The Research Of Relationship Between Manager Compensation And Company Benefit

As the scandals of American companies unceasing and the benefit is inclining, the high income of managers become the focus of commenting once again. All of these have to make us think over the matter that if there are phenomena in china that manager compensation don't agree with company benefit. If there are, what harmful effects will the phenomena have? These questions are analyzed by theoretically and demonstrational on some companies'data. In chapter one, we have briefly reviewed some content of agent theory and the way of manager compensation. Under the circumstance of the ownership separating from the control power, the agents have the possibility by using client's authority to seek for the maximum of self-benefit. Because the agent don't have enough wealth as guarantees, the principal can't take the most effective measure, so they can only design a summing-up compensation plan including salary, bonus, stock, stock option and so on. In this way, they have the agent's compensation established contact with company benefit, thus link with principals'benefit. In chapter two, we mainly discuss the inner contact between company benefit and manager compensation, and raise a model of theory. First, we raise two hypothesis: company benefit is the positive correlation function to manager compensation (H1); manager compensation is the function to company benefit (H2), and then come to the game below: There are two concerned persons in model hypothesis: one 1-manager, the other 2-stockholder of the company. Manager have the character of personal model. This personal model is that under the condition that stockholder ask for the certain benefit, the satisfaction's degree to the desired income is θ. When the manager is satisfied with the desired income, θis G. On the contrary, θis B. The action that manager can choose is to work hard or not to work hard. When θ=G, choose to work hard-Y; otherwise choose N. The cost from manager working hard is C(θ,e). The signal coming from it is company benefit e. Stockholder don't have the character of personal model, according to the signal of company benefit e, choose the compensation to manager w(e). And suppose: Hypothesis 1: Accord with mechanism of inspiring and emerging. Hypothesis 2:e? is the normal benefit of stockholder; there exists the minimum benefit e 0 asked by stockholder. When e< e 0, manager is fired. Hypothesis 3: C(B,e)>C(G,e). Suppose that C(θ,e)=eθ,that is the marginal cost of the manager (model B) who isn't satisfied with the desired income is larger than that of the one who is satisfied. Hypothesis 4: Suppose that the manager's income is U=w(e)-C(θ,e)=w(e)-eθ. Since we have supposed the incentive compatibility, when e? ∈[B(H-L+e0B ),G(H-L+e0G )], there's the separating equilibrium: **( )0 0**0( ) 1,( ) 1,( ),,e p G e eGe e p B ee eBw eHL ee ee??????? θ=????? →→= | ???| ≤≥