The Research On Say On Pay In Listed Companies

As the ownership and control separated in modern companies,the executive compensation becomes an important part in corporate governance to stimulate the executives.In traditional theories of company law,executive compensation comes from arm's length negotiation,which provides the optimal contract with executives.However,the governance system of executive compensation is challenged in several aspects,including the managerial power theory,the deficiency of directors-oriented system,the pay for failure,the limitation on shareholders' supervision and judicial intervention.With respect of this,some countries,UK for instance,provide shareholders of listed companies a right of advisory vote on executive compensation(Say on Pay),which aims to improve the directors-oriented governance system.Say on Pay requires the board of directors to submit the executive compensation report to general meeting of shareholders or as a part of the annual report.The items and forms of the executive compensation report are normally listed in the regulations on information disclosure.On the other hand,an increasing number of empirical research was conducted,which proved the efficiency of Say on Pay on shareholders' supervision,the strengthened linkage with performance and the better structure of executive compensation.Therefore,Say on Pay provides plenty of meaningful experience for the listed companies in China.