Research On The Influence Of Bank Executives’ Salary Payment Mode On Bank Operation Performance

As a pillar industry in China’s national economy,the modern banking industry is a critical component.The industry’s knowledge-intensive nature determines the importance of talent in bank management.The success or failure of a bank’s development depends largely on the quality of its executive management.Therefore,it is necessary to stimulate their work enthusiasm through scientific and effective incentive mechanisms and promote the vigorous development of the banking industry.The separation of ownership and control in modern enterprises has led to the emergence of the principal-agent problem.Compensation contracts guide companies to link executive compensation with company performance,motivating executives to work hard to improve company performance and earn more rewards.In recent years,the phenomenon of exorbitant executive compensation in banks has attracted widespread attention from the public.The mismatch between high executive pay and low bank performance in some banks has also been questioned by the public,and compensation system reforms are urgently needed.Currently,the executive compensation of listed commercial banks in China is mainly composed of short-term monetary compensation,supplemented by long-term incentives such as deferred payment and equity incentives.Against the backdrop of compensation system reform,it is of significant theoretical and practical significance to study the impact and mechanism of different executive compensation payment methods on bank operating performance.This will contribute to the improvement and perfection of China’s banking industry compensation system and promote the sustained and healthy development of the banking industry.Based on the principal-agent theory and incentive theory,this study examines the impact of different forms of executive compensation on the performance of listed commercial banks in China and their transmission channels.Using panel data from 42 listed commercial banks in China between 2007 and 2021,the study employs fixed effects models with commercial bank return on equity as the dependent variable and executive cash compensation,deferred compensation,and executive stock ownership as core independent variables,while controlling for variables such as leverage ratio,bank size,and non-performing loan ratio.The empirical results show that:(1)Overall,executive cash compensation is positively related to bank performance in listed commercial banks in China.Non-state-owned holding banks have a significant positive correlation between executive cash compensation and bank performance,while state-owned holding banks do not have a significant impact on bank performance.(2)Deferred compensation has a negative impact on bank performance,and the negative impact on performance in joint-stock banks is greater than in non-joint-stock banks.(3)Overall,executive stock ownership has a negative impact on bank performance.This impact differs between city commercial banks and non-city commercial banks.Executive stock ownership has a significant negative correlation with performance in non-city commercial banks,while it has no significant impact on bank performance in city commercial banks.(4)Non-interest income plays a mediating role in the relationship between executive compensation and bank performance.Based on the findings,suggestions for the future development of commercial banks include: improving internal governance mechanisms and strengthening internal supervision;establishing a transparent compensation disclosure system and enhancing external supervision;adopting a diversified compensation incentive mechanism that integrates short-and long-term incentives;establishing a comprehensive performance evaluation system and perfecting the assessment mechanism;reducing the intervention of the government and establishing a professional management system for the banking industry.