| Compensation management is the key part in human resources management of enterprises. As middle and top administrative staffs, managers play a very important role in the course of enterprise development. Consequently, it has been significant project that constructs the efficient manager's incentive and constraint mechanism for deepening enterprise's reform.The main thought of this article stems from principal-agent model which had been used for solving moral hazard problems because of information asymmetry between principal and agent.When a corporation is in the case of insolvency, the relative seniority of debt and managerial compensation has important implications for the design of remuneration contracts. We theoretically show that risky debt changes the incentive to provide the manager with performance-related incentives (a"contract substitution"effect). In other words, the relative degree of seniority of managers'claims and creditors'claims in case a bankruptcy procedure starts is crucial to determine the optimal incentive contract ex-ante. Through existing theorems and assumed conditions, this article mainly discusses changes of managerial compensation structure when being insolvent comparing to equilibrium state and obtains conclusions as follows: if managerial compensation is more senior than debt, higher leverage leads to lower power incentive schemes (lower bonuses and option grants) and a higher base salary. In contrast, when compensation is junior, we expect more emphasis on pay-for-performance incentives in highly-levered firms. The conclusion has great guiding significance when formulating compensation contract for remuneration committee.For high-tech enterprises, stock-option incentives occupy very great proportion in the manager's remuneration contracts as an efficient and long-term incentive mean. This article draws the following conclusions being based on assumption that there are two different kinds of items: long-term project and medium-project that when liquidating, conditions need to be fulfilled referring to amounts of stock-hold and stock-option in manager's remuneration contracts in view of the medium-project and corresponding mathematics expression formulae about corporation's values which are created due to long-term project and medium-project so that manager's incentive problem is solved comparatively good for high-tech enterprises. |
