| Corporate executive compensation has caught great attention in recent years. Anyway,executive payments in the financial industry are far ahead of other industries, and the paymentdoes not coordinate with the company’s performance and market performance. On the other hand,the corporate separation of ownership and the principal-agent problem have been plagued by theacademic community. As the management-power theory replacing the optimal contract theoryand become the mainstream of executive compensation, more people draw attention to themechanism of corporate governance to constrain management rent-seeking. Some researchersproposed that the management entrenchment has impact on the sensitivity of executivecompensation and payment-performance，but it is still unknown about the the real impact.This study analyzes the theory of executive compensation based on managerialentrenchment and summarizes the mechanism of the managerial entrenchment influence onexecutive payments and performance-pay sensitivity. This paper collects data from financialsector listed companies (2009to2011) to empirically test，and has found some interestingconclusions.(1)The Financial industry executive pay and managerial entrenchment level arepositively correlated.(2)Executive compensation positively correlated with firm size and the risk,negatively correlated with the growth of enterprises.(3)Relative to the corporates with strongmanagerial entrenchment level, the corporates with weak managerial entrenchment level havestronger executive pay-performance sensitivity.(4)Compare with other financial institutions, thebanks have higher managerial entrenchment level and weaker executive pay performancesensitivity.(5) Compensation Stickiness also appears in financial industry, and it’s affected bythe managerial entrenchment level. Finally，this paper explains the reason for the abnormalexecutives remuneration issues in financial industry, and also gives the relevantrecommendations. |
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