The Empirical Research In Top Management Compensation Incentive And Business Performance Of Realty Listed Company In China

With the developing of knowledge-based economy in 21st century, the competition among the enterprises is becoming fiercer and fiercer. In order to help enterprise won the competition, and make the enterprise develop healthily and constantly, the importance of enterprises'management has changed from physical capital to human capital. As the core of human capital, top management plays an important part in the developing of enterprise. Therefore, how to motivate them to work positively became a hotspot.The article chose the samples from the list companies which take realty business as the main industry in Shanghai and Shenzhen stock exchange, whose year is from 2004 to 2008.Through regression analyzing, we obtained the conclusions as follow: firstly, there is a positive correlation between the salary of top management and performance of realty listed company. It testifies that the realty listed company in china has built the executive pay principle of performance-related gradually. Secondly, with the expansion of the scale of realty listed companies, it will strengthen the impact of business performance on executive compensation. The larger realty list companies have established a relatively perfect system of pay--- performance contract. Therefore, the growth of the size in realty listed companies plays an important part in executive incentive. Thirdly, the ownership of realty listed companies will strengthen the impact of business performance on executive compensation, which confirmed the importance and usefulness of long-term incentives in the real estate industry, However, there is a very low equity ratio of top management in the realty industry from a statistical results, the holding members also very small, it reflects that the lack of long-term incentive in real estate industry, and should improve it constantly. Lastly, the larger proportion of state-owned shares of realty list companies, the weaker correlation between corporate performance and executive compensation. Therefore, it needs to be improved and perfected.According to the empirical analysis, this paper proposed related observations and recommendations to complete the executives'incentives in realty list companies. As follow:(1)improve the capital markets, and establish the rational and diversified ways of financing, which can reduce the operating risk of real estate industry.(2) increase the proportion of long-term incentive in real estate executives, and establish the related long-term incentive system;(3) speed up and improve the scale of real estate construction moderately, and improve the executives'incentives of larger real estate company; (4) improve the selection system of real estate companies, especially in the state-owned real estate company ; (5) establish the scientific and reasonable performance evaluation system, which can introducing the risk evaluation index and the EVA indicators in real estate companies; (6) set up the remuneration committee, and play a full role in supervisory; (7) improve the disclosure information system of executive pay. I hope that it can play an important part in improving the incentive mechanism in real estate industry.