The Empirical Study On The Relevance Between Corporate Performance And Senior Management Compensation

Senior Management's incentive arises from the separation of ownership in the modern enterprise, namely, the separation of ownership and management. shareholders who are business owners have the ultimate ownership of property and residual claims, but often have no direct operational control; enterprise management Layer on behalf of the owner to exercise operational control, don't bear the risk of the final decision-making. With the advent of the 21st century, human society entered the era of knowledge economy. Executives with high-tech knowledge and capabilities have become the key to the development of enterprises. Therefore, we need to design a reasonable executive for listed company compensation incentive programs, which can not only effectively motivate operators, but also Constraint operators'self-interested behavior, making their interests consistent with the interests of shareholders.This article is in this context, combined with domestic and foreign-related empirical research, based on the principal-agent theory, incentive theory, human capital theory, corporate governance theory, to make a research on the related issues of Senior Management compensation. First, With 616 samples of the Shanghai listed companies from 2006 to 2008, the author analyzed the status of China's Senior Management compensation from two aspects of the monetary remuneration and equity remuneration, and compared with the status of United States'Senior Management compensation, pointing out that our problems of Senior Management compensation. Then, With the actual data from the 616 samples of Shanghai listed companies in 2008, in the empirical point of view, the author built models to test the relations of company performance plus other factors and Senior Management compensation in two modes of short-term incentive and long-term incentive, which in particular: Senior Management compensation as the variable executive, company performance as the explanatory ?variable, the remaining factors as control variables, she also put forward seven assumptions. Proposing seven assumptions as follows: hypothesis 1, there is a positive correlation between the listed company's executive pay and company performance under the short-term incentives; hypothesis 2, there is a positive correlation between the listed company's executive pay and company performance under long-term incentives; hypothesis 3,the model about executive pay and company performance is more relevant Under the long-term incentive; hypothesis 4, a listed company's executive pay and company size were significantly positively correlated; hypothesis 5, the listed company's executive pay and the concentration of corporate equity is negatively correlated; hypothesis 6, in the long-term incentive, there is a positive correlation between the listed company's executive remuneration and executive's proportion of shareholding; hypothesis 7, is negatively correlated between the listed companies'executive compensation and corporate ownership. Then, the author took multi-linear regression to model using SPSS to test the Correlation in Senior Management compensation and other factors to Corporate Performance under two kinds of incentives.The empirical results show that the results under two kinds of incentives supported the original hypothesis. Moreover, in the long-term incentives, the Correlation between company performance with Senior Management compensation is Stronger than the correlation in the short-term incentives. Correlation between company performance and Senior Management compensation is Stronger than the correlation of between Senior Management compensation with other factors, and play more effective. Thus, we propose advice that we should. Improve the level of compensation, and optimize the salary structure of Senior Management compensation. Specific measures as follows: actively promote the long-term incentive system. Firstly, improve the corporate governance structure, establish and perfect the compensation committee system, improve the capital market competition mechanisms and accelerate the construction of the market managers, improve the executive compensation information disclosure system, so as to the long-term incentive system, Further, introduce EVA that is meeting the requirements of long-term incentive as a measurement of Corporate Performance in the system of performance evaluation, to make our incentive compensation system more robust and more effective.