Legal Regulation Over Executive’s Compensation In State-owned Enterprise

This article comprises the introduction, the text, and the conclusion.Introduction proposed the basic theory and practical background of theregulation of state-owned enterprises executives pay, and thus leads to realisticsignificance and purposes of this study.This article except preface and conclusion is divided into four chapters.Chapter I points out the object, the history and the present situation of this issue.The first part of this study identified the category of two key objects, in which"state-owned enterprise" refers to the wholly state-owned enterprises and company, aswell as state-holding company;"executives" refers to the operators (directors andmanagers) as the main body, including financial executives, secretary of board ofdirectors and other senior management. The second part reviews three representativehistorical stages of the state-owned enterprises executive pay, as well as the basicfeatures of state-owned enterprises executive pay at each stage. The third part pointsout the situation and major problems of state-owned enterprises executive pay atcurrent stage.Chapter II analyzes the theoretical framework and China’s specific realitybackground in respect of executive compensation. A basic idea derived from thetheory above is to establish an incentive compensation system according toobservable performance variables, which can reflect the human capital value ofexecutive management, in order to achieve the compatibility of interests betweenmanagers and shareholders. Through the analysis of our reality, the second partexplains the reason that causes the deviation between theory and reality, which causesthe current problems of state-owned enterprises executive compensation. Meanwhile,it also explained the necessity of legal regulation of state-owned enterprisesexecutives pay.Chapter III examines the situation in terms of legal regulation of state-ownedenterprises executives pay in western countries. The first part introduces thelegislation and judicial practice of executive compensation in Western publiccompanies, and discusses the role of law in accordance with the purpose and effect ofthat regulation. The second part inspects macro-control management system ofstate-owned enterprises and regulatory mechanisms of state-owned enterprises executive compensation in western countries, and sums up the features of executivecompensation regulatory system in state-owned enterprises of western countries andreference for China’s state-owned enterprises as well as the fundamental differencesbetween the western state-owned enterprises and China’s state-owned enterprises.Chapter IV explores a reasonable path to legal regulation of China’s state-ownedenterprise executives pay. The first part systematically straightens out current legalregulation of executive compensation system in China in two aspects: the system andthe content of regulation, and points out the deficiencies in existing regulation. Thesecond part put forward the concept of "classification of regulation" for differenttypes of state-owned enterprises, combined with the fundamental policy of strategicadjustment of China’s state-owned economy, and, for different types of state-ownedenterprise, suggests several specific aspects, in which the regulation should play arole.