Correlational Study Of Executive Payment Incentives And Company’s Performance And Sustainable Growth

The relationship between enterprise’s incentive system and performance evaluationsis always the hotspot of company governance’s research. It is also the benchmark toensure enterprises’ core competitiveness. our listed companies have a incentive system,which not only brings an incentive and a restriction to executives, but also bring down thecapital cost and agency cost of companies. It is helpful for the long-term development ofour enterprises.Based on the literature review, we selected the data of Chinese A-share listedcompanies between2001-2010as the study samples, combined with market-orientedprocess to examine the relationship between China’s listed companies executivecompensation, equity incentive and sustainable growth rate and ROA. Study shows thatunder the process of Marketization, executive pay and ROA shows significant positivecorrelation, and has no significant positive correlation with sustainable growth rate;executive compensation and executive’s share of stock show significant positivecorrelation relationship between Sustainable Growth Rate, but there is no positivecorrelation between executive pay and Sustainable Growth Rate; in the year or regionwith higher general market index, executive pay will be higher; the greater the generalsize of the company, executive pay will be higher; executive compensation also increaseswhen the job consumption increases.Under the background of Marketization, we found that China’s listed companieshave paid more attention on immediate interests, and ignore the long-term interests. Butwhen we put equity incentives variables in the model, we found that in equity incentivescompanies, executive pay and sustainable development rate has significant positivecorrelation, while in no equity incentives companies, executive pay and the sustainabledevelopment rate has no significantly positive correlation, this shows the importance ofequity incentives to the listed company’s long-term development. This conclusion is alsoenriched the study of corporate governance.