On August 9th, Caixin reported that according to the financial report disclosed by Guangdong Huaxing Bank in 2023, the bank's executives (directors and supervisors) are eligible for a subsidy of RMB 15,000 per person per meeting to attend a board of directors/supervisors meeting and RMB 10,000 per person to attend a shareholder meeting. Other types of meetings are reimbursed at around RMB 5000.

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On the afternoon of August 9th, in response to the high conference subsidies for directors and supervisors that have recently caused public concern, Guangdong Huaxing Bank exclusively responded to Caixin reporters that it mainly issues remuneration to independent directors in an appropriate form based on their attendance at meetings and job performance. The total annual compensation for individual independent directors is also within the normal range of the industry.

Furthermore, according to the bank's compensation management system, senior management of Huaxing Bank does not receive any conference subsidies when attending shareholder meetings, board of directors meetings, and special committees. Shareholders attending shareholder meetings do not receive subsidies, and executive directors do not receive director compensation or conference subsidies. The claim of high subsidies is a misunderstanding and misinterpretation.

On August 9th, a secretary of the board of directors of a listed bank told Caixin that this way of determining director allowances is relatively common, and it is mainly to stimulate directors to actively attend meetings and fulfill their duties. The allowance for independent directors is generally around 0.2-0.3 million yuan per year. The number of meetings per year is not many. If calculated by the number of meetings, it seems relatively high.

Caixin reporters noticed that on the morning of August 9th, Guangdong Huaxing Bank issued a statement on its official website stating, "Recently, some netizens took advantage of the information disclosure of the annual report of our bank to take words out of context, distort concepts, and give false reports. In response to this, our bank has complained to the relevant platform and will legally pursue those who maliciously spread rumors. At present, the main operating indicators of our bank meet regulatory requirements, and the business development situation is good."

The controversy caused by the disclosure of details.

This incident originated from the "Annual Remuneration for Directors, Supervisors, and Senior Executives" disclosed in Huaxing Bank's 2023 annual report.

The annual report shows that the directors' and supervisors' remuneration of the bank consists of basic allowance, due diligence allowance, and conference allowance. The report did not disclose the basic allowance, only the due diligence allowance of RMB 5000 per person per month.

What caused the controversy is the standard of conference allowance, which is RMB 10,000 per person per attendance of shareholder meetings and RMB 15,000 per person per attendance of board of directors/supervisors meetings. Other types of meeting allowances are between RMB 2000 and 5000.

The annual report shows that the board of directors of Huaxing Bank held a total of 13 meetings in 2023, approved 106 proposals, and reviewed or listened to 9 reports; the board of directors' special committees held a total of 33 meetings, approved 120 proposals, and reviewed or listened to 13 reports; the board of supervisors held a total of 6 meetings, approved 26 proposals, and listened to 23 reports; The supervisors' special committees held a total of 8 meetings and approved 25 proposals.

In this regard, relevant personnel from Huaxing Bank told Caixin that the 33 meetings mentioned in the self-media article are the total number of meetings held by six different board of directors' special committees. Counting the meetings per independent director is misleading.

The annual report finally shows that executive directors, full-time supervisors, and employee supervisors of Huaxing Bank do not receive director/supervisor remuneration.

The above-mentioned bank secretary stated that subsidies for directors and supervisors are industry practices, especially to encourage the participation of external directors and supervisors. However, it is uncommon for institutions to disclose the detailed allocation of subsidies, which may be more sensitive to the external.

Caixin reporters noticed that most banks disclose the total annual remuneration of directors and supervisors.

Is it difficult for external directors and supervisors and independent directors to perform their duties?

Cailian Press journalists noted that the director allowance standard announced by Hua Xia Bank is similar to that of Huaxing Bank.

On May 13, the proposal for amending the "Hua Xia Bank Co., Ltd. Director Allowance System" at the 2023 annual general meeting of shareholders of Hua Xia Bank showed that according to the company's governance reality and reference to comparable industry practices, it is proposed to adjust the bank's director allowance standard and plan to implement it as of January 1, 2024.

Specific labor compensation is adjusted from 0.18 million yuan per year to 0.28 million yuan per year; committee duty allowances are adjusted from "0.036 million yuan/person/year; if serving in multiple special committees, calculated cumulatively according to the number of appointments" to "0.075 million yuan/person/year; not cumulatively calculated if serving in multiple special committees"; cancellation of meeting and inspection subsidies (originally 0.012 million yuan/time), after adjustment, the director allowance standard is 0.355 million yuan/person/year.

On April 12, 2024, the State Council issued the "Several Opinions on Strengthening Regulatory Prevention of Risks and Promoting the High-quality Development of the Capital Market", which clearly stated," Effectively play the role of independent directors in supervision, and strengthen performance guarantee and constraints." This means that the responsibility of independent directors is further expanded. Subsequently, from public information, several listed companies have also adjusted the compensation of independent directors.

According to Wind data, at least more than 50 listed companies have separately issued announcements on the adjustment of compensation for independent directors of the company. In addition, more than 100 listed companies mentioned in board resolutions and other announcements that they plan to adjust compensation for independent directors, and the vast majority of companies are upwardly adjusting.

A brokerage industry analyst once told Cailian Press that the overall compensation in the banking industry has declined to a certain extent in recent years, especially for senior executives. Although independent directors do not belong to bank senior management, their increase in compensation may also be constrained by the industry. "How to provide independent directors with compensation equivalent to their responsibilities and rights is the power of bank boards and other relevant agencies, and also tests the wisdom of their management."