Research On China's Listed Companies Executive Compensation Structure And Corporate Performance

In recent years, China's listed companies executives compensation has become the focus of public concern and debate, which also raises concerns for the relationship between the executives pay and firm performance. Many scholars studied the relationship between them, and come to different conclusions. Too concerned about the level of executive compensation not carried out a structural study is one of the reasons(Chen Xinmin & Liu Shanmin,2003). How much compensation to pay the manager is not important, the important thing is how to pay their remuneration; compensation structure can contribute more to the improvement of firm value than level (Jensen & Murphy, 1990; Mehran,1995). As the gradual increase in equity-based incentives in China's listed companies, executive compensation structure has been formed diversely by the monetary compensation and equity compensation. In practice, how to organize the various components rate of compensation in order to achieve the best possible incentive effect has become the practical problems faced by the companies. Therefore, the study of the relationship between executive compensation structure and firm performance has important theoretical and practical significance. This paper systematically study the structure of executive compensation-related issues from the optimal compensation structure, compensation structure and firm performance, factors influencing pay structure, etc. and the key findings are as follows:Firstly, construct optimal structure model of executive compensation. In the present limited study of the optimal incentive combination, there are less research considering the mutual substitution between monetary compensation and share-based compensation, their different effects on the utility of executives and risk, expected return on equity, etc. Based on considering the above practical problems, this thesis derived optimal executive compensation structure model. This model provide a very powerful tool for analysis and interpretation for the relevant theoretical and practical issues.Secondly, analyze the development and current status of executive compensation structure. Using 2006-2008 data on listed companies compensation structure, and based on the comparative analysis of China's executive compensation evolution and US Japan executive compensation structure, this thesis distinct three different principal-agent-level of executive team, chairman and CEO, according to zero holdings, zero pay, zero holding +zero pay and holding+compensation it horizontal and vertical analyze and compare the three year top managers compensation structure.A few different conclusions with previous studies are proposed, and the underlying causes of self-adjustment by top managers in the changes of compensation structure is analyzed.Thirdly, study on the relationship between executives compensation structure and firm performance. By analyzing the relationship between the level and structure of executive compensation and performance, this thesis propose the following conclusions: the level and structure of executive compensation are significantly positively related with performance, the impact of compensation level on financial and market performance are different depending on the executive team, chairman and CEO; the influence of chairman compensation structure on market and financial structure is greater than the compensation level; in the relationship between financial performance and compensation, the CEO and executive team compensation structure has more impact on performance than compensation level; in the relationship between market performance and compensation, the CEO and executive team compensation structure has less impact on performance than compensation level.Finally, research on the factors affecting the structure of executive compensation. According to the theory of reward structure and previous empirical evidence and other related documents, summarized 16 determinants, distinguishing between executive team, chairman and CEO of the factors that affect the structure of executive compensation, conduct an empirical analysis, respectively in the environment of China's listed companies.The results showed that there are variety of factors affecting the structure of executive compensation. These factors include four aspects of ownership structure, board characteristics, executive characteristics and the company characteristics, a total of 10 factors. The factors affecting the executives, chairman and CEO compensation structure are not only the same, but the factors affecting the ownership structure are most obvious. In addition, the existence of the different factors with foreign companies are analyzed and explained. The above research can provide Specific and feasible suggestions for the guidance of designing and adjusting executive compensation structure.