, we should also be wary of its possible negative impacts. For example, an overly strict recourse clawback mechanism may have a dampening effect on employee motivation and innovation. Therefore, when formulating and implementing this system, banks need to fully consider the interests of employees and ensure that the system is fair, reasonable and effective.
To sum up, the author believes that the practice of banks pursuing performance-based compensation is a vivid embodiment of the concept of risk and responsibility sharing. By establishing and improving the deferred payment of performance-based remuneration and recourse clawback mechanism, the banking industry can not only improve its own risk prevention and control capabilities, but also help promote the development of the entire industry in a healthier and more stable direction. In the future, we look forward to more banks joining the ranks and jointly contributing to the stability and prosperity of the financial market.