Research On The Influence Of Reorganization Of Executive Team On Executive Compensation Gap

With the advent of the digital economy era,society and enterprises are facing tremendous changes.In order to cope with the pressure brought by this change,enterprises are trying to adopt organizational changes(restructuring executive team)to meet challenges and complete self-reform.In the fourth quarter of 2018,Apple's continued stock price decline due to the sluggish mobile phone market and over-reliance on the iPhone.In early 2019,Apple tried to re-construct the executive team to change its strategy and return to its heyday;in 2018,The market economy is weak,Jingdong's main business is not developing smoothly,and with the Liu Qiangdong incident,Jingdong's reputation is damaged,so Jingdong want to change the company's strategy by eliminating the top management.Coupled with the convenience of transportation and network,people are increasingly reluctant to be confined to a "small world",but constantly discover "new world",and executives change more frequently.One is the external pressure,the company has to do it;the other is that people's choices due to the lower and lower cost of job-hopping and more and more desires in their hearts have led to more and more frequent executive changes.Such frequent changes are bound to lead to instability of the executive team and the enterprise,what kind of emergency strategy will be adopted by the enterprise and what impact it will have on the enterprise,which is worth exploring.The executive pay gap is the tournament's bonus that set by the company to motivate executives to work hard,but only if the executive team members are stable.When the senior management team reorganizes,the team members change greatly.The new and old members have great differences in demographic characteristics,cognition and emotion.The subsequent cooperation will also be a poor level of behavioral integration that be in poor quality of information interaction,low decision-making efficiency and cooperation level.In this scenario,will companies continue to increase the executive pay gap to encourage executives to work hard to advance? At the same time,whether the CEO changes,the CEO is routinely replaced,the CEO succession type,different CEO change scenarios and different enterprise nature will also have different impacts on the team behavior integration when the senior management team reorganizes,which will have different impact on the company's salary policy.Finally,the degree of reorganization of the executive team will affect the degree of cooperation between team members,which will have an impact on the incentive effect of the executive pay gap.Based on the existing research,this paper comprehensively uses behavior integration theory,tournament theory,relative exploitation theory,optimal contract theory,etc.,selects 2012-2016 China's Shanghai and Shenzhen A-share data as a sample,and studies the senior management team restructuring from the perspective of behavior integration.It mainly studies the impact of senior management team reorganization on executive compensation gap and its incentive effect,and discusses the adjustment role of different CEO change scenarios and different enterprise characteristics.The study found that,first,when the senior management team is reorganized,the company will narrow the salary gap between the senior management team members,reduce the competition factors among the team members,and enable the team members to integrate behavior as soon as possible.Second,relative to the CEO has not changed,the CEO conventional replacement,the CEO comes from internal followers,after CEO change,CEO unconventional replacement and CEO from internal competitors or outsiders,the behavior integration of executive team reorganization is more difficult,the company is more tend to narrow the salary gap of executives;compared with private enterprises,enterprises tend to narrow the pay gap when the senior management team of state-owned enterprises is reorganized.Third,after the reorganization of the senior management team,the behavior integration is difficult,the teamwork is affected,and the executives may obtain the tournament's bonus through acts such as power competition and conspiracy promotion,thus inhibiting the promotion effect of the executive compensation gap on corporate performance.According to the research conclusions,this paper puts forward corresponding suggestions: First,enterprises should pay attention to the behavior integration of executive team restructuring and senior management team restructuring,especially when CEO changes,CEO unconventional replacement,external or internal competitors succeed CEO enterprises can not alleviate conflicts by reducing incentives.We should establish an effective behavioral integration mechanism to promote the status of solidarity and cooperation between new and old members.Second,the enterprise should set up the salary system according to the degree of reorganization of the senior management team.It can temporarily ease the tension between the team members by equalizing the salary;although the executive compensation gap can stimulate the performance of the enterprise,there are constraints.Enterprises should increase the salary gap of senior executives in the case of a small degree of reorganization of senior management teams,in order to maximize the incentive effect of executive compensation gap.