Executive Pay Stirs Outrage, Becomes Political Issue in Iran

Local media have published pay-slips of top managers at banks, other companies, showing their compensation to be dozens of times the average monthly income of an Iranian urban household.

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Iranian President Hassan Rohani speaks in parliament on May 2016.
Iranian President Hassan Rohani speaks in parliament on May 2016.Credit: Ebrahim Noroozi, AP

REUTERS - Executive pay, a source of controversy at shareholder meetings in the West, has become a political issue in Iran where revelations of high compensation packages at state-owned firms are being used to attack moderate President Hassan Rohani.

Over the last several weeks, local media have published the pay-slips of top managers at banks and other companies, showing their compensation to be dozens of times the average monthly income of an Iranian urban household, about $650.

In a country that portrays the 1979 Islamic revolution as a revolt of the poor against exploitation and oppression, the revelations have triggered outrage. National newspapers and television are criticizing income inequality in the country, and people are denouncing executives' salaries on social media.

Rohani's conservative opponents are using the uproar to highlight the fact that living standards for ordinary Iranians have improved little since he took office in late 2013, with the official unemployment rate near 12 percent.

The issue is sensitive for Rohani because he justified a deal with world powers to curb Tehran's nuclear program partly on the grounds that it would aid the economy. International sanctions on Iran were lifted in January but economic benefits have been slow to come, partly because big foreign banks remain wary of the country.

"The government says the Treasury is empty of funds...but it has enough money to pay astronomical salaries and huge bonuses," the YJC news agency quoted Hamid Rasaei, a former lawmaker who is a strong critic of the nuclear deal, as saying on Wednesday.

In the worst case, the uproar over executive pay could make it harder for Rohani to open the economy further to foreign investment and push reforms to foster the private sector, both declared goals of his administration.

"The salary leaks were the result of political infighting that was launched by Rohani's conservative rivals to undermine him before the upcoming election," said Saeed Laylaz, a Tehran-based economist, referring to presidential polls next year.

The source of the leaks has not been identified, but the pay-slips were first published by news agencies close to the conservative establishment. However, Laylaz said stirring up resentment of income inequality was risky in Iran because it could develop into criticism of the entire political system.

"Its consequences would not be limited to Rohani - it would put the credibility of the whole Islamic Republic at risk."

Iranian women at prayer in Tehran, July 6, 2016.Credit: Ebrahim Noroozi/AP

The pay-slip leaks showed some senior managers at the government-owned Central Insurance Co (CIC) were paid up to 870 million rials ($28,339 at the official exchange rate) in March.

The company said the pay-slips were for the last month of the Iranian calendar year and therefore were unusually large, including arrears, loans and bonuses.

Nevertheless, CIC General Manager Mohammad Ebrahim Amin stepped down in May, denying any wrongdoing but saying he regretted the affair had prompted attacks on his company, Rohani and the government.

The uproar continued with the publication of a document showing one manager at state-owned Bank Tejarat received the equivalent of about $230,000 last November. The bank said the media had misrepresented the document because it showed not only salary payments but also pension amounts and other arrears.

Then the salary of the managing director of the National Development Fund (NDF), Safdar Hosseini, was revealed to be $18,700 a month. The NDF is Iran's sovereign wealth fund and Hosseini was directly appointed by Rohani.

Hosseini said he had voluntarily reformed the NDF's salary system several months previously and paid back to the government a portion of his salary which he considered excessive.

Iranian law states that the top salary in the government should not be more than seven times that of the lowest-paid government employee. However, the law is ambiguous when it comes to bonuses, benefits and other incentives.

Rohani blamed his predecessor Mahmoud Ahmadinejad for giving the green light to high executive salaries, and criticized the judiciary for turning a blind eye to them.

Although amounts revealed in the media were "legal", he said last week, they violated the "moral values of the government".

Supreme Leader Ayatollah Ali Khamenei, who is the most powerful man in Iran and believed to be more conservative than Rohani, and more wary of opening the country to the rest of the world, last week criticized "astronomical salaries" which he said contradicted national values.

A campaign has been launched on social media, the My Pay-slip Challenge, to persuade politicians and ordinary people to publish their pay-slips.

Some senior Iranian officials, including the spokesman for the Revolutionary Guards, General Ramezan Sharif, have said they would like to join the campaign but cannot reveal personal information because of security concerns. Rohani and Khamenei, who are believed to lead austere lifestyles and do not have high salaries, have not declared whether they will participate.

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