Executive Compensation And Corporate Governance In China

In modern society, the company becomes the main organized form of enterprises. Listed company is the typical model representative of the incorporated company in which the ownership and the control powers on the company separate mutually, and the executive directors and managers gradually acquired control of the company.With the development of management practice in modern company, the company compensation of executive directors and officers has become an allotment mechanism of interest between shareholders and the executives. This article gives some preliminary ideas, based on a balance of benefits only from the legal point of view, which refer to the present situation and regulations about the company compensation of executive directors and officers.This article carries on an investigation in the development process about the company compensation of executive directors and officers, which experienced several periods from decentralizing authority reform, annual salary to stock option incentive. However, due to the contradictions between inertia effect of traditional allotment mechanism and external corporate governance experience, with the phenomenon of the unique structure of various malpractices at same time in listed companies, we come to a conclusion: the essential of the problem about executive compensation is the imbalance in the distribution of benefits between the shareholders and executives.This article try to analyze the relations between corporate governance and company compensation of executive directors and officers, based on the experience of the listed companies in China. Because the investor of state-owned shares is not in place, major shareholders have no power to bargain with executives about their compensation, the right to decide on the operators'compensation actually doesn't exist. Independent directors can't be independent, the Remuneration Committee has difficulties to make decisions, and so Board of managers in listed companies fails on the decision-making process on some degrees. Board of Supervisors plays a decorative role for its weak power.This article shows the analysis of various phenomena about compensation of executive directors and officers, and exerts to find some appropriate regulations in order to perfect corporate-governance at listed companies in China, without prejudice to self-government of the company. The specific goal of corporate governance at listed companies in China is to seek to maximize the value of the enterprise. This article put forward to enhance the disclosure about their compensation, strengthen the independent directors and the compensation committees definitely, improve the related necessary laws about stock option incentive and adopt the"waste principle"to balance the compensation mechanism of executive directors and officers.