Research On Control Mechanisms For Executives Compensation In State-owned Enterprises

Many companies go bankrupt and staff lose their jobs after the outbreak of thefinancial crisis, some state-owned enterprise in china is affected, their benefit declined, butsome operator also can get expensive salary. This kind of phenomenon cause social publicattention and dissatisfaction. The state-owned enterprise is the lifeblood of our nationaleconomy and the operator is the core resources of the enterprise. Because of no exactowner of state-owned enterprise and lax supervision, the operators control and master theremaining ownership of the state-owned enterprise, they manipulate the board of directors,the board of supervisors and the remuneration committee to create a high salary forthemselves. In the situation of high salary of operators in state-owned enterprise, if thegovernment implement control to operators’ salary, which only can reduce their dominantsalary, but not realize the real control of operators’ salary because Official consumption willbecome their alternative choice. Instead, it will cause the low efficiency and waste ofresources to enterprises, thus it’s very urgent to construct a control mechanism forstate-owned enterprise operator’ salary.This article analyzes the situation and cause of high salary of operators in state-ownedenterprise and uses human capital theory, principal-agent theory and some theory related.Literature investigation and empirical analysis are involved. Based all, we put forwardsome suggestions: to make a start from internal state-owned enterprise; to improve theinternal structure; to perfect the formulation of operators’ compensation contracts; to builda special external security measures by government at the same time.The paper is composed by five parts: the first chapter is the introduction of this paper,it puts forward the background and significance of the subject, the main research methodand innovative points; The second chapter is the review of the literature theory, it combsrelated literature home and abroad and summarizes the basic theory related compensationcontrol and concept definition; In the third chapter, we trace the evolution of operators’salary system and control in the state-owned enterprise, then analyze the cause in view ofthe current situation of high salary of operators in state-owned enterprise; The fourthchapter is the core part of this article, we put out some suggestions about how to perfect theinternal control mechanism of state-owned enterprises’ operators: to make operatorscompensation contracts; to perfect the remuneration committee system; to pay attention tothe participation of small and medium shareholder, etc.. The fifth chapter, external securitymeasure and compensation control should be strengthened; Market executive selection mechanism should be established; the disclosure of salary information and shareholderlitigation rights should be ensured. The sixth part takes the Weichai Power Co. LTD as anobject and analysis its compensation control mechanism of executive, which is empiricalsupport for this article.