Commercial Bank Executives Incentive Pay System Design

In the global financial crisis, many major financial institutions of U.S, including Lehman Brothers, were collapsed.And it raises the banking sector executive to pay attention to the system of incentive and compensation.The problem of the system of incentive and compensation on the banking executive evolved into a hot issue. Although domestic and foreign scholars have proved to be successful on the research of incentive and compensation for senior management staff. Their research mainly includes the relations between the pay of executive and corporate performance, salary incentive factors, equity incentive on the executive, the research of the forms of executive incentive and payment and so on. However, in the current complex economic condition, the systematic research of incentive and payment of Commercial Bank executive was involved little.In this paper, based on a certain theory of salary and incentives, summarized the research of incentive compensation of executives of scholars at home and abroad, according to status of Chinese listed commercial banks, we pay a more in-depth incentive study of executives in Commercial Banks.First of all, taking 14 listed companies for example, we have empirically test on the effectiveness of the system of incentive and compensation of Commercial Banks in China. We use the remuneration of the data from the disclosed Annual Report of 2006-2008. And proposing the hypothesis, selecting some variables, we inspect the relationships between rewards of the executives in the listed Commercial Banks and the short-term performance indicators and the growth degree by correlation analysis.Secondly, we design the system for the short-term incentive, long-term incentive as well as the positions of consumption and welfare plan for the specific implementation, combinating the empirical test results. The short-term incentive includes base salary and annual risk of income, frequently using the model of annual salary system. And we also take some research on the payment system based on performance. Long-term incentive is a high risk of return incentives. The main benefits of such risks reflect the stock option income. Special allowance is a privilege, and mainly related to the duties of senior executives consumption. Welfare program designed primarily targets at the protection of senior executives gain.Finally, with the system of remuneration incentives for program design, we summarize the paper under the heoretical analysis and the empirical research. And we have raised a number of issues related to policy recommendations for reference.