Study On Industry Differences Of The Correlation Between Executive-staff Compensation Gap And Company Performance

Compensation gap in companies has been the social topic. Under the globalfinancial crisis,"sky-high compensation" is frequently reported and deepened thesocial public concerns about compensation gap. Facing the turbulent marketenvironment, improving performance become the companies’ important goals, butwhether the executive incentive will improve corporate performance is still hotlydebated. At present, scholars at home and abroad have studied the relationship of theexecutives’ compensation gap and company performance, but shown less concern tothe executive and staff compensation gap. Different industries have their own industrycharacteristics, the correlation of executive and staff compensation gap andperformance in different industry are not the same as well.This paper selects2006-2010A listed companies as the research samples, siftingand sorting the annual reports of this five years. Listed companies could be dividedinto12industries, and manufacturing could be divided into8subcategories. Thispaper studies on the correlation of executive-staff compensation gap and companyperformance in different industries. Research results show:(1)among industries: theagriculture forestry animal husbandry and fishery industry has significant positivecorrelation between executive-staff compensation gap and company performance, andit has the same correlation in the production of electric, coal, gas and water supplyingindustry; the information technology industry has significant negative correlationbetween executive-staff compensation gap and company performance.(2) amongmanufacturing: the electronics industry has significant positive correlation betweenexecutive-staff compensation gap and company performance; the food and beverageindustry has significant negative correlation between executive-staff compensationgap and company performance.(3)in most industries, executive-staff compensationgap and company performance is non-linear.The correlation between executive-staff compensation gap and companyperformance in different industry is not the same. In most industries, expanding thecompensation gap between executive and staff is not improve company performance.Therefore, when the companies formulate compensation system, they should fullconsider their own industry characteristics and needs, and not blindly expand the executive-staff compensation gap. It should arouse the executives, and at the sametime consider the staffs’ sense of injustice.