Research On Correlation Between Executive Compensation And Enterprises’ Performance Of China Gem Listed Corporations

Executive compensation has been the focus of people attention, especially since the launching of GEM in2009, a series of events resulting in the issue of executive compensation having become the hot spot. Through the analysis of many of the pay scandal we can find the root cause of the problem is mainly due to the separation of ownership and management of enterprises. So, how will interests between shareholders and executives closely linked, it is the key to alleviate the principal-agent problem on corporate governance, to improve the manager’s enthusiasm, to achieve the desired effect of conducting executive pay incentives but also the eternal topic placed in the road to business success.Based on the above background, firstly, theoretical analysis of the influence mechanism of executive compensation on company performance and ownership structure on the sensitive of pay for performance; Secondly, to the GEM listed companies from2009to2013data as the foundation, I analyzed the present situation of the executive compensation, the corporate performance and the corporate governance of the GEM listed companies in China to want to know at this stage the status of the GEM listed company executive compensation incentive system and the characteristics of the ownership structure; Thirdly, as the study samples with355GEM listed companies of2013,the comprehensive indicators will be established from the debt paying ability, operation ability, profitability and growth ability in four areas to measure the overall performance of the company through the SPSS statistical software and using principal component analysis, then with the logarithm of executive compensation in the top three as explained variable empirical studies correlation between executive compensation and enterprises’performance of China GEM listed corporations, followed by study the influence of ownership structure on compensation performance sensitivity; Finally, according to the result of empirical analysis, I will make some suggestions of perfecting the GEM listed company executive compensation system in China.In this paper, empirical research results are as follows:In China GEM listed companies, executive compensation and corporate performance is a significant positive correlation; The China GEM listed companies’ownership structure is relative concentration at present stage and the sum of the top five shareholders’ shareholding is positively correlated with compensation performance sensitivity; Managerial stockholding level and institutional ownership are positively correlated with compensation performance sensitivity; A moderate amount of state-owned shares ratio can improve the compensation performance sensitivity, but too high proportion of state-owned shares will have a negative impact on compensation performance sensitivity.