The Regulation Of Listed Companies' Executive Pay In The Financial Sector Of China

The business activity of listed companies in the financial sector relates to the economic development and stability of China, the excessive executive pay may raise the risk and affect our own economic situation, the scandal of AIG is a typical example. The executive pay disclosed by the listed companies in the financial sector of China also attracts widespread discussion, how to standardize and disclose the executive pay in the financial sector has become an all-important subject in the circumstance of financial crisis.With the Principles for Sound Compensation Practices and Principles for Sound Compensation Practices: Implementation Standards published by FSB in 2009, the financial regulators of many countries actively answered the call and established a series of guidance to regulate the executive pay in the financial sector. For example, Federal Reserve System published the proposal of the Principal Principles of Risk-Adjusted Compensation in October 2009 and the official version in 2010. Financial Services Authority published the Code on Remuneration Practices in Financial Services in August 2009 too. Governments have already realized that the regulation of executive pay in financial sector has become the urgent risk at present.The article begins with the definitions and theories to analyze the economic basis of executive pay. Subsequently, the article lays more emphasis on the experience of regulation of executive pay overseas and their merits and demerits. In the third part, the article illustrates the history and present state of the regulation of listed companies'executive pay in the financial sector in China and its drawbacks. Finally, several measures for the regulation of listed companies'executive pay in the financial sector in China are suggested: introducing the rules of structures of executive pay; establishing deferral of executive pay in the whole financial sector to make sure that the executive pay is linked to the risk management; rebuilding the determination mechanism of executive pay and strengthen the supervision; enhancing the transparency of executive pay; strengthen judicial relief, etc.