Company directors say higher pay would lead to better performance
Company directors say higher pay would lead to better performance
Dragon Capital's Vu Huu Dien said company leaders should be paid more during a Tuesday meeting in Ha Noi held by the State Capital Investment Corporation (SCIC) and the Ha Noi Stock Exchange.
Salaries for directors and board members at the stock market's top 10 firms increased through the 2010-12 period from 39 to 52 per cent, ranging between VND900 million – VND1.9 billion (US$42.4-89.6 million) – four to five times higher than the average pay of staff.
"It should be 20-30 times that within the next three years," Dien said.
Currently, only 20 per cent of income comes from salary, while 78 per cent comes from allowances and barely 2 per cent from shares. Dien suggested that structure be changed to 60-20-20.
"Companies typically set up salaries for directors in accordance with the level of their rivals," he said, adding that this strategy resulted in a lack of competitiveness that failed to encourage long-term contributions.
In addition, leaders are often rewarded for past achievements instead of expected contributions.
According to circular 121/2012/TT-BTC on corporate management, businesses must have a remuneration department.
"But it does not exist in many companies, or if there is, it is not independent enough," Dien said.
A SCIC representative agreed that it was "vital" to "create incentives for board members" to work harder to develop their companies.
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