Legal Regulation Of The Company’s Executive Compensation System

The American people launched the movement of "Occupy Wall Street" on September17,2011. The movement intensified because deception and greed on Wall Street finally angered people in the United States. Until October15, the demonstrators of82countries protested in951cities synchronously, and "Occupy" welcomed a global action for the first time. Anger was not hard to understand. On the one hand, as one of the culprits of the financial crisis in2007, the Wall Street financial giants avoided collapse for receiving the U.S. government’s aid. However, instead of by the corresponding punishment, the Wall Street executives continued to take a surprisingly high salary, and their income continued to grow to hundreds of millions. On the other hand, America’s unemployment rate had reached9%of danger and a large number of people lived below the poverty line. In our country, many companies were also influenced by financial crisis. The companies’ margins felled sharply and made a layoff while they maintained executives high-paying even a raise. This phenomenon was difficult to call fair. So, it was particularly important to how to regulate the company executive’s pay by law. In recent years, the problem of company executives compensation has attracted worldwide attention. As one means to reduce agency costs, executive compensation has become another big difficult problem in corporate governance with the process of the development of the company system and management practices due to the interests divisions of executives and shareholders and the company. As the pioneer of corporate governance, the United States paid attention to the problems of high salary earlier than other countries and has been through improving legal regulations against compensation. However, the executive pay still has given rise to the occurrence of financial crisis in recent years. In the crisis, executives reap huge compensation leads’ to shareholders and the public’s anger. So, we have to consider that law can have much effect in regulating the executive compensation and how should regulate the company executive pay. The paper uses the sky-high compensation events to analyze the reflected problems, introduce the legislative status, point out the lack of executive compensation system and improve the countermeasures.