An Empirical Study On Executive Compensation Incentive Mechanism In Listed Commercial Bank Of China

Commercial bank means a great deal to state financial security and economicdevelopment.The separation of ownership and management is queit common formodern enterprise,the effectiveness of executive compensation incentives directly affectexecutive behavior,and then affecting the business performance.Therefore,theconstruction of the executive compensation incentive system has long received a lot ofpublicity. How to make executive pay high associateg with bank interests has been a hotresearch in a long time.After the financial crisis of united states,the soaring executivepay of bank has become one of the hottest issues,this problem has aroused publicdiscussion frequently.The reorganization of joint stock system of the state-ownedcommercial banks in our country has been successfully completed in2010.In recentyears,state-owned banks listed one after another,commercial banks have gradually speedup the process of executive pay reform. How to improve bank governance,how toestablish a scientific and reasonable incentiving and bonding salary system andinplement the motivating effect,are the keys of the reform to commercial bank, what ismore, they are pressing problems that need to be solved as soon as possible.This paper present out the bank executive compensation system of the UnitedStates, Germany and China,then we compared and analyzed three compensationsystems.We examined the relationship between the bank’s performance and executivepay,we also discussed the factors affecting executive compensation,besides,we verifiedthe effectiveness of the motivating and bonding syetem by use the date of16listedcommercial banks during the period of2001-2012as the research sample.Empricial andregression analysis showed that in the whole sample, executive payments are positivelycorrelated to bank performance and the size of banks.on the contrary,the higher theownership concentration is,the lower compensation the executive gets, the link betweenindustry risk,safety and executive compensation is not particularly strong. We dividedthe samples into2groups as state-controlled banks and non-state-controlledbanks(joint-stock commercial banks),empirical research suggests that there is nopositive relationship between annual compensation and corperate performance in thelisted state-owned commercial banks, each of the factors affecting executive pay seemsunnecessary and even meaningless in state-controlled banks.Based on theoretical andempirical research, this paper summarizes the characteristics and disadvantages of theexecutive compensation incentiving and bonding system of domestic commercialbanks.From our point of view, commercial banks need to improve the internal and external governance mechanism first,then they should optimize the salary structure andconstuct the comprehensive performance evaluation system.In addition,banks shouldfocus on system reform and legal constuction for guarantee the effective operation ofsalary system,make the incentiving and bonding system works.Besides,state-ownedbanks would gradually completing the further reform by optimizing equitystructure,improving compensation combination,streamling regulatory agencies and soon.