An Empirical Study On The Performance Of Corporate Executive Compensation Based On The Management Of Power

In 1943 America psychologist Abraham Masno put forward “the theory of hierarchy of needs”in the book of “Human Motivation Theory”.Which has always been considered to be the earliest theoretical basis about compensation incentive system. In twentieth Century 60 years Frederic Herzberg has proposed incentive factors and health factors affecting incentive mechanism.The problem of social fairness and one of the main aspects is to achieve fairness in income, and the problem of the income gap between the poles are imporment problems in the present stage of wealth distribution in China.The executive compensation is a problem of wealth distribution which attracts more public attention, but also a hot issue in academic research at present.In the financial crisis of America in 2008,Wall Street executives’ huge year-end bonuses are called “Ultra High Salary” while the newly elected president Obama also denounced it shameful. When the five major Wall Street investment bank step into huge losses.the year-end bonus to its executves remain high. In recent years, in the governance of China’s Listing Corporation is also appeared the seriousness problem of unreasonable executive compensation. Whether the compensation incentive mechanism can play a role in the listing Corporation has become an urgent problem needed to be solved by the theory circle and the practice circle.The almost researching of the compensation contract stayed before the financial crisis, but after the global financial crisis in 2008, the performance of executive compensation is particularly obvious. It is necessary to seek a more fit compensation contract theory to solve this problem and explain the salary incentive mechanism which turned it to be better role. Based on the previous normative research and empirical in nature, combined with the current development of economy in China, selected after the global financial crisis, A shares of listing Corporation 2009-2012 years of data and get a conclusion that the 899 companies meet the conditions, a total of 3596 sample.The main research content of this paper is through empirical research, analysis on the correlation between executive compensation and company performance and various factors affecting the formulation under the condition ofmanagement power. In the model design the company’s performance variables are decomposed into accounting performance and market performance with adding power and performance variable which is a cross. Based on traditional model,the paper adds the company’s industry variables and regional variables.The empirical results show that, the relationship between executive compensation and accounting performance is positively correlated, but there was no correlation or weak correlation between executive compensation and market performance.It’s the first time to know the degree of influence between four quantitative indicators of executive compensation and management power and the cross terms simultaneously between the management authority and the company performance, which reflects the sensitivity of executive compensation and corporate performance affected by the degree of management power. In addition, this paper also finds that the existence of structure problem in listing Corporation governance, such as the establishment of the Remuneration Committee and the board of supervisors does not play a supervisory role very well in the concentration condition of management power.In the model design,it was divided into non management power group and join the management power variable group, verified the relationship between executive compensation and corporate performance, and compared the influence degree of management power variables on compensation and performance. Further verified the influence degree of different variables on compensation and company performance sensitivity, and built the management power comprehensive variables to validate the sensitivity changes between the two in the highly centralized management authurity. At the same time, joined the variables of industry and regional into the company based on traditional model.The empirical results show that, there is a positive correlation between executive compensation and company performance; innovation shows the degree of influence between four quantitative indicators of executive compensation and management power, at the same time shows that relations between the the management power variables and the cross terms of the company achievements and the compensation, reflected the sensitivity of executive compensation and company performance by the degree of influence the size of the power.