The Correlational Study Between Top-executive Compensation And Firm Performance In China's Listed Central Companies

In the construction of China's economic system, many companies has achieved the separation of ownership and management rights through the improvement of corporate governance structure,. The incentive and restraint for human capital owners has become the weakest link of corporate governance structure, which has become the current issue of our executive incentive source of controversy. At present, China's listed central companies'incentive for top-executive has been established initially. But the relationship between the incentives for executives and realization of the interests of shareholders has not haven a full conclusion yet.In this paper, we first reviewed domestic and international incentive basis on management and corporate performance. from January 1, 2006 to December 31, 2008, using the three fiscal year's A share listed companies in 218 central enterprises home samples, considering the scale of their business, industry, described statistics of the incentive and firm performance, and then examined the CEO pay and corporate performance relationship in China's listed central companies by linear regression model. Based on the new central enterprises'performance evaluation system, in addition to the use of accounting profit targets as indicators of company performance measures, we also use new performance indicators- Economic Value Added (EVA). It could evaluate the correlation between the CEO pay and corporate performance in China's listed central companies objectively and accurately.The results show that: there is significant relationship between executive compensation and corporate performance, and the effect of incentive mechanism is satisfactory.