| In recent years, executive compensation is increased rapidly in Chinese listed companies. The phenomenon of “extortionate salary”, executive compensation and performance upside down has also drawn public attention. Due to the absence of external market mechanism and internal supervision mechanism, the stories of executive selfish behavior appear frequently in the press exposing, like influencing self-dealing compensation based on their power, seizing huge profits and conducting types of other short-term profit-driven behaviors at the expense of shareholders’ interest. However, numerous empirical evidences show that there is the agency relationship between the board of directors and shareholders. Management may influence and even capture the board of directors based on their power, and then affect their own pay. In addition, the continuous expansion of the power will not only lead to the management seek control and private interests, but also increased the possibility of the occurrence of executive compensation sticky behavior.This paper is based on the unique background of Chinese stock ownership concentration and imprefect corporate governance, discussing the managerial power effect of compensation level and compensation stickiness of the CEO in Chinese listed companies, in order to improve the system of executive compensation incentive. Firstly, we review the relevant theories and literature. Secondly, we analyze the formation and performance of the power and the characteristics of executive compensation incentive combined with the system background of our country, and put forward the corresponding research hypothesis. Thirdly, we apply the sample of the Chinese listed companies during 2009 to 2014, test the relationship between managerial power and executive compensation lever, the relationship between managerial power and compensation stickiness, the characteristics of compensation stickiness by using T test and multiple regression based on panel data. Finally, according to research conclusion, we propose appropriate policy recommenddations.This paper draws the following conclusions. Firstly, managerial power has significant positive relation with executive compensation, CEO may influence their compensation based on their power. Secondly, the stickiness of CEO compensation exists in Chinese listed companies. Thirdly, different CEO power has different influence on the compensation stickiness. The compensation stickiness will reduce when CEO holds shares of the company, long-term tenure, the company without controlling shareholders or CEO Part-time in other enterprises. The compensation stickiness will increase when CEO served as chairman or vice chairman or as a member of the Remuneration Committee. Fourthly, the compensation stickiness of CEO has the structure characteristics, it only exists in companies which have serious losses, and it will gradually decrease and disappear with the improvement of performance. The compensation-performance sensitivity of CEO is inverted U type. The compensation stickiness of CEO hasn’t obvious time variant characteristics. The protective industries have less compensation-performance sensitivity, and the compensation stickiness exists in the competitive industries.For the conclusions of research, this paper puts forward corresponding measures and suggestions from four aspects. They are improving the corporate governance system, optimizing the salary structure and performance evaluation system, improving the information disclosure of executive compensation, and strengthening the functions of news media supervision. |
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