Research On The Effectiveness Of Remuneration Committee On Listed Company

Due to the imperfections of our corporate governance structure, corporate senior management often determine their remuneration for a long time. With the substantial increase in compensation executives, people's discontent is also growing, which led directly to the board changes. The Board of Directors consists of the Remuneration Committee to formulate the remuneration of senior executives plan, which will enable the board have greater control on remuneration of corporate executive and rationalize interests among its shareholders, managers and other stakeholders. However, our Remuneration Committee system is still in the immature stage, and we have not established a sound mechanisms of independent directors and the Remuneration Committee. In this context the study of the effectiveness of the Remuneration Committee has a positive effect for us to further improve our Remuneration Committee system。In respect of theory, with the guide of three-level theory, organizational behavior theory, game theory, management of power theory, tournament theory, theory and other related theory, we analyze the relationship of the independent director system and the remuneration committee system. Through the analysis of the role of the Remuneration Committee, we define the Remuneration Committee effectiveness and propose the standard to measure the effectiveness of the Remuneration Committee. Then we study the Remuneration Committee effectiveness of our listed companies from an economic point of view, and further explore the reason of the effectiveness of the Remuneration Committee, and then present specific measures to improve the effectiveness of the Remuneration Committee. In respect of empirical research, this article takes the listed company from 2004 to 2008 as inspection object, using financial data, establishing regression analysis model, confirmed the influence of the Remuneration Committee on the executive pay and company performance. Result demonstration: the creation of the Remuneration Committee has remarkable relational dependence of executive compensation, but has not a significant relationship with company performance, indicating the role of our compensation committee system has not been a good play.To enhance the effectiveness of the Remuneration Committee, we must have a comprehensive consideration of all factors to create conducive conditions for the Remuneration Committee. Therefore, this paper proposes the following policy recommendations: enhance the legal status of the Remuneration Committee, improve the corporate governance structure, correctly handle the relationship with the regulatory authorities, improve the quality of the Remuneration Committee, enhance the independence of the Remuneration Committee and a sound incentive and restraint mechanisms.