The Empirical Study Of Management’s Compensation Structure On Corporation Performance

The research about management incentive is one of the core issue about corporatemanagement research, principal-agent theory is the cause of management incentive.According to this theory, in order to solve a series questions between shareholders andmanagement because separation of ownership and management, to make the interests ofshareholders and management in line, companies should establish an effective incentiveand restraint mechanisms. Different management compensation structure will lead todifferent incentives effects, reasonable compensation structure can mobilize theenthusiasm of the management’s work, achieve the optimal incentive effects, andultimately improve corporation performance.Management compensation structure is designed to solve the principal-agent problem,in this paper, to maximize the effectiveness of the management compensation structure asa starting point, consider the interaction between incentives and changes in compensationstructure on the incentive effects, and maintain the management compensation structurewithin a reasonable proportion is necessary. Using a combination of theory and methodregression analysis, the results show that, there is a unique optimal solution to do amaximization utility based on management remuneration package, keep the compensationstructure relative proportion of elements is necessary. The dominant incentives of thecompensation structure have an alternative effect, dominant incentives and implicitincentives have a substitution effect, and this will have a certain impact on the incentiveeffects. Monetary compensation has the best incentive effect, managerial ownership isfollowed by, and the worst is perquisite consumption. The different change in salarystructure has a significant effect on incentive. The purpose of this paper is to give a basictheory for our company to design a reasonable salary structure, in all types of the article,the compensation structure of reducing the monetary compensation, increasing themanagerial ownership, and reducing the perquisite consumption has the best incentive effect.