Research On Executive Compensation Structure Of Chinese Listed Companies Based On Enterprise Growth

The compensation system is an important part of modern corporate governance. The characteristics of separation of ownership and control of the modern enterprise determines the inconsistent between manager acts with the shareholder interests, so designing effective executives pay incentive mechanisms, lead executive behavior, personal performance goals and business interests to consistent direction, become a core issue that modern enterprise management to resolve. The compensation is the most direct and effective way for executives incentive, and establishing an effective compensation motivation system, focus not only on absolute levels of pay equity, but pay more attention to the rationality of the pay structure, the incentive effect of pay structure is stronger than that of the pay level. Whether the pay structure reasonable or not is an important factor affecting the development of the enterprise. Optimal contract theory is to recognize the substance of linking executive pay to performance, and getting the two aspects increasingly connected, so to solve the conflict of principal-agent, executive compensation structures should enable executives to maximize the incentive mechanism to promote business growth.The basic job of pay structure to do is to determine a reasonable pay form and their composition, balancing the short-term incentives and long-term incentives of compensation, encourages executives to achieve best human capital value, promote the achievement of corporate goals and stable growth. But for a long time, both at home and abroad for the theoretical study of the executive pay structure and corporate practice was highlighted many problems, especially in China, research on executive compensation system is still at an early stage. In recent years, due to variety causes led executives pay to distorted development, pay structure design exposed out many defects, led the contradictions of difficult alternative of compensation incentive and its design defects increasingly highlight, that caused low effect and distorted phenomenon of executive pay contract arrangements, and led to social concern and criticized constantly increased for executive paid, on this, scholars has many research, but researching problems are too concentrated on executive pay level and relationship of executive pay and enterprise performance, study on executive pay structure was relatively weak, existing research has mainly focused on the form of the executive pay structure, pay structure impact on business performance, and so on, and there is a big difference, even contradictory study conclusion. Along with the enhancement of China’s listed company shares inspiration, Executive pay structure became more diversified, thus as theory researchers, practitioners and policy makers, there is a need to re-examine executive compensation structure features, deeply study into executive compensation structures determining mechanism and the effectiveness of its design. There will be of great theoretical and practical significance to further enriched and improved executive compensation theory of motivation, guiding the enterprises to build a rational and effective executive pay system.This article combines governance practice of listed company of China, take human capital theory, property incentive theory, delegate agent theory, and entrepreneurs theory as research base, to analyze the latest research trend both at home and abroad, summary listed company’s development status and the executives pay incentive features both at home and abroad, combines theory research and empirical research phase, qualitative analysis and quantitative analysis, using scientific mathematical statistics method, to discuss the integrated factors that decide executives pay structure, analyze effects role that executives pay structure play on enterprise growth, and to explore the best incentives of executive pay structure<, Take the human capital value as the core, building a pay structure optimization system of balanced risk-sharing and incentive strength, and put forward policy proposals to make a perfect executive pay structure mechanism and strengthen executive pay incentive, and theory and practice basis to improve the enterprise pay incentive system and bring into executive human capital value, and make enterprise to get sustainable and stable development.This article’s main findings are as follows:The first, constructed the model of the relationship of executive human capital value realization, compensation distribution and enterprises growth. Reference past scholars research results, this article divided executives human capital value into three forms of basic value,output value and social value, described the relationship of them and revealed the role mechanism of executives human capital value achieving process, compensation determine and the enterprise growth, that executives pay distribution of determines mechanism should to take executives different quality human capital value for core, makes executives of human capital value to get reasonable reflected and compensation, so as to motivate executives pay own efforts to improve their performance, and to promote enterprises to get sustainable development and growth.The Second, analysed the executive compensation structure situation of listed componies in our country, resveled that there are still many unreasonable problems of the executive pay structure in China, such as form single, unbalanced, the pay gap is too large, pay system is not perfect etc., and by summary contrast different area executives pay structure of United Kingdom and European other countries, United States, and Japan etc., to reference the experience of developed countries for providing useful lessons for China’s enterprise executive pay structures and incentive mode of practice and the future reform of pay management.The third, human capital value plays an important role on the determination of executive pay structure. The determination of the executive pay structure is the result of several factors combined effects. Executive compensation