The Research On The Relationship Between Senior Executive Compensation And Corporate Performance In Our Listed Companies

The financial crisis in2008brought a great shock to the global economy. The economicbenefit of many enterprises is declining. In order to reduce the cost of enterprise and deal withthe financial crisis, many enterprises reduce the senior executive compensation. However, underthis circumstance, there appear some different voices. Some financial institutions usegovernment handouts to issue high salaries. Ping An Group Chairman Ma Mingzhe’s salarywas more than66million Yuan in2007, and he announced not to receive salary in2008. Thismakes the senior executive compensation lack of social identity and the call forglobal regulation becomes more urgent. The society is filled with the emotion to restrict thesenior executive compensation. Therefore, after the financial crisis, what kind of impact does thesenior executive compensation have on the enterprise’s future performance, what is therelationship between the senior executive compensation and firm performance and how to setthe senior executive compensation, are worthy of our in-depth study. I hope this study caneffectively verify the relationship between the senior executive compensation and firmperformance and what are the factors affecting executive compensation. Then provide animportant theoretical basis for the reasonable effective senior executive compensation decision,further promote the reform of enterprise salary system and effectively improve the performanceof enterprises.This article firstly reviewed related content of senior executive compensation and enterpriseperformance from two aspects of literature and theory to review. Then it does empirical researchon the relation between executive compensation and enterprise performance. This article mainlyanalyses the correlation between executive compensation and enterprise performance from twoaspects. One is vertical line description statistical analysis, and the sample is divided into generaldescriptive statistical analysis and industry descriptive statistical analysis; the second is to gatherthe data of the single variable and multi-variables linear regression analysis, and this articleselects the natural logarithm of the top three senior executive average compensation to measuresenior executive compensation and return on equity and earnings per share to measure enterpriseperformance, adding eight control variables, such as corporate size, financial leverage, corporateownership concentration, senior managers’ shareholding ratio, the proportion of state ownership,the proportion of independent directors, the occupation of chairman and general manager, the size of the board of supervisors. Research conclusion(for the overall sample):(1)Senior executivecompensation and enterprise performance was significantly positively correlated;(2)Seniorexecutive compensation and corporate size was significantly positively correlated;(3)Seniorexecutive compensation and the rate of assets and liabilities was significantly negativelycorrelated;(4)Senior executive compensation and corporate ownership concentration wassignificantly negatively correlated;(5)Senior executive compensation and senior managers’shareholding ratio was significantly positively correlated;(6)Senior executive compensation andthe proportion of state ownership was weakly negatively correlated;(7)When it selects return onequity to measure enterprise performance, senior executive compensation and the proportion ofindependent directors was significantly negatively correlated, but when it selects earnings pershare to measure enterprise performance, the relevance between senior executive compensationand the proportion of independent directors was weak;(8)Senior executive compensation and theoccupation of chairman and general manager was significantly negatively correlated;(9)Seniorexecutive compensation and the size of the board of supervisors was significantly negativelycorrelated. Last, it puts forward some related suggestions and elaborated the limitations of thestudy and puts forward prospects of future research.