A Executive Compensation Study

Modern enterprise the separation of ownership and management, professional manager who gave birth to this special occupational groups, but also to enable owners and operators formed a principal-agent relationship, in accordance with the assumptions of economics, the principal and agent are economic persons, the pursuit of maximizing their own self-interest, while the managers are seeking more pay and leisure. Because the existence of information asymmetry between the two, the agent may be at the expense of the client’s interests at the expense to pursue personal interests, so they have a "agency problem", principal-agent relationship is bound to generate business there agency costs. In order to reduce agency costs, an effective way of pairs of managers to implement effective incentive and restraint mechanisms to co-exist, the manager’s interests and the interests of shareholders, tied up, so that the interests of managers and shareholders to maximize the convergence of interest. Associated with the development and performance pay model is an important part of incentives it by allowing managers to share business residual income, coordination between shareholders and managers conflict of interest.Where the author is a listed company consists of state-owned subsidiary of the company’s current salary evaluation focused primarily on the completion of the accounting indicators of results of operations, the approach taken by the one hand, this evaluation is subject to the guidance of head evaluation methods, on the other hand is also early with the company’s main business operations related to the nature. This evaluation method is more intuitive, the manager’s salary with a direct result of the efforts closely related to the allocation of such payment the concept of "distribution according to work, hard work and" the principle of distribution, to a certain extent, the mobilization of the manager’s enthusiasm, an increase of managers to work satisfaction is also guaranteed certain period of time units the completion of the annual operating results. But the operator as an agent, instead of owner engaged in management work, which makes the value of enterprise, efficiency and long-term development depends largely on the operator’s behavior. When the operator management company, his "short-term behavior" so that the remaining losses to rise, the agency cost and damage of the owner’s interests. The operator’s short-term focus in the following two aspects:First, short-term decision-making behavior. Some operators in the process of enterprises, only to consider the tenure of the immediate and long-term interests of the home business expense. Second, the distribution of benefits of short-term behavior. Operators of such short-term actions caused an increase in agency costs; First, short-sighted business practices to increase the "residual loss", the owner of the company’s emphasis on long-term development, concerns the company’s long-term interests, therefore, the operator during the decision-making may be immediate in order to damage the company’s long-term interests in exchange for their income, would be unable to make the company the owner of the utility maximization, resulting in loss of revenue of the company owners, thus creating a "residual loss", an increase of agency costs.In this paper, the remuneration of managers through study and research, improvements for the Salary Model is currently manager of ideas and measures.