Analysis On The Influence Of Corporate Governance Structure To The Executive Compensation And Pay-performance Sensitivity

In the internal organization structure of a company, senior management personnel isa major strategic decision makers, daily affairs management, grasping the importantinformation, is directly related to the rise and fall success or failure of the enterprise.Executive compensation system has one important seat in modern enterprise system,reasonable compensation contract mechanism plays a positive role in incenting andrestraining executive behavior and reducing agency cost. Recently, the problem relativelyfocusing on executive pay is mainly manifested in the following two aspects: whether itis effective for executive compensation on incenting mechanism; How to arrange andoptimize the corporate governance structure to motivate executives to serve shareholders’interests and solve the principal-agent problems.At present, the domestic and foreign theoretical research about corporategovernance and executive pay is not few but lack of integrity and systemicness, empiricalconclusion is majorly different. Domestic scholars took research focusing on all of thelisted company or a particular industry, and used only a part of the corporate governanceindicators. Due to the regional characteristics of executive compensation and thedifferences in corporate governance structure, the conclusion is not necessarily applicableto listed companies in Liaoning province.This article adopts the method of combining theoretical research and empiricalresearch. From the perspective of motivation theory and contract theory, it suggests thatthe study is valid and necessary. And then it describes and analyzes the present conditionof the governance structure and executive compensation of listed companies in Liaoningprovince. Based on them, it chooses38listed companies in Liaoning province from2007to2011as samples for empirical research. Through the establishment of multiple linearregression model, it selects six important variable indicators from three dimensions ofownership structure, board characteristics and characteristics of supervisory board,analyzes the effects of the corporate governance structure on executive compensationlevels and pay-performance sensitivity. The empirical analysis showed that: for the listedcompanies in Liaoning province, executive compensation and corporate governance structure factors existed significant correlation. It had significantly negative correlationbetween the proportion of state-owned shares, the proportion of the first largestshareholder, board size, the size of the board of supervisors and executive compensation;pay-performance sensitivity and corporate governance structure factors existedsignificant correlation.; It had significantly positive correlation between the first bigshareholder’s shareholding proportion, board size, independent directors, the joiningtogether of two position, size of the board of supervisors and the pay-performancesensitivity. According to the analysis of the research conclusion and the situation of listedcompanies in Liaoning province, the paper puts forward the following advice: buildcorporate governance culture atmosphere; perfect incentive constraint mechanism;perfect the information disclosure system; improve the internal governance mechanism.