China asks finance firms to suspend stock options

SHANGHAI Jan 27 (Reuters) - China's Ministry of Finance has asked state-owned financial institutions to suspend stock option incentives for managers and employee stock ownership plans during the global financial crisis.

A notice from the ministry, quoted by the official Xinhua news agency late on Monday, said such schemes should be halted until the government released specific policies covering them.

Xinhua did not elaborate on when the suspension might be lifted, but it quoted the ministry as saying financial firms should keep executives' compensation at a "reasonable" level, to avoid huge gaps between their pay and the salaries of lower-level employees and the public.

Financial companies should monitor the business expenses of senior management and report their plans to control executive compensation to local governments by Jan. 31, the ministry said.

The announcement followed news that some state-owned financial firms were paying annual salaries of more than 10 million yuan ($1.5 million) to top managers, Xinhua said.

State-owned financial firms include China's biggest banks as well as many insurers and brokerages. The government is believed to be keen to prevent revelations of high pay at state firms from worsening social tensions as the country's economic growth slows and more people lose their jobs. ($1 = 6.83 yuan) (Reporting by Andrew Torchia; Editing by Kim Coghill)