The Legal System Of Restricting Executive Compensation In Listed Companies

The issue of executive compensation has attracted a great deal of attention in all countries in recent years. The rationality of executive compensation have been called into question. It is generally believed that the executive compensation was beyond control, which will damage the interests of other peoples. In reaction to the phenomenon, many countries set up new rules to strictly regulate executive compensation issue in order to maintain the executive compensation in a reasonable level. Establishing a restraint mechanism for executive compensation, which play a significant role in protecting the interest of shareholder and promoting development of China's securities market.The article includes three parts. In part 1, I point out executive play an important part in listed companies and define executive in the eyes of law. The system of shareholder's limited liability brings about the reality of separation between ownership and management. This separation of ownership from management results in the entrustment and proxy between shareholders and the executive. At the same time, i introduce the compositions of executive compensation and analyze the reasons of excess executive compensation. In part 2, In reaction to the phenomenon that the executive compensation was beyond control, discuss how can law work and what role should law play in this issue. The duty of law is establish a rational mechanism for balancing the interests of all parties. In this part, I also introduce some methods that use in restricting the executive compensation, including exercise external control and perfect the system of corporation governance structure. There are compensation information disclosure, compensation committee and proxy. In part 3, I make my own suggestions to improve our executive compensation legal system in the view of the system of corporation governance structure...