Visual China

BEIJING, June 6 (TMTPost) – As a payday arrived at CITIC Securities on Monday, several employees received their pay stubs and noticed a decrease in their base salaries.

CITIC Securities has lowered the basic salaries for employees below the rank of managing director (MD) in the investment banking division at its headquarters. As salary details are personal information, the majority of employees are hesitant to disclose the specifics. However, according to a few sources, a portion of these employees have experienced reductions ranging from 6,000 yuan ($842.98) to 10,000 yuan ($1,404.97). 

CITIC Securities has not respond to a request for comment.

Compensation at securities companies primarily consists of the base salary and year-end bonus. The year-end bonus for employees at departments such as investment banking accounts for a higher proportion of their compensation. Meanwhile, the year-end bonus as a percentage of their compensation increases with higher ranks. According to the 2022 annual report of brokerage firms, there has been a decline in the year-end bonuses for some brokerages. In particular, some highest-paid companies, including China International Capital Corporation Limited (CICC) (601995.SH/03908.HK), CITIC Securities (600030.SH/06030.HK), China Securities Co., Ltd. (CSC) (601066.SH/06066.HK), and Huatai Securities (HTSC) (601688.SH/06886.HK), have all cut year-end bonuses.

Investment bank ranks usually are Managing Director (MD), Executive Director (ED), Director, Senior Vice President (SVP), Vice President (VP), Senior Associate, and Associate, in the descending order. At CITIC Securities, fresh graduates entering the front-desk department typically start at the senior associate-1 level. Based on current information, certain staff members have experienced salary reductions. Specifically, employees at the SA1 level saw their base salaries fall by 6,000 yuan, SA3 by 8,000 yuan, and VP by 8,000 to 10,000 yuan.

The recent adjustments to the base salaries at CITIC Securities only affect the employees at the investment banking headquarters. There have been no reductions in base salaries for employees in regional investment banking and other departments. However, in the sales department, although base salaries remain unchanged, there was a change in the commission ratio at the beginning of this year, with the standards of performance going up.

The specific plan for adjusting base salaries for employees at the MD level and above within the investment banking division has not been announced yet. However, it is anticipated that the adjustment for the year-end bonus could be more significant. As of now, CITIC Securities has not distributed its 2022 year-end bonuses for the investment banking department. CICC and Huatai Securities, two major players in the securities industry, have already issued their 2022 year-end bonuses, which have generally experienced a notable reduction.

According to the 2022 annual report, CITIC Securities had maintained its top position in terms of performance and average salary, with its average salary in 2022 standing at 836,400 yuan, an 11.68% decrease from the previous year. Among the 23 listed brokerages, the average salary is approximately 529,100 yuan, indicating a reduction of nearly 110,000 yuan compared to the previous year. Notably, the decline in salaries is more significant for the top players.

Certain industry insiders believed that the base salary was stipulated in labor contracts, and thus was unlikely to be subject to adjustment. However, enterprises can apply Article 35, Article 40, and Article 51 of the Labor Contract Law when considering salary reductions. These legal provisions outline the basis for salary adjustments, including consensus-based salary adjustments as well as adjustments related to job transfers due to incompetence.

According to a senior financial industry auditor, the adjustment of compensation incentives within securities companies should not be solely seen from the perspective of fairness. He emphasizes that a balanced approach should be adopted, which takes into consideration both the need for salary reductions and clear rules and guidelines.