The Empirical Study Of The Relativity Between Chinese Listed Company Top Executive Salary And Company's Achievement

On the face of the current financial crisis, some U.S. government-funded enterprises continue to have luxury consumption, and pay executives huge salaries, because of that Obama administration put forward the salary limit order in February 2009, the Chinese government also found similar problems, followed by Chinese version of the salary limit orders. Does the limited salary of Chinese version indicate that the state-owned enterprises in China have unreasonable executive pay system? Does China's executive pay system need reform? Can the limit order of Chinese version play a role in salary?Executive compensation incentive has many forms, So factors which affects the effects of incentive are various, in the current economic situation, the high pay of executive of state-owned enterprises reflects on the question of fairness that question lead to controversy over the validity in society The Chinese government announced a "financial state-owned and state holding enterprises responsible compensation management approach (draft)" but many people doubt that so that many scholars are troubled, and the system of executive pay will be a major problem that deepening reform of a state-owned enterprise and improve the corporate governance mechanisms must face.A reasonable executive compensation has double-edged sword role: not only can achieve cost savings, but also can achieve objectives that is encouraging executives to improve company performance. This paper uses 500 companies'data of the Shenzhen and Shanghai stock market as samples, using principal-agent theory as the theoretical basis ,using empirical analysis to illustrate the correlation of executive pay and company performance under the conditions of the different company of different size and proportion of state-owned holding, that will reach the following conclusions through empirical research :The company's performance and the equity ratio of the executives is positively correlated; the company's performance and the annual salary of executives is positively correlated; company size and incentive mechanism of executives is inversely related, that is, the greater the size of the company the smaller the correlation between annual salary of executives and the company's performance; state-owned shareholding ratio is inversely related to the incentive of executives that is the larger the proportion of state-owned shareholding the smaller the correlation between annual salary of executives and the company's performance the more imperfect contract between the owner and operator.Finally according to the results of empirical research, and for the particular context of this period this paper made the following recommendations: to change the salary structure and increase long-term incentives; defining the government as a business owner's position and role, to improve the capital market and the human capital markets of executives; to strengthen powers of the board and clear the obligation of the board and assume responsibility for its negligence; to increase the transparency of the formation mechanism of executive pay and disclosure; intermediary institutions review the reasonableness of executive compensation.