A Research On Executive Compensation Incentive Mechanism Of Listed Joint-stock Commercial Bank In Our Country

The global financial crisis breaking out since2008brought great shock to the world economy. Many financial institutions of the United States of America went bankrupt. In order to maintain the stability of the financial markets, the United States Federal Reserve has repeatedly injected money into the financial system and has taken relief measures to a number of financial institutions. Although the Wall Street financial institutions receive the government support, the executives still get such high salary. Thus, the rationality of the financial industry executive compensation attracted the attention and questioned widely.At present, in the protection of margin, the Chinese banking sector maintain high profit growth is inevitable. While some banking institutions’executives get far higher than the entity enterprises’compensation, especially in the joint-stock commercial banks of our country. Compared with the state-owned commercial banks subjected to administrative intervention, they can adjust the executive compensation according to their own needs, which also leads to the higher executive compensation of joint-stock commercial banks in our country. Such compensation price is reasonable pricing? How to determine the reasonable level of executive compensation of the joint-stock commercial banks of our country? How the joint-stock commercial banks can determine the remuneration system that enable banks to reach the balance between the income and the risk? How to encourage the executives to ensure the long-term stable development of banks? These have become the questions that the joint-stock commercial banks of our country can’t be avoided.Based on the questions mentioned above, this paper uses the combined method of qualitative analysis and quantitative analysis to describe this issue. The main contents and viewpoints of each chapter of this text is the following:The first chapter is the introduction part, including the background, significance and literature review at home and abroad, introduction of the research methods and structure arrangement of this paper. We also pointed out the innovation and deficiency in this part.The second chapter introduces the development and current situation of China’s joint-stock commercial banks’executive compensation incentive mechanism. In this paper, we explain the conception of salary structure and its function in detail. We point out that China’s joint-stock commercial bank executive compensation is high and it is unreasonable to pay too much short-term monetary payment. As to the structure of executive compensation, and China’s current salary structure is unreasonable and the joint-stock commercial banks did not obey the executive compensation incentive in accordance with the requirements.In the third chapter, we mainly analyze the relationship between the executive compensation and the banking performance by selecting the9listed joint-stock commercial banks as the sample. We get the following results:Firstly, Executive compensation and net profit growth rate and earnings per share significant positive correlation. Secondly, there is no significant relationship between the level of risk management and the executive compensation.In the fourth chapter, we mainly analyze the characteristic of the executive compensation incentive mechanism of commercial banks in developed countries, and then provide countermeasures and suggestions for perfecting the incentive system of our commercial banks’executive compensation. For instance, the joint-stock commercial banks of our country should establish the executive compensation adapt to the system environment; gradually introduce the long-term incentive in the executive compensation; Strengthen the information disclosure of executive compensation and corporate governance structure of the commercial banks.In the fifth chapter, we make suggestions to improve the executive compensation of China’s joint-stock commercial bank based on the above analysis.(1)Determine the performance evaluation index;(2)the incentive mechanism should established by combining a long-term incentive;(3)encourage the joint-stock commercial banks in implement executive equity;(4)establish the executive compensation information disclosure mechanism;(5)improve the corporate governance structure of commercial banks, give full play to the related function of the board of directors and board of supervisors. The innovation of this paper lies in the following three aspects:firstly, in this paper, all the representatives of the banks’board of directors, supervisors and senior management personnel are included in the analysis and we use their average salary to represent the average executive compensation. Secondly, this paper presents the long-term incentive in the implementation of bank executives and a certain condition to restrict executive compensation. Thirdly, based on the analysis of China’s joint-stock commercial banks’implementation of the CBRC’s regulations, we propose a long-term executive compensation incentive mechanism, which will be a good reference for improving executive compensation of China’s joint-stock commercial bank incentive mechanism.