Research On Senior Executive Compensation System Versus Performance Of Corporate Governance

Economic background of marketplace pattern and effective establishment of the stock market are two prerequisites in my article. Then, the mechanisms and applied conditions of some prevalent compensation patterns for senior executive and the improvement of the performance of corporate governance by them are studied. In China listed companies, the senior executive compensation system has been developed from fixed compensation pattern to share of enterprise's remainder and from absence of stimulus to prevailing of short-term stimulus. At the moment, a part of corporations have come into effect the long-term stimulus to senior executives by means of awarding or selling themselves' stocks to them, but the senior executive compensation system is subject to annual remuneration system in most domestic companies. Meanwhile, the effects of the long-term stimulus of stocks are short to the anticipative ones.Finally, by analyzing the datum exposed by domestic listed companies, stocks and remuneration acquired by senior executives and the relationship between annual remuneration and the share of stocks-owned and performance of corporate governance are researched to show the effects of short-term and long-term stimulus (annual remuneration system and stock option system) in China listed companies. As is shown by the conclusion of empirical researches, there is remarkable positive correlation relationship between business performance of listed company and its annual remuneration of senior executives, but not between the performance and the rate of holding share of the senior executives. However, the results some scholars concluded on the basis of analyzing the data listed companies presented in 2001 indicate there is not remarkable positive correlation relationship between business performance and annual remuneration of senior executive.