China asks finance firms to suspend stock options

SHANGHAI, Jan 27 (Reuters) - China's Ministry of Finance
has asked state-owned financial institutions to suspend stock
option incentives for managers and employee stock ownership
plans during the global financial crisis.

A notice from the ministry, quoted by the official Xinhua
news agency late on Monday, said such schemes should be halted
until the government released specific policies covering them.

Xinhua did not elaborate on when the suspension might be
lifted, but it quoted the ministry as saying financial firms
should keep executives' compensation at a "reasonable" level,
to avoid huge gaps between their pay and the salaries of
lower-level employees and the public.

Financial companies should monitor the business expenses of
senior management and report their plans to control executive
compensation to local governments by Jan. 31, the ministry
said.

The announcement followed news that some state-owned
financial firms were paying annual salaries of more than 10
million yuan ($1.5 million) to top managers, Xinhua said.

State-owned financial firms include China's biggest banks
as well as many insurers and brokerages. The government is
believed to be keen to prevent revelations of high pay at state
firms from worsening social tensions as the country's economic
growth slows and more people lose their jobs.
($1 = 6.83 yuan)
(Reporting by Andrew Torchia; Editing by Kim Coghill)