Top Management Compensation Incentive And Corporate Governance Of Listed Companies

Now the world is in the fifth wave of transnational incorporation and purchase,it arose in 1993, and it is still in the ascendant in the 21st century, expanding from traditional industries to technology industry and finance industry. Chinese enterprises are now on the arena and gathering wide focuses. On the background of economic globalization, the fifth wave of transnational incorporation and purchase certainly will bring impacts and challenges to our country. In order to make a success, top management compensation incentive is absolutely necessary, it is the core issue of corporate governance. American and other western countries have spent a long time studying and continually perfecting top management compensation incentive mechanism. China is trying to break away from the centralization of state power of planned economy. Now Chinese capital market is facing the god-given opportunities, such as the state-owned assets management system, the financial system, the social security system, etc, all have magnitude progresses; the financial instruments innovation is quickening; the structure of market and investors have both taken big changes. Especially the changes brought by the reform of non-tradable shares, the reform of state-owned assets system, the recensions of"Company Law"and"Securities Law". All these require the incentive mechanism, which can incentive and restrict the behaviors of top management. Good corporate governance mechanism can reduce the cost of proxy and the cost of capital.This paper uses the case analysis method and normal analysis method, and analyzes the differences and reasons of the changes in top management compensation after Lenovo's purchase of IBM's barely profitable PC business (IBMPCD). This is the innovation of the paper. The analysis come to the following conclusions: (1) Optimizing the share structure, establishing a share structure which has some centralization, comparatively control stockholders and other large stockholders. (2) Establishing a long-term incentive mechanism which is mainly for the top management. (3) The top management compensation incentive mechanism should be performance-based. (4) The compensation difference between top management and common employees should be moderation. At the finally of the paper, the conclusions are used in the listed company of our country and thus gained the inspirations.