Research On Correlation Between CEO Compensation And Performance

In recent years, with the emergence of Principal-Agent Theory, the level of corporate governance has been improving gradually, but new conflicts between shareholders and CEO also become more serious, which mainly arouse from the great payment of CEO, so the relationship between huge payment of CEO and corporate performance is worth paying great attention to. Leaners both at home and abroad have made amount of research about the relationship between huge payment of CEO and corporate performance, but they have not considered the different effects on corporate performance between cash remuneration and total payment including stock returns, and they have ignored the effects on relationship because of different characters in different corporates, so this paper can exactly make up the gap in this field research. In this paper, we have selected the annual financial reports of1818corporates that listed in Shanghai Securities Exchange and Shenzhen Securities Exchange in2010as a sample, and have analysed the relationship between CEO’S payment and corporate performance from both in theory and in practice.First, we illustrate the study background, meaning, and research routs in this paper.Second, we review the previous research about relationship between CEO salary and corporate performance, and point some relative theories and concepts in this paper.Forth, both some theory research and practice research are applied to analyse the relationship between CEO payment and corporate performance. In this paper, statistical methods are used to analyse the current situation of CEO salary as a whole, besides, we find that there are huge differences in CEO monetary payoff and total payoff because of different industries through analysis, what’s more, some practice research methods are applied to analyse the relationships among CEO payment, corporate performance and other factors that maybe affect the relationship between CEO payment and corporate performance through data from listed corporates in2010. From above research, we conclude that there are prominently positive relevance between CEO payment and corporate performance, and the more prominent it is, the larger the corporate scale, the higher risk corporate debt as well as the more fierce competition corporate face.While, the more concentrated the stock rights, the more positive relevance between CEO total payoff and corporate performance is. Last, we present the results of our research, and give some theoretical suggestions on the basis of them, which can be seen as a reference to make CEO payment systems and give some advice for making CEO payment-performance stimulation, besides, we also point the further study in future.