Problems Of Joint-equity Commercial Bank In China Executive Compensation Incentive

In early2009, the Ministry of Finance of China proposed that2,800,000should be the“raising limit” of executive pay according to the guidelines on the executive pay ofstate-owned and state holding financial enterprises.The guidelines shows that the executivepay in financial industry has attracted national attention especially in the banking industry.In view of this, we should conduct a thorough study of the incentive payment system of theexecutives of commercial banks in China and develop a incentive payment system whichgoes with the status quo of the banking industry in China. Not only do we have to associatethe executive pay with the bank performance, but also do we have to assure that theincentive payment system of the executives can develop a long-term blueprint of thebanking industry of China. Today, the stock-listed banks in China are in a critical period,they have a strong demand for senior executives, so it is a win-win for both helpingenhance the core competitiveness and improving the governance system of banks andavoiding serious financial crisis caused by blind expansion to perform such an research.There are many reasons to choose the joint-stock commercial banks as a sample toperform this research. In comparison to large-scaled state-owned banks, they have a shorthistory of organizing and a strong demand for personal allocation, especially seniorexecutives. On the other hand, they have no historical burden, their operational mechanismis flexible, their management efficiency is better and it is easy to optimize theirmanagement because they are small-scaled. Therefore, they are more representative in thisaspect and worthy of further study.Firstly,the theoretical basis of incentive payment system is expounded which analyzedthe characteristics of the currently domestic and international incentive paymentsystem.Secondly, eight listed joint-stock commercial bank were chosen to study theexecutive pay incentive system of joint-stock commercial bank. By collecting andintegrating date, we put the joint-stock commercial bank executive pay levels in theindustry, then we find out that there is a huge pay gap analysis between bank executivesand ordinary employees.Thirdly, basis the nearly three years of financial statements issuedby the bank.We will see there little elationship between bank performance and executivepay levels.Finally, we collected the proportion of total shares in bank executives.And we thought that bank executives is still considered to provide cash-based short-term incentivecompensation and lack of long-term incentive pay.Analysis of these issues, put forwardsome suggestions and countermeasures.Then improve the compensation incentives injoint-stock banks.