May 17 (NBD) -- There have been a lot of talks about Shenwan Hongyuan Securities Underwriting Sponsor Co., Ltd. after the company's General Manager Zhang Jian answered employees' questions about performance evaluation and compensation system and decided to set up an interest-free fund of no more than 500,000 yuan (78,518.8 U.S. dollars) to help employees deal with difficulties in daily life.

Zhang said the money is from his own pocket, and has no connection with the company. Employees who borrow money from him must repay before leaving this company. Otherwise, he won't approve the resignations.

The underwriter is a subsidiary of Shanghai-based Shenwan Hongyuan Securities Co. It is noticed that the securities company adjusted its compensation structure last year with merit pay taking up 20 percent to 50 percent of base compensation. Employees view the adjustment as a wage reduction in a disguised form.

NBD learned from an insider that the compensation an employee of the security company received in May was only 4,783.65 yuan (751.2 U.S. dollars). The person also said many employees are unable to pay their mortgages after the wage reduction. That's why the company's general manager decided to set up a fund to help needy ones go through the difficulties.

According to the 2017 annual results of Shenwan Hongyuan Securities Co, its investment bank business is combating with a sluggish bond market. The investment banking unit generated commission income of 1.397 billion yuan (219.4 million U.S. dollars) last year, a significant decrease of 33.95 percent year over year.

The underwriter's General Manager Zhang Jian said he joined the company only a few months ago, so he doesn't know much about the adjustment of compensation and awarding system. But according to previous practices, the company will clear accounts at the year end and decide whether to provide back pay.   

Given the current high housing prices, commodity prices and other costs, the compensation system adjustment will make a great impact on young employees' daily life. In that case, it would be hard to talk about career development if one cannot keep himself full and warm, Zhang added.

In light of this, the underwriter has been dedicating to pushing forward the reform of the compensation system in line with the standards of big investment banks since the beginning of this year. All formality procedures have been finished as of the end of April and the readjustment is expected to get approval from the parent company in late May and to go into effect in the second half of this year. 

Email: tanyuhan@nbd.com.cn