Executives Of Listed Companies Pay Incentives Based On Value Management Study

The whole world competition is increasingly fierce day by day, so the mode of enterprise management is changing from "financial management" to "VBM". This not only reflects the maximization of the value of corporate, but also reflects the focus of the management is transferring into value creation. Therefore, how to make top-managers action initiatively so as to reach the objective of enterprises is becoming increasingly important.This paper discuss and analysis the value, value management, value creation and value evaluation theoretically, and put forward the necessity to establish the system that focuses on the value creation. Meanwhile, incentive compensation is a key component of value creation, and executive compensation has more significance pivotal because they're the principal of value creation. Based on incentive theory and empirical study, the incentive compensation based on EVA is more appropriate to maximize enterprise than other incentive pay system. The author analyzes the current EVA-based incentive pay system and modifies it with multiplier of non-financial indicators. This amendment to the EVA-based incentive pay system is better to reach the enterprise's goal. Then, the author makes an empirical analysis on the correlation of incentive compensation and the value created of listed companies. The empirical results indicate the equity incentive has no correlation with the value, and the annual compensation also has a little contribution to it. Then the study indicates that annual compensation only considers the scale factor, the proportion of state-owned shares. Thereby, it shows the compensation design of China's Listed Companies didn't adequately base on the realization of the value maximization. Finally, the author gives some proposals to perfect the system of remuneration incentives in order to maximize the value of enterprises.