| This paper examined the relationship between the CEO's compensation and the firm performance and verify the correlativity of the CEO's compensation and the correlative factors on the listed firms over 2001-2006, which is based on the statistical analysis of CEO's compensation. Our descriptive analysis indicated that the compensation of CEO's compensation had been rising during the latest years, but the gap between the industries were even becoming more and more huge,furthermore, the relationship between CEO's compensation and the firm's performance is positive which needs to be tested later. Our regression findings suggested that firm performance is not significantly positively related to the CEOs annual pay, which indicated that incentives of CEO's is working very well, although the CEO's compensation incentive have positive effect in a certain extent and the increasing of the Corporation's performance is beneficial for the higher compensation of CEO, the effect still needs to be improved . At the same time, the research found out that corporation performance was weakly positive related to the stocks held by the CEO, who hold small percent of stocks. Moreover, the long term incentive mechanism of the equity capital held by the top managers have not been established,and the regression model also denied the incentive "strong effect" of the equity capital held by the top managers.The empirical studies on the CEO's compensation suggested: (1) the relationship between CEO's compensation and corporation's performance is positive;(2)the relationship between percent of the top mangers hold stocks and corporation's performance is positive but not significant.(3)the CEO' s compensation have a strong relationship with the scale of the company, due to the complexity of the larger companies and the top mangers have to deal with it carefully. (4) the centralizing extent of the equity capital have positive effect on the incentive of the top managers, the better corporation governing mechanism is propitious for the embodiment of the CEOs individual value.(5)the relationship between compensation of the top managers and the income of each stock is positive.(6)the relationship between the CEO's compensation and the size of the directorate is determined by the type the company, which means that the type of the stockholder have influence on the incentive mechanism.(7)the CEO's compensation is not consistent with the growth of the corporation, which indicate that the lag of the incentive mechanism of listed firm in china .The problems of the CEO's compensation incentive can easily be found out through the experience study , which suggest as follows:(1)the compensation of top managers is not consistent with corporation's performance.(2)the percentage of the top managers share hold is lack of incentive effect.(3)the listed corporation pay much more attention to the obvious incentives but less attention to the concealed incentives.(4)the restriction factors works but not well.In order to establish long term incentive mechanism,severals suggestions were given base on the former analysis in the end of this paper.On one hand,incentive mechanism should be improved through the following methods: (1) increase the compensation of CEOs; (2)pay more attention to the long term incentive to top managers and increase the percentage of the stock held by them;(3)select the proper incentive methods.On the other hand,obligations should be strengthen by way of effective actions such as: (1)improve the incentive mechanism as well as obligations;(2)improve the construction and implemention of the rules of law referred;(3)establish perfect market of the chief executive officers which should have a mature compensation mechanism for professional managers;(4)regulate the system of the releasing rule in capital market. |
PDF Full Text Request