Managerial Power?Excessive Remuneration And The Future Performance Of The Company

Executive compensation contract incentive effectiveness has always been a focus on theoretical and practical circles and hot topic of discussion.As more and more "Sky-highcompensation" announced and the compensation and corporate performance inversionphenomenon is revealed,the public has a deep suspicions to the effectiveness of the salary incentive.At that time,a series of government pay orders have been issued,more and more people think that the compensation contract is invalid.However,in the face of the government pay requirements,in order to reduce the cost of public anger,State executives seek more on-the-job consumption which is relatively hidden incentives.Some executives directly chose to "vote with their feet".This reality raises the author's thinking: compensation contracts in our country have totally failed? The "high" or "excess" executive pay in the public eye is really doesn't depend on the manager's ability but is obtained by managerial power? Is there a lag of incentive effect and not easy to be observed by public? If then,how the managerial power will affect this relationship?In order to make more objective and accurate evaluation on the effectiveness of executive compensation contract,this paper is devoted to the test on the incentive effect of executive excessive pay.Based on the optimal compensation contract theory and the theory of managerial power,the author analyzed and validated the relationship between the executive excess compensation and the company's future performance as well as discussed the role that the managerial power played in this relationship.In addition,in order to make the research of this article more thorough and reliable,the nature of property rights and the influence of industry monopoly has been carried on the detailed study.Through theoretical analysis and empirical test,this paper draws the following main conclusions: firstly,the executive excess compensation is positively related to the company's future operating performance which indicates excess compensation has incentive effect of lag.Secondly,the management authority has obvious inhibitory effect on theincentive effect ofexecutive excess compensation.Thirdly,from the perspective of property rights,state-owned property rights will weaken the incentive effectof executive excess compensation on future performanceand in the state-owned enterprises,the blocking effect of the managerial poweron executive compensation incentive effect will be more apparent.Last but not least,if the competition degree of the market is higher,the incentive effect of executive excess compensation will be more obvious and monopoly would be prevented it from its role in promoting.In this paper,the research results indicate that the optimal compensation contract theory in our country still has certain applicability.Namely,executive excess compensation is associated with executive ability and effort and thus has a certain incentive effect.Managerial power to a certain extent hampered,however,the incentive rolethat compensation contracts played.Therefore,the design of the compensation contracts should be more personalized.Also,the related managerial power arrangement should be paid more attention to.