Pay Gap Of Top Management Team And The Contributing Factors On Compensation Dispersion

A set of reasonable remuneration system in an enterprise can effectively motivate personnel, especially corporate executives. After30years of reforming and opening up, the basic framework of China’s modern enterprise system has been established, but the remuneration system for corporate executives still has many problems, such as the astronomical salaries and huge job-consumption. Compared to non-monopoly industries, these phenomena is particularly prominent in monopoly industries. All the factors above has made executive compensation issues, especially in monopoly industry, a major concern.Executive compensation has always been an important issue of corporate governance research areas, which is marked by the pay gap. The pay gap reflects the distribution method of overall remuneration within top management team (TMT). Tournament Theory, Behavior Theory, though from different angles, both reflect the pay gap has an impact on the efforts and loyalty of the executives, which will absolutely affect the development of enterprises. Therefore, in recent years, the number of related researches is growing. China starts relatively later on this area, and, instead of contributing factors, or related comparative study between different kinds of industries, most studies are concerned about the impact on the corporate performance and the corporate value by pay gap. Based on the reasons above, the purpose of my research is to figure out the situation and contributing factors of pay gap of TMT, using comparative thinking and empirical research methods, so as to show the differences between monopoly Industries and non-monopoly industries.The main contents of this paper are as follows. PART I:Introduce the background, purpose, contribution, methods and framework of this research. PART II:This part provides theory evidences for the research by listing and analyzing the three basic theories of pay gap of TMT——Powers of Management Theory, Tournament Theory and Behavioral Theory, analyzing the this paper’s viability within China as well as reviewing the related literature. Part Ⅲ:Show the past and present situation of pay gap in different angles such as year, area and industry. Part Ⅳ:Show the design of the research. Based on the existing pay gap theories and previous research conclusions, propose assumptions from the angle of the basic situation, the corporate governance and company performance. Then, make a comparison between the regression results of two industries. Part Ⅴ:Show the conclusions, shortages and future directions of the research, summarize the main conclusions of this paper, and puts forward relevant policy recommendations accordingly. Then show the article limitations and future research directions.The main conclusion of the research is that many differences have been found between monopoly industries and non-monopoly industries. Detailed description as below:(1) For monopoly industries, the following four factors have significant positive correlation with TMT pay gap:size of corporate, size of TMT, the nature of equity, enterprise value; and two with significant negative correlation:size of supervisors-board and ownership concentration; seven factors have no significant correlation with TMT pay gap:the area of the company, the listed period, capital structure, two-jobs-concurrently, the proportion of independent directors, equity balance degree and growth of corporate.(2) For non-monopoly enterprises, the following seven factors have significant positive correlation with TMT pay gap:the area of the company, the listed period, size of corporate, two-jobs-concurrently, size of TMT, equity balance degree and enterprise value; five factors with significant negative correlation: capital structure, size of supervisors-board, the nature of equity, ownership concentration and growth of corporate; the proportion of independent directors has no significant correlation with TMT pay gap.The main contribution of this paper is the large-sampled statistical description of top management team pay gap within China’s listed companies, in which there is valuable related information, useful to users such as government regulators, the public to understand of the actual situation of the listed company’s executive team pay gap so as to support their decisions. The data is grouped, studied and analyzed according to whether it belongs to monopoly industry. This work is groundbreaking in the field of TMT pay gap. The research offered advice and suggestions on this basis to help set a more reasonable TMT pay gap which is in line with China’s actual situation, contributing to improve executive compensation system.The limitations of this study:firstly, due to the uncertainty of the measurement, the object of the study is only limited on monetary remuneration of the top management team, not including other invisible remuneration (such as the job-consumption). Secondly, this paper only group samples into monopoly industries and non-monopoly industries. Studies conducted in future can go deeper by refining industry classification or analyzing from other angles.