Ping An’s Chairman Ma Didn’t Take a Salary in 2008

Feb. 24 (Bloomberg) -- Ping An Insurance (Group) Co., China’s second-largest insurer, said Chief Executive Officer Peter Ma will forgo his salary for 2008 after the company lost $2.3 billion on its investment in Fortis.
Ma, who earned 66.16 million yuan ($9.7 million) in 2007, made the decision after the financial crisis “affected company performance,” Ping An’s Shenzhen-based spokesman Sheng Ruisheng said in a telephone interview today.
Ping An has forecast a “significant” drop in annual profit because of the decline in the value of its stake in Belgium’s Fortis, bailed out by three European governments last year. Ma, who earned 33 times more than his counterpart at larger China Life Insurance Co. in 2007, joins executives at companies from Citigroup Inc. to Sany Heavy Industry Co. who have taken pay cuts as the financial crisis erodes earnings.
“That was the company’s response to the public’s skepticism over its high compensation and management abilities” following the Fortis losses, said Olive Xia, an analyst at Core Pacific Yamaichi in Shanghai. “It can help restore investor confidence, but will have little effect on company profit.”
Ping An’s net income may have dropped by 30 percent from 2007 to 13 billion yuan last year, said Xia. The company, scheduled to release 2008 financial results April 10, has fallen 58 percent in Hong Kong trading since the start of last year.
Pay Cuts
Ma’s compensation compares with the 1.99 million yuan made by Yang Chao, chairman of China Life, the nation’s biggest insurer, in 2007, and 1.156 million yuan PICC Property & Casualty Co. paid Chairman Wu Yan for the same year.
Sheng declined to say whether Ma, 53, received the money and is returning it or didn’t get paid last year, as well as whether other Ping An senior executives or board members agreed to compensation cuts.
Ma, who has been with Ping An since 1988 when the company was set up and has been chairman since 1994, gave 20 million yuan from the 66.16 million yuan to Beijing-based charity China Soong Ching Ling Foundation, the company said. His income after tax and the donation was 25.794 million yuan.
Citigroup Chief Executive Officer Vikram Pandit said Feb. 11 that he will take a salary of $1 and no bonus until the bank, which has accepted $45 billion in government bailout money, returns to profitability.
Sany Heavy, China’s biggest supplier of concrete-making equipment, said Feb. 5 it plans to cut Chairman Liang Wengen’s annual salary to 15 cents and slash the pay of board members by as much as 90 percent in 2009 because of the financial crisis.
Fortis Stake
Ping An in November 2007 paid 1.81 billion euros for a 4.9 percent stake in Fortis, which became a casualty of the global credit crunch after pouring 24.2 billion euros ($31 billion) into the acquisition of ABN Amro Holding NV assets in 2008 just as the U.S. subprime-mortgage market collapsed.
The Chinese insurer voted against a state-organized breakup of Fortis, once Belgium’s biggest financial services company, on Feb. 11, saying asset sales driven by the Belgian government “severely impaired” shareholders’ interests. Ping An reported a third-quarter loss after a 15.7 billion yuan impairment charge on the Fortis investment.
Ping An Chief Investment Officer John Pearce left the company two months ago.
To contact the reporter for this story: Zhang Dingmin in Beijing at Dzhang14@bloomberg.net Last Updated: February 24, 2009 00:36 EST