The Research On The Executive Compensation Incentive Contract In Chinese Insurance Industry

Since the exposure of Ma Mingzhe’s high compensation, the executive compensation of financial insurance industry in our country get great attention by the society. We can’t help thinking, why does executive compensation in financial insurance industry are higher than other industries? What factors influence on executive compensation? If the existing executive compensation incentive contract of financial insurance industry in our country’s is effective?This paper tries to introduce the theory of incentive compatibility in the research field of executive compensation incentive, to solve the insurance company governance particularity of conflict of interest problems.In this paper, the basic thought and the institutional arrangements are as follows:The first chapter:introduction. This chapter shows the background and the selected topic significance, review and comment on the basis of predecessors’ research results, and put forward the research ideas and research methods in this paper, then expounded the possible innovation and deficiency. The full text plays a leading role of the paper.The second chapter:The particularity of insurance company governance. This chapter expounds the particularity of insurance company governance from three aspects:the particularity of the insurance industry, the particularity of conflicts of interest and the particularity of insurance company governance mechanism.The third chapter:Theory analysis of insurance executive compensation incentive contract. Seen from the second chapter of the theoretical analysis, the insurance industry executive compensation incentive theory should be a two-way from internal and external motivation. External motivation as a result of the particularity of insurance company governance, it cannot function well mainly due to the conflicts of interest among stakeholders. Therefore, this article introducing the theory of incentive compatibility problem trying to solve the conflicts of interest.In this chapter, on the basis of analysis of the main body of the executive compensation incentive compatibility contract design and model, trying to construct incentive theory framework of compatibility of the insurance industry executive compensation incentive contract.The forth chapter:Case study of executive compensation incentive in the insurance industry. This article selects the three listed data from the year2007to2011to explore if the executive compensation incentive is incentive compatible in the insurance industry or not. Based on the data of representative and availability, this paper use the top three executives’average compensation to reflects the executive compensation; use return on total assets, total assets growth rate, return on sales, sales revenue growth and earnings per share to depict performance level; and use solvency ratios to describe risk control. Through analysis of the three listed insurance companies,I find the executive compensation is neither pegged to the performance nor linked to risk control. Although the number of samples is small, but it can reflect the actual status of the insurance industry in our country in a certain extent. Combined with practical analysis, the causes of lack of motivation mainly lies in the following two aspects:(1) the lack of supply of information;(2) the absence of strong external constraint mechanism.The fifth chapter:Suggestions on our country insurance industry executive compensation incentive contract. Based on above theories and case analysis, I put forward the corresponding policy recommendations on the basis of the Chinese insurance industry executive compensation contract design.Possible innovation of the paper:(1) Bring in the incentive compatibility theory applies to the establishment of executive pay, extending the application of the theory of incentive compatibility, and combines the management with economics, for the insurance industry executive compensation incentive contract design to seek a proper theoretical basis.(2) Based on the theory of incentive compatibility perspective, this paper initially constructs the insurance executive compensation incentive theory frame.