The Financial Supervisory Commission yesterday ordered Chaoyang Life Insurance Co (朝陽人壽) to cut its chairman’s salary by 30 percent in the next 15 months for a number of infractions.
For his company’s failure to bring its risk-based capital (RBC) ratio to above 200 percent in line with regulatory guidelines, the commission imposed a 30 percent wage cut on Chaoyang Life chairman Li Chih-chung (栗志中) for a year.
Li’s salary is also to be cut by 30 percent for another three months after he breached corporate governance rules by giving himself a 36.66 percent pay increase in this year’s compensation review without gaining the approval of the company’s board of directors, the commission said.
The RBC requirement establishes a minimum liquid reserve that protects a financial institution, its customers and the economy by ensuring that the firm has sufficient capital to sustain possible operating losses.
The troubled insurer’s RBC ratio is estimated to be below zero and, as of September, its net worth was tallied at about NT$2.2 billion (US$66.5 million) in the red, the commission said.
The company has pledged to initiate a NT$1.55 billion real-estate-backed capital increase program on Friday, aiming to bring its RBC ratio above 50 percent.
The insurer’s president and vice president were granted pay raises of about 5 percent this year, the commission said, adding that the salary docked from Li would be returned to the company.
It was the second time in two years that Li has been penalized for the same offense, the commission said.
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