The Empirical Study On The Executive Compensation And Performance Of China’s Listed Banks

As an important cornerstone of national economy, the development of banking has a significant impact on the economy. Bank’s top management play a vital role on the survival and development of banking. Accompanied by the emergence of the global financial crisis, top management’s high compensation also gets more attention, and many countries around the world have introduced restrictions on it. Facing the change of the financial crisis,the bank industry need to reconsider the incentive and constraint mechanism,the problems that how to make regulations for the reasonable development of compatible incentive and constraint mechanism for commercial banks and minimize the transaction costs between managers and owners become the priorities of the banking industry and financial regulatory authorities in all countries. In this paper, the empirical study on the top-management compensation and performance of china’s listed banks has great value in attracting and retaining talent and will provide useful information for the compensation reform in china’s commercial bank.The normative analysis method and empirical analysis method are used in this paper.On the basis of the predecessors literature,this paper firstly describe the current situation and existing problems of the executives in China’s listed banks,and then empirically analyze the relationship between the executive compensation and the bank performance. Finally, this article gives some further advice to propose the incentive mechanism for executive compensation.In this paper,commercial banks,as the research object,by using samples of14Chinese listed banks from2007to2009,the paper makes an empirical analysis (using fixed effects model of the panel data) on the relationship between top-management compensation and listed banks’performance,with full consideration of the bank’s distinct peculiarity compared with general enterprises. The result shows that top-management compensation appears a significant positive correlation with bank performance, and its coefficient lack of elasticity,which means the higher pay couldn’t bring the same level of comprehensive upgrade the performance. Based on the findings above.this paper argues the cumulative effect is to create incentive compensation increases.while the incentive effects of pay with a diminishing marginal effect.Therefore,after the crisis,the focus should not be limited to paid or not, but the incentive mechanism innovation:①Establish a scientific and reasonable and consistent with laws of the market performance evaluation system of commercial banks;②Strength performance-oriented,focusing on long-term incentive;③Improve bank corporate governance;④Improve the information disclosure of executive pay system;⑤Establish a market-oriented bank manager selection mechanism.