HONG KONG A top 10 Chinese fund manager has asked senior executives to return pay received over the past five years that exceeds a new cap, to tally with a government initiative promoting economic equality, said two people with direct knowledge of the matter.

China Merchants Fund Management (China Merchants FM) wants the executives to repay income beyond a three million yuan (US$421,330 or RM1.8 million) limit imposed this year for each year from 2019 to 2023, the people said.

The firm, wholly owned by China Merchants Group (CMG) - one of the country's largest state-owned conglomerates - is run by six executives and there are another three who run subsidiaries.

Neither China Merchants FM nor CMG responded to Reuters requests for comment.

Capping salaries and recalling pay have become avenues through which state-owned companies can adhere to the government's "common prosperity" campaign which since 2021 has sought to address social and income inequality as economic growth slows.

The campaign has seen authorities discourage extravagant lifestyles among the financial elite. Fund managers have come into focus due to the high profit earned even though the stock market has performed poorly, the people said.

China Merchants FM has already asked some portfolio managers to return pay from last year that exceeded the three million yuan threshold, Reuters reported in July.

The Shenzhen-based firm informed both the portfolio managers and senior executives - about 60 in total - in June and started to receive money in July, said one of the people, who declined to be identified as the information was private.

It was not clear whether China Merchants FM can pursue repayment from former staff.

Group affiliate Bosera Asset Management, 49% owned by CMG, capped pay at 2.9 million yuan and asked some staff to return any excess received last year, Reuters previously reported.

At least two other fund managers have introduced a five-year claw-back, with senior management the most prominent "targets", the second person said.

Auditors from the National Audit Office visited China Merchants FM and around a dozen fund managers in the first half of this year, underscoring widening scrutiny of the sector, said two other people with knowledge of the visits, declining to be identified due to the sensitivity of the matter.

They deemed salaries at some of the firms too high and requested they set pay caps and recover money, the people said, without specifying what they requested of China Merchants FM.

The National Audit Office did not respond to a request for comment.

The base salary of senior executives and department heads in sales and investing at Chinese fund managers ranges from 1.6 million yuan to six million yuan, showed the 2023 China Salary Guide of headhunter Morgan McKinley.

  - Reuters