Reserch On Compensation Incentive To Senior Executives Of China's Listed Company

As asymmetric information issue exists between owners and senior executives of listed company ,there needs to a incentive and restrictive contract which used to restraint the senior executives to trench on owner's property,and encourage them to work hard on the owner's behalf. At the same time , an unprecedented financial crisis made people deeply understand the necessary of risk control in listed companies. As a result of single pursuit of Firm performance , the senior executives of listed companies might pursue a maximum benefits from the contract and else ignoring the interior risk control which made the listed company face a big hidden danger in their survival and development. So it's crucial for listed companies and owers to establish a effective incentive mechanism for firm performance and interior risk control.In order to find the realistic basis for reasonable compensation incentive, this third chapter conducted empirical tests on compensation incentive of China's listed company. First of all, by selecting many financial data of china's listed companies from 2006 to 2008,this paper conducted a brief description of the status quo of compensation incentive within china's listed company. Secondly,by selecting 1252 listed companies'related data in 2008, this paper tested the effectiveness of compensation incentive within china's listed company by considering the path of compensation incentive. On the one hand this paper analysed the impact of annual remuneration and stockholding rates on companies'performance and risk under current incentive mechanism.It found that annual remuneration can have positive effects on performance,and negative on risk.But there is a interval correlation between stockholding rates and performance, and a positive correlation between stockholding rates and risk. On the other hand,we conducted a analysis of the specific factors affecting the annual remuneration of our executives. It found that performance can affect the level of senior executives'annual remuneration significantly while the company size and age of executives have a positive effect on it. And there still existed a negative correlation between equity concentration and senior executives'annual remuneration.Then, Chapter IV solved how to stimulate senior executives while considering the two tasks of peformance and risk control by establishing a optimal incentive compensation contract model taken into account the firm performance and risk control. This fifth chapter approached to an analysis of incentive compensation manners and path while taking into account the specific performance and risk control together, and then described the measure of the incentive effects briefly.Finally, Chapter VI summed up the contents of the previous analysis of incentive compensation for our country through a combination of China's actual situation, and then made the following recommendations: establish a scientific performance evaluation system; establish a risk-linked incentive mechanism; optimize the incentive compensation structure; play the role of the Remuneration Committee effectively.