Would you take a 96% pay cut to save your company? The property developer Country Garden is scrambling to scrounge up as much funds as it can to pay back its debt. Now, the company is targeting the paychecks of its top executives to save money.
The president, chairman, and two other executives of the debt-laden Country Garden are getting a pay cut to narrow the company’s costs, the company said in a stock filing on Tuesday. All four will now earn 120,000 RMB, or about $16,900, a year.
Country Garden’s president Mo Bin is getting the steepest cut to his paycheck. He earned 3 million RMB ($423,700); his new pay represents a 96% cut in salary. Yang Ziying, an executive director also affected by the pay cuts, originally drew a 2 million RMB ($282,000) salary.
Yang Huiyan, the company’s chair, and her husband, a non-executive director, are the other two executives taking a pay cut.
For Yang, at least, the drop in pay is largely symbolic. Her original salary was 370,000 RMB, or $52,000. Instead, Yang—the daughter of company founder Yang Guoqiang—owns a 52% stake in Country Garden Holdings and a 36% stake in its affiliated property management firm, Country Garden Services Holdings. Bloomberg estimates that Yang has collected almost $5 billion in dividends from the two listed companies.
Yang became Country Garden vice-chair in 2012, then co-chair in 2018. She became the sole chair of the company after her father resigned in March this year.
In addition to the pay reduction, the four executives will no longer enjoy executive perks such as the use of company cars, free meals at the office cafeteria, and company-reimbursed medical check-ups. This isn’t the first steep pay cut for Country Garden executives: In Sept. 2022, the company dropped president Mo Bin’s annual salary to 3 million RMB from 15 million and executive director Yang Ziying’s salary to 2 million RMB from 10 million. (That means Mo’s pay has dropped by 99.2% since late 2022)
Country Garden was once seen as a ‘model developer’. It was previously China’s largest developer by sales and has developments in almost every province in China. The developer was able to stay out of the spotlight for much of China’s property crisis, but the company gained unwanted attention when it missed payments on two dollar bonds in August. Country Garden had about 1.36 trillion RMB ($191 billion) in liabilities as of June this year.
In October, a panel of global banks and investors declared Country Garden to have defaulted on its dollar bonds after the developer failed to pay a $15.4 million interest payment due Sept. 17 within the grace period.
Yet the developer managed to avoid its first onshore default this week. Country Garden remitted 800 million yuan ($112 million) to onshore bondholders, according to a filing on the Shenzhen Stock Exchange.
Country Garden said Thursday that it would sell a stake in China’s largest operator of shopping malls worth about $428 million. In a stock filing, the developer said the proceeds would help with its offshore debt.
Yang’s fortunes have plummeted as China’s property crisis drags on. According to a Bloomberg calculation in August, Yang’s net worth has dropped more than 80%, or by about $28 billion, from its peak in June 2021.