A Study Of The Relationship Between Executives' Salaries And Corporate Performance-based On The Ownership Structure

In knowledge economy era of 21st century, economy development mainly depends on knowledge, knowledge creators and knowledge carriers, so the competition for human resources has become a focus of competition between enterprises. Executives as the corporate strategic decision-makers, are brains of the enterprise. No doubt they are one of the core resources of human resources. How business motivates executives to make the most use of executives resources, is the key to success in business competition.Pay, including annual salary and executive stock ownership, is the main business incentives for executives. Whether the incentives effect mainly reflected by the performance of enterprises. The general view is that executive pay and corporate performance should be positively related, but this relation is not consistent in different studies. Clearly the incentive of executives has also been effected by a number of factors. Many previous studies focused on corporate governance structure, executive salary structure, while ignoring the company's own characteristic effect on incentives. This paper argued that companies of different ownership structure had significant differences, so the article grouped the companies according to the company's ownership structure. On the basis of that, then the article divided them into groups by the size and industrial competitiveness. It was found that differences exsit in companies of different ownership structure, and the article make the corresponding recommendations for improvement on executive pay.the article firstly reviewed the domestic and foreign studies of the relation between executive pay and corporate performance, and then analyzed how the shareholding structure effect executive incentives from the basic theory of executive pay, incentives. Lastly the author selectted the Shanghai Stock Exchange listed companies in 2007 and 2008 as the sample and designed the research variables. Through descriptive statistics of the sample, the author analysed the differences of executive pay of each group and its causes, and through linear model tested the relation betweent executive pay and corporate performance of different groups by means of hypothesis test. Through the regression we found that: Overall, the annual salary is better, and managerial ownership as a long-term incentive hasn't play a role. Both Company size and industrial competition have impact on executive incentives; the largest shareholder holding 15% -40% in the best incentives for executives, the shareholding in this group can be an effective incentives; The higher the proportion of state-owned shares, the better incentive effects of the annual salary, which is contrary to our expectation. Finally, the article made some suggestions about pay incentive for executives.