Study On Relationship Between Senior Manager Compensation And Company Performance

With rapid development of national economy, auto industry as one of the pillar industry of China, has experienced an explosive growth. According to the related statistics, experts predict that the production and sales of vehicle in China will keep growing at a fairly high speed to1.5-2times’of the growth ratio of our GDP. Therefore, auto industry has a significant meaning to the national economy and, as the leading role of auto industry, the listed motor companies have gained worldwide attention with their performance.Generally speaking, Human Resource especially the strategic resource of senior managers, plays a superior role.It exerts great influence to corporations in how to adopt corresponding strategy to take full advantage of the active and creative human resources. And more often than not, compensation is adopted as an important incentive method and a primitive direct motivation. In the background when auto industry booms, this paper studies systematically of the relationship between senior manager compensation and company performance from the perspective of HR and would have a practical significance to promote a healthy and sustainable development of Chinese motor industry.Our samples are21Chinese companies which listed in Shanghai or Shenzhen Stock Exchange from2008to2011.It gives prior to empirical study and research the relationship between senior manager compensation and company performance based on panel statistics. First of all, after inductive analysis of related notion like principal-agent theory, human capital theory, efficiency wage theory, compensation dispersion, performance incentive theory and human resources strategic theory, it proposed five basic hypotheses and structured two intellectual regression models. Then, the regression analysis with the samples with EVIEWS3.1confirmed the hypothesis finally. Based on the study above, the main conclusions are:(1) senior manager currency compensation and company performance is of positive correlation relationship in Chinese auto industry. Thus to give fairly high annual currency compensation is helpful to inspire the managers to work harder for better performance.(2)Stock ownership incentive is rarely used in Chinese listed auto companies and companies have better performance even when the senior managers do not have any of the stock ownership than the companies who spare stock ownership to their senior managers.(3)Keep appropriate compensation dispersion is meaningful to expel the managers to strive for better performance.(4) There is no obvious correlativity between the proportion of state-owned shares and senior manager currency compensation in Chinese listed motor companies and senior manager annual currency compensation is not effected or limited by state-owned shares.From the perspective of Human Resource Strategy, to better keep and inspire excellent senior managers or talents,some suggestions are given as the follows: perfecting the annual compensation system; bringing in stock option measure and improve stock holding system; state shareholder should try not to interrupt of the senior manager compensation system; enlarging the compensation dispersion to an appropriate extent; enhancing disclosure of salary information; designing a more rational performance appraisal system; and building an efficient professional manager market.