A Study On The Effectiveness Of Chinese Public Listed Companies' Executive Compensation Structure

With the establishment of modern enterprise system, the issue of top managers incentive compensation has become a hot research topic at home and abroad. However, China's current executive compensation system is still not perfect, the empirical study of top executive compensation encouragement in domestic is not enough in-depth, nor formed a coherent research findings. So, this paper selected the theme of public listed companies'executive compensation, and take related research with executive compensation structure as innovative spots.This research based on the principal-agent theory, human capital theory, management incentive theory and strategy compensation theory, and combined with the research results of scholars in China and abroad of annual salary and holding stocks of top executives. On this basis, we first take 2006 -2008 year's 1069 listed companies as samples, studying the status of executive compensation structure of public listed companies in our country with the descriptive statistical method. Then, use these samples to continue to perform the empirical study of executive compensation structure. The empirical study proposed seven underlying assumptions and four linear regression model, and using correlation analysis, regression analysis and partial correlation analysis to examine the correlation between the annual salary and the proportion of shareholders of executives and the operating performance in listed companies. Thus, the effectiveness of the top managers'compensation structure in China's listed company was studied. In order to exclude the impact of a single indicator is not strong persuasive, the paper synthesizing return on equity (ROE) and earnings per share (EPS) and using principal component factor analysis to measure the operating performance of enterprises.Through research, this paper come to these conclusions:①There was a significant positive correlation between the annual executive pay and the corporate performance, and would be stronger with short-term corporate performance;②The higher of the proportion of shareholders, the stronger of the effectiveness of the annual salary;③There will be more effective of annual salary in shareholding more than zero than those proportion equals zero;④There was a positive correlation between executives shareholding and corporate performance, but not significant, and would be stronger with the short-term corporate performance;⑤There was no significant effectiveness of executives annual salary on the proportion of shareholding;⑥The effectiveness of the proportion of executives shareholding exists interval effect;⑦T he correlation between the proportion of ?shareholding and the annual executive pay shows a positive correlation.Finally, there are three approaches and recommendations for improve basis on the above analysis results:①To establish a combining executive compensation structure with long-term incentives and short-term incentive;②To establish an effective supervision and restriction mechanism of executive compensation;③Improve compensation disclosure system and a sound-related laws in public listed companies and other regulated supporting measures.