structure is not a separate existence as an independent whole in the corporate practice, in the design process of pay structure, under the influence of various factors, including its underlying factors of human capital characteristics, internal governance, external constraints, and corporate governance, by the moderating effect of these factors to make executive pay structures have a positive effect on business growth. Due to space limitations and the availability of data, this paper mainly studies the influence on the executive pay structure of characteristics of executive human capital and corporate governance factors. Which human capital factors include inherent human capital, utility human capital and social human capital. Inherent human capital stock takes senior age, knowledge, professional background, business know-how for the analysis variables. Utility human capital take corporate performance as the variable, social human capital take the executive reputation and social networks-social as analysis variables. Corporate governance factors primarily include ownership structure, corporate governance and enterprise characteristics. By constructing a structural equation, to make an empirical analysis of effects that human capital characteristics and corporate governance factors of executives played on executive compensation determine. Results displayed, the base role of executives human capital value to executives pay structure determines is no full to play, it only explained17.7%of pay structure determine; in executives human capital value, utility value is strong related with executive pay structure, in the inner value, executive education level, and career experience are positive related with executives pay structure, and social value of relevance weaker, which social relations and executives pay structure is negative related. This shows that in the practice of enterprise pay distribution in our country, and executives pay distribution is not based primarily on the value of human capital, and more under the influence of other factors. Corporate governance, ownership concentration and the size of the Board, the Board of supervisors, company size and scale, the five factors are the most important internal governance factors to decide executive pay structure.The forth, the executive compensation structure plays an important role on firm growth, both showing a linear relationship. The highest principle to judge the reasonableness of the corporate executive pay structure is whether it can best promote business growth. So, this article take listed company of related data of2008-2012, to analyze the impact of executives pay structure to enterprise growth, results suggests that:simple fixed pay of increased cannot promote enterprise growth effectively; risk pay level has active of impact to enterprise growth; equity incentive strength can significantly promote enterprise development and growth; reasonable pay gap is conducive to incentive managers; executive pay structure and enterprise growth rendering nonlinear relationship, executives pay structure exists best interval incentive effect. When executive risk pay ratio lies between30%-50%, it is most conducive to enterprise growth. When risks pay ratio is50%, enterprise growth is to the highest value. When it is higher than50%, enterprise growth has a large drop, when it at70%, enterprise growth is the lowest, when the risk pay ratio is greater than70%, enterprise growth began to increase, but growth was much lower than the increase of the risk pay ratio in the10%-50%area.The fifth, built a mechanism determining model for executive pay structure and proposed measures to strengthen the effectiveness of determine system of executive pay structure. Based on empirical analysis, to take the human capital value and it’s the property right as basis, enhance business growth for the purpose to proposed determining mechanism of executive pay structure. Determining mechanism of the executive pay structure is not the single factor results, but from both micro-level enterprises and the external environment changing features, building a fitness, balance, motivation and persistence characteristics of modern enterprises executive pay structure based comprehensive, dynamic and solid story with rationality. That according to executives pay structure achieved of dynamic process, take human capital value for core, company governance structure for base, company external regulatory mechanism for premise, external market competition mechanism for constraint, to make pursuant of executives pay structure determines materialized, determines reasonable, effective executives pay structure, and take various effective measures to make pay structure of determines system to really play its due of incentive and constraint features.The sixth, optimized the corporate executive pay structure model. Design mechanism of executive pay structure should take the value of human capital as the core, according to executive fundamental value of human capital to determine the basic pay, the productand volue and social value determine the short-term performance-related pay and long-term risk pay. Optimization system of executive pay structures should includ pay patterns, pay component and the pay gap. Executive pay should combine variety pay forms, including main forms of fixed pay, short-term incentive pay and long-term risk pay and welfare. Which fixed pay includ basic pay, allowances and subsides; short-term incentive pay main is performance pay, including annual, quarter and monthly bonus and special performance award plans; long-term risk pay main refers to equity incentive, includ stock, period stock, option, and virtual stock.Welfare includ guaranteed and incentive welfare. When the enterprises desige executive pay structure system, they should further increase the incentive pay forms. As to the ratio of executive pay forms, under China’s current situation, the ratio of executive risk pay in total compensation should be in the30%-50%range. And consider various conditions such as corporate governance and market competition, the pay gap should be within reasonable range, not allowed to extend indefinitely.