On Company Law Norms Of Executive Compensation

Executive compensation is a difficult point of corporate governance. Especiallyin the financial crisis, the measure of value aroused so many critiques. The point ofthe anomie in executive compensation is the neglect in defining the attribute of thecompensation. It was regarded as “self-dealing”, so the legislation tent to construct aconflict of interest isolating mechanism, this mechanism assumed the independentdirectors and supervisors could supervise and restrict the inside directors, but it wasshort of the participation of shareholders. So the corporate operators are easy tocollude with each other. Construct a complete corporate governance system toregulate the behavior of the company is a purpose of legislation of the Companies Act,the purpose to regulate the executive compensation of the Companies Act in thesubstantive level is to form a reasonable and fair incentive mechanism, and in theprogram level is to ensure the fairness and transparence of the price. The characters ofthe human capital and the powerful functions and powers of the operators determinethe contents of the regulations strategies. The regulations strategies of theCompanies Act are “inspiration” and “restraint”, and should based on the “restraint”.The core mechanic of the Companies Act to regulate the executive compensationconsist three organic compositions. The resolution regime is characterized by the backof the shareholders’ rights, it adopts the “say on pay” rule. The information disclosuremechanism is to guarantee the shareholders’ right to know, and ensure the shareholders can relief the benefits of the company. The relief mechanism is based onthe shareholder derivative litigation, the shareholder can sue the operators to retrievethe compensation in their own name.