Top Management Compensation Structure And Stickiness Of State-owned Listed Companies

In order to attract talented top managers and stimulate their potential, how to set the salary system is a tough question for many enterprises. Above all, under the background of the state-owned-enterprises reform, executive incentive mechanism seems to be an obstacle for development of those companies. From the theoretical and practical experience, the mechanism that salary highly depends on performance is proved to be a good incentive mechanism. But this mechanism does not mean there is a synchronous relationship between compensation and performance. That is to say, there exists a compensation stickiness phenomenon. Along with the establishment and improvement of the equity incentive mechanism, this paper focuses on whether the equity incentive can alleviate the compensation stickiness phenomenon or not.State-owned listed companies are regarded as the research object in this paper. Adopting the method which combines the theoretical analysis and empirical research, this paper discusses the relationship between compensation structure and stickiness based on managerial power. This paper introduces the background and significance of this topic firstly to illustrate the research content and framework, and then states related research literature. After that, research hypothesis and regression model are built, based on theoretical analysis. In the step4about the empirical analysis, the CEO compensation is defined as the sum of monetary compensation and equity compensation. The analysis reveals that there is a strong correlation between compensation and performance, but compensation stickiness phenomenon still exists. Equity incentive mechanism can effectively reduce the extent of compensation stickiness, but the growing power of senior managers may weaken this positive effects. Meanwhile, the impact of this growing power on equity compensation stickiness is greater than that on monetary compensation stickiness. This paper also finds that enterprises setting the compensation committee have a relatively higher compensation and committees do not play a role of supervisor. Central enterprises have lower compensation stickiness, and enterprises in non-profit&monopolistic industry enjoy higher stickiness. At last, this paper gives some advice on how to weaken compensation stickiness from two aspects. First, enterprises can appropriately raise the intensity of stock rewards. Second, enterprises should reasonably control the power of top managers. Enlightenment on stratified salary system reform is also found at the end.