| In the 2008 worldwide economic crisis, many banks were facing bankruptcy. It was noticed that the banking sector was confront with corporate governance malfunction. Compensation system is an important part of Corporate Governance. The problem of Corporate Governance arises from the irrationality of executive compensation's level and structure. By the end of 2008, the U.S. banking industry executives carried out huge dividends policy, raising big controversy on banking executive compensation. In this context, this paper attempts to analyze China's banking executive compensation status and its development.In this paper, the principal-agent problem of Corporate Governance was studied as a starting point. Then the distinctive principal-agent problem of China's banking sector was discussed afterwards. Firstly, the majority of China's banks'owners are government and government's objective is different from ordinary investors who are focused on financial gains. Secondly, the government as principal and the agents are legally non-market relation of equality, which limits equal contracts. Thirdly, state-owned banks have multilevel nature of principal-agent. Fourthly, the external forming environment of China's banking principal-agent relationship is severely supervised and controlled. In this situation, the banking compensation system of china has its particularities.From the reform of China's banking to the financial crisis in 2008, scholars used a "Manager Salary Structure and Level– Company (banking) Performance" framework to study China's banking executive compensation problem. During the process of the 2008 financial crisis, the international coordinator of financial supervision institutions found it was this paradigm that result in the risk-taking business of banks. Therefore, in order to prevent this situation happening in our country, the re-examining mechanism of China's banking executive compensation is a necessary. On the basis of discussions above, this paper presents a new study and suggestion on China's banking executive compensation. |
