The Study On Legal Regulation Of Executive Compensation Of Listed Company

In the financial crisis, the executive compensation issue has become a major focus of all, for Chinese Listed Companies still pay over-high executive compensation which is un-associated with the performance of listed companies. In listed company, ownership and management have a high degree of separation, which causes cost of agency problems. Listed Company pay for operators to encourage them to fulfill their duties faithfully and diligently, however, the unsuccessful corporate governance makes the solution of the agency cost problem become the problem itself. This paper will analysis the legal regulation of executive compensation of listed company in the aspect of corporate governance. The paper is divided into four chapters.The first chapter is an overview. In order to analysis the legal regulation of executive compensation of listed company, first the study area and background must be explained, including the definition of listed company, the operator and the executive compensation and the status and problems of Chinese executive compensation.The second Chapter points out that the key to the legal regulation of executive compensation of listed company is corporate governance. Apart from corporate governance, there are still several ways to regulate the issue, including compensation limitation, judicial review, imposing tax on executive compensation and mandatory disclosure. However, these methods of regulation on executive compensation only have limited effect. The author analysis the theoretical foundation of the listed company executive compensation issue-the agency cost theory. And then the author points out that only well-developed executive compensation determining mechanism, which is based on the corporate governance, is the key to resolve the pay issue.Chapterâ…¢discusses the executive compensation determining mechanism. This mechanism includes executive compensation determination process, an effective isolation mechanism and adequate sources of information. This chapter introduces the executive compensation determining mechanism of the United States, Germany, Japan and China Listed Company.The last Chapter discusses the recommendation of the executive compensation determining mechanism. The proposal of the executive compensation should be made by the board of supervisors for the ownership structure, stakeholder theory, isolation mechanisms, access to information, practical effect; further, the author proposes a complete isolation between the board of supervisors and managers to strengthen supervisory mechanisms and adequate rights for information acquirement; finally, the author proposes two measures to make sure that the shareholders take part in the general meetings of shareholders.The executive compensation determining mechanism is a great important and complex issue. As the author's limited knowledge, the paper may not penetrate this issue deeply enough, may you please criticize the paper.