Study On Chinese Executive Compensation, Comparison With The Executive Compensation Practices Of The U.S. And U.K.

Executive compensation is a key area of corporate governance, especially in theaftermath of the2008global financial crisis. The executive compensation problemsare not just boasted by the US or UK, but in fact the executive compensationproblems of China are ubiquitous as well and therefore China is in the process ofexecutive compensation reforming.“To be or not to be” dilemma has been faced bythe Chinese regulators, which are settling the executive compensation problems bypractices learned from US and UK or to resolve the problem just on its own practice.As UK and US have long history of executive compensation legislations and practices,it’s would be a good choice to learn from the practices in US and UK and apply thembased on the Chinese special circumstances.As to answer what Chinese companies could learn from the US and UK’s executivecompensation experiences, the layout of this paper will be as follows: Part I will be anempirical study of executive compensation in China and the US which explores thereality of executive compensation in each country. Part II will then examine the statusquo theory of whether executive compensation is a real problem or not. Part III willdetailed discuss the executive compensation practices in the US and UK and fromwhat Chinese could learn. Specifically, the first Section will explore the development of US and UK’s executive compensation governance after the2008financial crisis.Section two will focus on equity-based compensation, which is widely used in boththe US and the UK, and on what China can learn from them. Approaches to curbarduous executive compensation, especially as the result of widely using ofequity-based compensation, will be discussed in the following three sections. MoreSpecifically, Section Three will concentrate on transparency and disclosure the rulesand practices in the US and the UK, in order to provide good examples for China topractice. Section Four will turn to "say on pay" provisions. Section Five will look into"claw back" rules and Section Six will analyze the role of judicial relief in the area ofexecutive compensation. Part IV will analyze how rapid globalization requires specialconsideration for executive compensation since counties could compete to lure topexecutives through executive compensation packages. Part V will be the conclusion.