Research On Executive Compensation Incentive Effect Of Listed Companies

With the market competition becoming increasingly fierce, the competition for talent has become the main theme of the company in the market competition. The company executives as the company’s core decision-making management play a vital role in the development of competition in the company. In the modern corporate governance both the company’s owners and operators make maximize their own interests as the starting point, with the separation of company ownership and management. The owners want the company to long-term and stable development. But the operators hope that the short-term interests to get high pay and get real control over. The goal of the owners is inconsistent with operators in the course of business of the Company and the information is asymmetry. If incentive effects of the operators are not able to meet the needs of the operators, the operators are likely to damage the interests of the company for their own interests which is called a "moral risk "and" adverse selection "problem. An effective executive compensation incentive need to established to reduce agency costs, to mobilize the enthusiasm of management operators, to make managers target consistent with the owners’. Since1998, annual statements of listed companies began to publish annual remuneration and shareholdings of the executives. Executive incentive compensation and corporate performance becomes an important research direction of the listed company executive compensation. However, due to the imperfect mechanism of corporate governance, executive compensation incentives did not play a good effect. Therefore an executive incentive for listed companies in China is currently the focus of China’s reform and the focus of attention.417listed companies are samples with the2009-2011financial data selected. The principal-agent theory, human capital theory, incentive theory, the labor theory of value as a theoretical basis, the multiple indicators reflect the profitability operating capacity, profitability, capacity development, the level of risk of listed companies. Company’s performance composite score for the indicators got with the method of factor analysis. The relationship between executive pay and corporate performance reflects the listed company executive compensation incentive effects through the empirical analysis. Executive compensation and corporate performance was inverted U-shaped relationship according to the empirical test analysis. Listed companies can take advantage of the relationship between executive pay and company performance to development executive pay incentive method to achieve an effective executive compensation.