Board Characteristics, Executive Compensation And Business Performance

Executive compensation is the sum of the benefits of the senior management or the compensation of capital and monetary its scarce human capital in the enterprise obtained. Scientific salary system, reasonable incentive pay, there is no doubt to improve business performance, enhance corporate value. However, the establishment of a scientific and rational system of remuneration depends on the board characters, the level of independence of the board and its competence. Recent years, the performance of listed companies obviously mismatch with executive compensation. Board of directors involved in the design of executive compensation as a key institution of governance of listed companies, and also have supervision and management functions. How the board of directors really played supervision and management functions; how to take measures to make the board of directors taking advantage in setting executive pay feature to prevent unreasonable remuneration paid with performance falling instead of rising phenomenon; the board itself will feature what kind of impacts on business performance; the board itself have impact on the relationship between executive pay and corporate performance; above all, these are the focuses of this paper. In addition, this paper introduces the market index as a measure of the degree of market indicators, futherly analyze how the board of directors impact the listed companies executives pay in different degree of market characteristics. The introduction of market index, studying the board of director features, executive pay and corporate performance relationships between the three deeply, and to play the role of the board of directors, regulate executive pay and improve business performance provides a theoretical basis.Firstly, this paper describes the background, the corresponding research value, the research methodology and framework; secondly, introduce the theory associated with this study comprehensively, combing the relevant research results, and writing the review; then elaborate the relationship between the three-board characteristics, executive pay and corporate performance theoretically, on the basis of data collected, make statistical tests on the board characteristics how to impact executive compensation, how the executive compensation impact business performance, the impact of board characteristics on firm performance, the relationship between executive pay and corporate performance and adjusting the degree of market; This paper selected Shanghai and Shenzhen listed company data from January 1st, 2009 to December 31 st, 2014, from the size, the independence, the board chairman and general manager of the two whether grades in one, the board meeting frequency, and the compensation committee five board characteristics and corporate performance and market index were descriptive statistical analysis, Hausman test, random effects analysis, and least-squares regression analysis, and thus draw the following conclusions:(1) with the expansion of the board of directors, executive pay rise, chairman and general manager of the two jobs separate, the higher the degree of specialization of the board of directors, better able to control executive pay; increase the independence of the board of directors does not executive compensation have a significant constraint;(2) executive pay can bring a significant impact to the business performance in listed companies, and the relationship between corporate performance and executive pay is an inverted U-shaped;(3) the board of directors scale increases, will reduce corporate performance, and its relevance affect between performance and executive pay was not significant;(4) enhance board independence, business performance can be improved significantly, but reduces the relationship between business performance and executive compensation;(5) in some listed companies, chairman and general manager of the two jobs separate is a dead letter, did not bring the performance upgrade, furthermore, the functional separation of the chairman and general manager of the two influence between executive pay and firm performance is not remarkable;(6) the impact of board meetings on corporate performance is not significant, and its impact on the relationship between corporate performance and executive pay not significant either;(7) the remuneration committee not only failed to make the business performance improved, but decreased., and the strengthening of the remuneration committee is possible to improve the correlation between corporate performance and executive pay;(8) in the higher degree of market, the size of the board of directors of listed companies as well as chairman and general manager of two is more significant on executive pay. The lower degree of market, the specialized of the board has more constraint on executive pay, and the impact on the independence of the board of executive compensation is not significant.