Determinants Of Executive Compensation Based On The Human Capital Perspective

The further development of knowledge economy determines the important value and status of the human capital. As China’s economic and financial center, Shanghai needs the continuous influx of high level talents if it wants to achieve the goal of global cities in the future. As an important part of enterprise human resources management, the function of compensation is very obvious. Scientific and reasonable remuneration levels and remuneration structure are important means to attract and retain talents, and realize the effective incentive to the scarce management ability. However, according to the investigation result of the “Hudson Report” which is jointly issued in 2013 by Shanghai Human Resources Consulting Association and Hudson, a consultancy, among the various reasons for the outflow of talents in the Shanghai area, dissatisfaction with the payment accounts for the astonishing proportion of up to 75%. Therefore, the action to explore the influence factors and the determining mechanism of the executive compensation, increase the competitiveness and attractiveness of the remuneration, and make the salary matched up with the ability, and the payment not divorced from the contribution, is the top priority of the Shanghai listed company, and also the key for the enterprises to win “the war for talent” in the 21 st century.According to the above phenomenon, this paper uses the method of combining theoretical analysis and empirical test to examine the determinants of executive compensation from the perspective of human capital. Firstly, this paper defines the concept of human capital based on the collation of literature at home and abroad, and divides human capital into two categories of demographic characteristics of human capital and human capital value from views of input and output respectively. Then, this paper carries on the mechanism analysis on the relationship between demographic characteristics and cash remuneration, as well as the human capital value and the equity compensation, and puts forward the relevant hypothesis. Secondly, the paper selects A-share listed companies from 2010 to 2014 in Shanghai area as the research object, and conducts empirical tests respectively for the overall sample, samples of state-owned enterprises and samples of non-state-owned enterprises. Finally, the paper summarizes the research results, and puts forward corresponding policy recommendations and future research prospects.The research of this paper mainly draws the following conclusions: First, the executive’s pay gap of the listed companies in the Shanghai area is relatively large, and the form is single, the long-term incentive is insufficient. Second, the demographic characteristics of the human capital have a significant positive impact on the cash remuneration of the executive, where the biggest impact of the demographic characteristics to the cash remuneration of the executive in the state-owned listed company is the executive’s age, and the biggest impact of the demographic characteristics to the cash remuneration of the executives in the non-state-owned listed company is the executive’s education background. Third, the human capital value of the executive in the non-state-owned listed company has a significant positive effect on the executive’s equity compensation, while the human capital value of the executive in the state-holding listed company has a positive correlation with the executive’s equity compensation, but not significant. Fourth, the total compensation of the senior executive is mainly determined by the executive’s education background, and its compensation effect is greater than the incentive effect.