A Study Of Incentive Modes And Performance For Senior-managers In Listed Pharmacy Companies

For a long time, how to effectively motivate senior executives has been a concern of researchers and shareholders. Due to the principal-agent problem along with the rise of joint-stock company, motivating executives has been paid more attention to and the types of incentives have been developed significantly. Executive incentive practice in China’s market started late, but in recent years as improvement of corporate governance and capital market, income from incentive plan of executives has been raised tremendously. At the beginning of2006, the CSRC issued listing Corporation equity incentive management measures (Trial), which offers the fundamental situation for China’s listing Corporation to carry out a wide range of equity incentive. In research field, the domestic researchers have completed a series of preliminary studies about the executive remuneration incentives, equity incentives and firm performance, and obtained useful results. However, because each of these studies may have some deficiencies in data selection, sample selection, or statistical methods, the research could still be improved. Meanwhile, there are many segments of research can be derived from this topic, which previous researches didn’t cover.In view of this, this paper analyzes the data of listed pharmacy companies in China which obtained from Wind financial database and CSMAR database, uses descriptive statistics, multiple regression analysis, and focuses on four issues:(1) whether executive compensation incentives are significantly correlated with the performance.(2) The impact of whether the general manager is hold concurrently by the President on the correlation between the executive annual pays and the performance of listed pharmacy enterprises.(3) Whether the different types of listed pharmacy companies has effect on the relation between executive compensation incentives and the performance.(4) Whether there is different effect between different compensation incentive types.This paper finds that:(1) Overall, executive remuneration incentives are positively correlated with the short-term performance of listed pharmacy companies; as well as executive equity incentives are positively correlated with the long-term performance of listed pharmacy companies.(2) The relation of executive compensation incentive and the performance of listed pharmacy enterprises are weaker when the chairman of the director and the CEO is the same one.(3) There is no significant difference between state and private listed pharmacy companies about the relation of executive compensation incentive and the performance of listed pharmacy enterprises.(4) Executive remuneration incentives are more efficient to enhance the short-term performance, equity incentives, however, are more efficient to improve the long-term performance.