Multiple public fund companies are preparing for a "salary deduction system" in which employees will have their salaries deducted for major failures or falsifying assessments.

The latest release from the China Securities Investment Fund Industry Association is the "Guidelines for Performance Evaluation and Management of Fund Management Companies". The guidelines clearly state that fund management companies should establish strict accountability mechanisms to enhance the constraints of compensation management, including but not limited to salary suspension, recovery, and clawback. It is understood that several fund companies are currently studying and drafting performance-based compensation recovery and clawback-related systems. From the perspective of institutional design, if employees engage in performance evaluation fraud, trigger major risk events, or commit major negligence, or if there are violations related to salary payments at the company level, it may trigger the performance-based compensation recovery and clawback mechanism. This system will not only apply to all current employees, but also to former and retired employees. It is worth noting that the compensation recovery and clawback system is not a new concept in the financial industry, as it has been implemented for many years in the banking sector. Establishing a performance-based compensation recovery and clawback system is expected to encourage industry professionals to diligently and carefully fulfill their duties and strengthen institutional compliance and risk management levels. Additionally, sources familiar with the matter told reporters that in accordance with industry practices, performance-based compensation recovery and clawback are only applicable in specific situations such as major negligence, violations of laws and regulations, or inadequate job performance. Public institutions will strictly limit the scope of application during the design of the system to prevent its abuse.