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China to give stock options to officials at state companies

China said it will give shares or options to executives of China National Petroleum Corp (中石油) as well as the nation's other 168 largest state-owned companies as incentives to improve their performance.

The plan by the government agency in charge of state-owned companies comes as the nation tries to improve the performance of state firms. Three years ago, China announced it was focusing on reorganizing 189 large state companies and said it will sell off or privatize the majority of the nation's 500,000 state firms.

"China will speed up the move to design and issue long and middle-term encouragement policies for executives of central state-owned enterprises," Li Rongrong (李榮融), chairman of China's State-owned Assets Supervision and Administration Commission, said in a statement.

It would be the first time China gave shares to executives of state-owned companies since the Communist Party took power in 1949. Stock options will first be offered to executives of overseas or listed units of the 169 companies, Li said.

"Enterprises first chosen should be those of standard corporate governance and have proper management," he said.

The announcement comes after the agency and the Ministry of Finance in April prohibited management buyouts of state firms.

Limits will be set on shareholdings given to executives, though the caps will vary among the 169 major state-owned companies, the agency said.

Executives of China's state-owned companies were underpaid in the past, the agency said. Many executives earned "hundreds of thousands of yuan" and yet managed "billions of dollars," the agency said in the statement.

China's 169 large state companies earned a combined 488 billion yuan (US$60 billion) of profit last year, 62 percent more than the previous year, according to the agency.
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