Multi-period Dynamic Salary Incentives For State-owned Enterprise Executives In China

How to link executives’ interests with shareholders’ interests and ease corporate agency costs through executive(manager)compensation has always been one of the core research issues in corporate governance.More importantly,how to link the interests of managers with the long-term interests of shareholders through executive(manager)compensation,and motivate managers to improve the long-term performance of enterprises is even more worthy of study.It is generally believed that in the past,the form of manager compensation is generally more focused on short-term incentives,not on long-term incentives,and should introduce future performance indicators in compensation,and link executive compensation with future performance to alleviate the problem of stimulating excessive incentives for managers’ short-term behavior.In the context of multi-period and dynamic,this paper studies the hidden and explicit incentive effects of state-owned enterprises in China.First of all,this paper establishes a multi-period dynamic principal-agent model.From the theoretical research,how to choose the level of effort to improve the current and long-term performance in the case of executives with promotion considerations and reward incentives.Then,the article extracts the data of some state-owned listed companies for regression simulation,and empirically draws the link between executive compensation and the operating performance of the company.Through empirical research on the executive compensation and corporate performance of 157 state-owned enterprises listed on the Shanghai and Shenzhen Stock Exchanges from 2013 to 2016,the following conclusions can be drawn:(1)The current salary of senior executives is significantly affected by the current performance and long-term performance of the company,and all of them are positively affected.The higher the performance of the company,the higher the executive compensation,and this conclusion complements the theoretical research.Further,the current incentive performance of the company’s current performance on executive compensation is stronger than the long-term performance,because the current salary of senior executives mainly focuses on the current development of the company,and appropriate linkage with long-term performance can enhance the level of managerial efforts.(2)The current performance and long-term performance of the company will also affect the long-term remuneration of the executives.The incentive intensity of the current performance is slightly stronger than the long-term performance.Overall,the performance of the company is significantly positively correlated with the long-term salary of the executives,but the incentives The intensity is weak.The long-term incentives commonly used by state-owned enterprises in China are mainly stock incentives,and the long-term compensation system is still not perfect.The research on incentives between long-term performance and long-term compensation is not deep enough.Empirical research also proves that the actual implementation effect is limited.