Study On Relationship Between Senior Executive Compensation Incentives Of Innovative Enterprises And Performances

Senior managers are the most important internal resources in the survival anddevelopment of enterprise, and is the human capital which can not be expressed in the bookvalue but with high appreciation potential. Because they have mastered the businessdecision-making information, resource management and decision-making power ofenterprises, the interests of arrangements for senior executives, corporate performance anddevelopment prospects are closely linked, how to form an effective incentive mechanismhas been one of the core issue in corporate governance. However, the ultimate goal ofcorporate governance is carried out around the maximization of equity value, equitiesincentive becomes the primary means to solve the principal-agent conflicts and make theinterest of executives to be consistent with shareholders’, and is also the mainstreamconclusion drawn by many scholars’ studying and the preferred practice of incentive forenterprise. For some special human capital invested companies such as innovativeenterprises，because of their own characteristics, the effectiveness of these enterprises ismore dependent on the creativity and professional management skills of senior executives,compensation incentives of such enterprises need designing more complex mode to reflectits effect.The paper systematically summarizes and summarized the status of compensationincentives in innovative enterprises which are in eastern part of China, presents its mainproblems, uses116innovative enterprises in east China as study sample, has multipleregression analysis with the executive compensation data after extracting common factorsof these enterprises’ key performance indicators. It finds that executives’ compensation ofinnovative enterprise has a significant positive correlation with corporate performance, theeffects of short-term incentives to executive is obvious. But the correlation between stockownership of executive from innovative enterprises and corporate performance is notsignificant, and lower shareholding proportion easily lead to negative incentives forexecutives. And corporate performance has a significant positive correlation withownership concentration, it illustrates that equity controlling replace the role of equitiesincentive to a certain extent. Combing with the status that generally lower shareholdingproportion of executives, this paper thinks that the main reason for the poor effect of equities incentive is still the shareholding proportion can not reach the extent of effectiveincentive. Withal，the paper proposes some recommendations such as improving thestructure of payment to improve the effects of incentives.