From The Economist:

How executives are rewarded is one of the many mysteries of China’s increasingly powerful companies.

A new study by Zhihong Chen and Yuyan Guan, of the City University of Hong Kong, and Bin Ke, of Pennsylvania State University, casts a rare beam of light.

The authors examine “red chips”—companies operating in China but incorporated abroad and listed in Hong Kong. For many years this was the main way in which big Chinese companies interacted with the capital markets. The 83 mostly state-controlled companies covered by the study’s final year of data, 2005, account for more than half of the stockmarket value of all Chinese firms and more than one-third of the capitalisation of the Hong Kong Stock Exchange.

Senior executives’ cash pay was low by global standards: $180,000 a year on average. Almost every firm awarded stock options, worth an average of $140,000, giving bosses healthy top-ups as well as equity stakes—if those options were exercised. Remarkably, a lot never were. At more than half of the firms, no options were exercised within four years of vesting.