Correlation Of Listed Commercial Banks Social Responsibility And Executive Compensation

With significant development of market economy and effective separation of ownership and management of modern corporate system, remuneration of enterprise resource controllers-senior management staffs and enterprise social responsibilities are drawing increasing public attentions. Bank, as a institution dealing with money, the policies setting for their senior management’s remuneration package could be affected by rumorous factors. In addition, along with the marketization reform of commercial banking industry in China, their senior managements’remuneration gets more market-oriented too. In recent years, the growing performance of commercial banks had witnessed a rapid increase of their remuneration also. Thus, this topic is concerned more and more generally.Now in China, large-scale nationalized commercial banks are acting as the trunk of this industry, with nationwide joint-stock commercial banks being the growing branches and city commercial banks as leaves. All kinds of commercial banks coexist under a fair competition environment. The Chinese commercial banking industry overall development was rapid in last few years with continues marketization reforms. So far, there are16commercials banks had got listed in the Shanghai and Shenzhen Stock Exchanges, and severals others are being preparing for listing. Although the worldwide2008financial crisis had caused lots of international financial institutions to crash or go broke, Chinese commercial banking industry was not deeply influenced and enjoyed a stable increasing trend as a result of a relatively low degree of participation in international capital market as well as effective government policies. Interestingly, pay gap among senior managements from different commercial banks are getting larger despite the fact that the overall pay of whole industry is growing. The huge differentials make people wondering about whether senior managements’remuneration setting policies are affected by banking social responsibilities or other factors. Therefore, this is a popular concern needs to be studied based on case study. According to principal-agent theory and social responsibility theory, this article that combined with the system background in China used the sample from2011to2012in Shanghai and Shenzhen A-share listed commercial banks to test the correlation between our country listed commercial Banks social responsibility and incentive contracts with executives and find the influence of corporate governance factors on them. The empirical test found that the better social responsibility performance of listed commercial banks, the higher the compensation of executives. In addition, we found that compared with the four major national banks, the other listed commercial bank pay more attention to the role of social responsibility in the executive compensation contract; the higher proportion of top ten shareholders, the lower status of social responsibility performance. Moreover, the study proved that independent directors play a role. Research shows that, firms gradually put the social responsibility into the strategy and daily management, taking social responsibility oriented corporate governance system is formed.In this paper, on the basis of research results of domestic and foreign scholars, combined with the actual situation of Chinese banking industry, combining of theory and empirical, we analyzed and discussed the correlation between our country listed commercial Banks social responsibility and incentive contracts with executives, and the impact of other factors on them.