A Study On The Relationship Between CEO Pay And Firm Performance Of The State-owned Listed Companies

In recent years, the problems of executives' salary system in China's state-owned enterprise have caused widespread concern in society. "Salary limited agitation" and "the budget management method of total wages" and so on make the reform of the salary system become the focal point. But in the reform of salary system, the incentive problems of executive pay should be concerned. Because the executives who are the most important parts in the company which need people to management. The performance of their work is one of the core factors of the performance of companies. So how to motivate the company executives, develop their potential, realize the maximum benefits of shareholders is the problem which cause the company, the shareholder and even the whole social concern.The forms of incentives about executive are various, and there are many factors which affect the effect of incentive. At present, in the background of China's income distribution, the executives' pay growth too fast in lots of the sate-owned listed companies. The level of salary is not only far higher than that of general staff in the enterprise, but also far higher than the average level of salary in society. These cause unfair distribution. And these phenomena also lead to the debate in the public: whether the executive compensation mechanism is reasonable or not, whether the executive pay is related to company's performance or not, whether the executive pay exactly reflect the executive's performance or not, even some people doubt the rationality of the executive pay system. In fact, both the internal reform and salary system reform have lagged behind in China's state-owned listed companies. There are many problems in China's state-owned listed companies, for example, executive pay system is not perfected, senior executives decided their salary by themselves, pay and performance is not related and so on. These problems make lots of scholars confused, but also become the hot spot of the scholars' research. In China, scholars begin to concern the executive pay later than western countries. The domestic researches on executive pay are still in the initial stage of the study, and for the state-owned listed companies, the researches are very few. Therefore, the paper intends to discuss the relation between executive pay and enterprise performance, and provides the advice for the reform of state-owned listed companies in China.This paper is divided into four parts:firstly, the paper proposed the problem of the study, and the theoretical and practical significance of the study, research methods, the paper research framework and the innovation of this paper. Secondly, the paper definite the concept of the state-owned listed companies, senior executives, and executive compensation, and illustrates the theory which is relevant to senior executives' incentive, such as agency theory, human capital theory and management incentive theory. On the basis of the literature at home and abroad, and concludes the research hypotheses and initial model, and those lay the foundation for the empirical study after the theoretical study. Thirdly, use the data of manufacturing state-owned listed companies from 1999 to 2010 years 805 data as sample, and analysis the data on executive pay, for example, descriptive statistical analysis of holding and executive pay. Use the line regression analysis among executive pay, holdings, enterprise performance, the company size, the proportion of the independent directors, two hats and remuneration committee, and analysis the relationship between these factors and the related degree. The conclusions are as follows:executive pay is positively related to the corporate performance. The percentage of executives' shareholding, the company asset and the proportion of the independent directors are positively related to executive pay. Finally, summarize the research results. According to the results, propose the advice to improve China's state-owned listed companies' executive salary incentive mechanism, and points out the advice of the limitations of this study and the content of the need to deeply study.