Legal Research On Executive Compensation For Listed Corporations In China

Since last financial crisis, the excessive executive compensation of a number of listed companies, especially in the financial industry, aroused controversy far and wide. The compensation system of executives in listed companies is designed to coordinate the conflicts between the shareholders and them, cut down agency costs and maximize the value. However, in listed companies, due to a highly separation between ownership and control, diverse targets and asymmetric information of both sides lead to extortionate compensation of executives. In China, governor structure of listed companies still associated with some drawbacks, improper executive compensation setting process and information disclosure opaque, the inevitable result is the executives to determine their own salaries, their own assessment and other corruptions. Executive compensation system, from formulating to implementing, is out of participation and supervision of the Board, independent directors, shareholders and so on. All of the aforesaid problems and facts result in the disorder of the executive compensation in the listed companies.Executive compensation regulation for listed companies should be improved in the following aspects. First, improve the composition of the Remuneration Committee and the duties system to authorize independent, substantial, competent personnel to be in charge of setting, implementing and supervising the system. Second, improve the information disclosure of listed companies executive compensation system. Providing adequate, timely and detailed information is the key point for the stakeholders to exercise their supervisions on the executives. Therefore, to resolve the widely existing information asymmetry is urgently needed. Third, improve judicial remedy means (shareholder derivative litigation) . Judicial remedy is the last line of justice, although the Section 152 of PRC Company Law has already established a shareholder derivative action, it is nearly impossible to operate. In a conclusion, derivative litigation action system should be improved.This article, based on the theoretical analysis, referring to management practices of universal listed companies on executive compensation, consists of executive compensation determination system, information disclosure system and judicial remedy system, 3 aspects, which analyses deficiencies in our country and try to improve.