Research On The Influence Of Executive Compensation On The Performance Of Listed Banks

As a knowledge-intensive service industry,Modern banking' characteristics decided the talented person is the bank's core capital.Highly qualified bank employees,especially bank executives,largely determine the bank's core competitiveness,so we need to implement scientific management and effective incentive to inspire the staff enthusiasm.In recent years,the benefits of bank executives has received close attention from all sectors of society,meanwhile the public suspect whether the high salary can bring the banks better performance.There are significant differences on the result between the Chinese scholars and foreign scholars.In this background,we study the influence of executive compensation on the performance of listed banks,which is of academic value and practical significance.The study use the relevant data of 16 listed banks executives' salary and performance as samples,and the influence of executive compensation on the performance of listed banks and its influence degree are the starting point and foothold of this research.To achieve the purpose,the article use the methods of theoretical analysis and empirical analysis,at the same time,we select adequate relative variables,then use Principal Component Analysis to compute performance score to found the relationship between executive compensation and performance of listed banks.Combining domestic with overseas academic research,this article is based on the principal-agent theory conduct theoretical analysis,then analyze present situation of China's bank executives compensation system and compare with the foreign bank.The results show that there are large differences between listed banks executives' compensation.Their wage is slightly down.Joint stock system and state-owned commercial bank executive pay gap is big.It is dominated by short-term incentive and the lack of long-term incentives.Compared with developed countries,the rate of fixed compensation of executive compensation in Chinese banks is too high.The executives' compensation has little to do with the performance of listed banks.In order to solve the above problems,the relationship between executive compensation and business performance should be further analyzed.Taking into account the different bank ownership structure,in the process of empirical analysis,this article divided the samples into two group state-owned commercial banks and non-state-owed commercial banks to discuss the difference between the two types of bank executive compensation on the performance of banks.Conclusions as follow: the non-state-owed banks' Executives compensation about overall sample has a positive impact on bank performance,while the state-owned banks have a negative impact on the bank performance.This result indicates that commercial banks in China have initially established the executive compensation incentive system.In addition,for a comprehensive analysis of the impact of business performance,this paper also examines the impact of deferred payment,equity incentives and other control variables.The results show that the delay in payment as well as stock ownership incentive has a negative impact on bank performance.Based on the above analysis,in order to improve the performance of the bank,we believe that according to China's specific national conditions,the bank should constantly improve our country commercial bank executive compensation incentive mechanism.The specific measures include: basic salary settings need to consider not only the internal fairness,but also external fair.Performance pay should not only consider the profitability index,and considering the nonprofit index,at the same time should also increase the proportion of performance pay in the long run and Establish a reasonable and effective performance evaluation mechanism.In addition to chose all the listed commercial banks as the research sample,there are some innovations in this article: Firstly,the most important is the selection of performance indicators,this article abandoned the previous performance evaluation methods that revolve about a single or a series of financial indicators and construct a bank performance evaluation system that can reflect the profitability,liquidity,security and growth ability.However,due to the time of listing of the listed banks are relatively late,so the amount of sample data is relatively small,and the measurement index of executive compensation should also be considered more comprehensive.It is also a need to perfect the field in the future research.