The Correlation Between Senior Excutives' Compensation And The Performance Of Chinese Commercial Banks

In recent years, the pay scandals of bank executives happened frequently in the West, which is vastly concerned in the international arena, the executive compensation system is thus being debated. With the gradual acceleration of the Chinese market, the problem of the executives'"high pay" has been exposed. Since the beginning of 2010, the Chinese government has introduced a series of guidelines and regulations so as to tackle the problem of executive compensation in the Chinese commercial banks. Therefore, this thesis is based on a research of executives'compensation system in the commercial banks, attempting to reveal the actual relationship between banking executive compensation and its resulting performance.This passage is originated from various related theories and our local banking conditions. It highlights the grading system and salary management of Chinese commercial banks, both theoretically and in the Chinese context. Extracting from the 2007～2009 statistics, we have found out that there has been an obvious co-relation between the executives'compensation and the resulting performance. In addition, having a banking stake has a inspirational effect on executives'performance. Research result has shown that the management body of Chinese commercial banks suffers from an unjustified salary distribution. Furthermore, there have also been an unhealthy performance-salary system, an obsolete salary distribution method as well as a lack of a long-term incentive system, all these can be seen splendidly in most commercial banks. Hence, there is a need to trim the salary gap within the management body and we need to gradually establish a incentive system. The salary distribution method needs to be more well-planned while the management body needs a complete revamp. All these changes may gradually adjust the current salary management to be more market-based.