Enterprise Group Board Structure And The Relationship Between Ceo Pay Incentive Pay Performance Sensitivity Study

As a new organization form, Conglomerates play an important part whether indeveloped and developing countries, and become the economic stanchion in manycountries. So researching the conglomerate governance has important practicalmeanings. Researching conglomerate governance necessarily involved itstop-management governance. But in china, researches about conglomeratetop-management governance are little, existent researches only simply use Corporategovernance theory to analyze without considering the characteristics of conglomerate.The text research the CEO compensation incentive of conglomerate. The text use dataof China public companies in 2005 to analyze the relationship between the CEOcompensation incentive of conglomerate and its board composition, basing the bypastresearches and considering the characteristics of conglomerate. Main conclusions ofthe empirical analysis: (1) when the proportion of interlock director becomes greater,the CEO compensation become larger, CEO pay-performance sensitivity becomemore sensitive. And there is no relationship between proportion of mission directorand CEO compensation and CEO pay-performance sensitivity. It means that"top-management group" exists in conglomerate in our country, it also confirms thetheories of interior dominate and cahoots. (2) There is no relationship betweenproportion of independence director and CEO compensation and CEOpay-performance sensitivity. It shows that independence director do not play its rolewhat it should be. (3) Chairman of the board and CEO mostly are no one person inpublic conglomerates in our country, it redound to avoid centralization of state power.(4) It is found that the stockholder who holds most stocks of the company supervisesefficiently. (5) The research supports the theory of small board be more efficiency. (6)It is found that stocks assuredly can motivate directors. But this effect is not exertedbecause directors have so little stocks. (7) It is found that compensation of parentcompany CEO is obviously higher than that of subsidiary company CEO. But thereason remains unsolved.The conclusion: it should consider marketable and portentous indexes ofperformance when setting CEO compensation. It should make the best of thesupervise function of the stockholder who holds most stocks of the company. It shouldkeep on perfecting the system of compensation committee and the system of independent director. The "top-management group" must be drive out. Thesupervisory effect of mission director should be enhancing. The board should besmaller and more efficient. It should give more stocks to directors.Finally, future research along this text could be: researching which indexes ofperformance can be more efficient to set CEO compensation, researching the"top-management group" in conglomerate in-depth, and so on.