The Impact Of Board Governance Structure On Top Executives Compensation

Based on the sample of the"A-shares"in Shanghai and Shenzhen stock market in 2008, the paper analyzes the impact of Board Governance Structure on Top Executives Compensation and on Pay-performance Sensitivity. As Board Governance Structure, the paper analyzes from the following Board governance features: size of the board, the number of independent director in the board composition, Remuneration Committee and the leadership structure of the board. First, the article presents descriptive statistical analysis, single variables comparative analysis and makes regression. Second, this paper further analyses the impact of the board governance on the sensitive of pay for performance.Empirical results show that board size and cash compensation have positive correlation, big size is not conducive to design management compensation according to the interests of shareholders; When company has a small board, the sensitivity that cash compensation with accounting performance is enhanced. The proportion of independent directors has no significant impact on top management compensation; When a company increases the number of independent directors, the sensitivity that cash compensation with accounting performance is enhanced. But the proportion of independent directors in committee increases management compensation; When a company increases the number of independent directors, the sensitivity that cash compensation with accounting performance is enhanced. The separation of CEO and board chairman can reduce the compensation obviously; When a company has separation of CEO and board chairman, the sensitivity that cash compensation with accounting performance is enhanced.At last, the article makes suggestions for a powerful board.