Research On The Legal System Of State-owned Enterprise Executive Compensation

Corporate executives pay has always been a compelling topic.With 2009 Global Financial Crisis,many companies were affected and at the risk of bankruptcy.Executive pay problems at that time have become a hot topic when a series of excessively high compensation were exposed.State-owned enterprises executive compensation problem has become valuable to be researched,because it is combined with China's state-owned companies and based on China's national conditions.We need to keep pace with era to the do the research with dialectical analysis and classification.The executives of state-owned enterprises are different from other professional managers.Although state-owned enterprises were separated and the executives did not have the identity of civil servants,it is not suitable to measure their pay in terms of market price.The principal-agent theory and property rights theory are not fit in state-owned enterprises.Long agency chain makes China's state-owned enterprises assets owners absent.All of these problems are caused because all citizens are the holders of the state-owned assets,but they can't directly participate in the management of state-owned assets or operations.After excessively high compensation for the executives of state-owned enterprises were exposed,the society have been debating about the topic for a long time.Many scholars put forward the idea that we need to use legislation to measure state-owned enterprise executives pay with the performance of the executives,in order to reduce and contain unreasonable compensation.However,the problem is not so easy to be solved,the situations of the state-owned enterprises are complicated,we cannot treat them as the same.Before the new round of reform of state-owned enterprises,many systems including state-owned enterprises pay system are dealt crudely,and it caused that the single policy could not solve different situations of each enterprise,so that the unreasonable salary structure appeared and compensation did not fit the corporate performance.As the result,it hurt the enthusiasm of executives of state-owned enterprises and even caused a large number of executives of state-owned enterprises quit their jobs.Since the central management enterprise salary system reform came out,we measure executives pay with different classification.“The central committee of the CCP and the state council on deepening the reform of state-owned enterprises guidance" preliminary divided state-owned enterprise into two types: business enterprises and social enterprises.State-owned business enterprises refer to the enterprises that their main business are in the market for profit,which includes competition enterprises in industry,and some monopoly enterprises in fields of electricity and so on.In some competition state-owned enterprises,it is reasonable to measure the executive pay with the performance,because in the market competition,the enterprise's performance is directly linked to the executive's personal management ability,and the pay of executives should be considered in the operating capacity and operating results.But in some monopoly and public welfare state-owned enterprises,such compensation system is not very reasonable.Monopoly state-owned enterprises are usually in the fields related to national economy,with its itself has a natural advantage,the performance is influenced by many factors,has little relation to executives' management ability.And to many public enterprises,they serve for free and have no purposes for profit.If we still measure the pay by enterprise performance,this is not reasonable.For this reason,the research of measuring the classification of the state-owned enterprises executives pay is particularly important.We need to make scientific analysis for each type of state-owned enterprises especially in their differences,to develop a series of targeted guidance documents to measure the executive compensation of state-owned enterprises.For example,for competition state-owned enterprises,since this kind of the enterprises participates in the market facing challenges and competition,the executive compensation should also reflect the marketization trend.Only in this way,it can effectively reduce incidents that bank executives quit jobs,so that we can retain our management talent with suitable compensation.When it comes to social enterprises,as its major job is for public service,it has many similarities with the national civil servants.When considering this kind of the executive compensation,we can use appropriate calculation method of the pay of civil servants,with some incentive compensation.The classification management of executive pay is a basic part of executive compensation system of the state-owned enterprises.After classification,how to consummate the system in different state-owned enterprises is what we need to seriously study.In the discussion of consummation of executive compensation system,a compensation system should be formed by the company compensation,government supervision and judicial perspective.To the company,it is important to improve the compensation and supervision systems.In deciding on the issue of compensation,compensation committee should not be non-existing,and it should play all functions;The board of supervisors should also be truly effective in supervision of the board of directors,to improve independence;The independent director shall also have full right to decide state-owned enterprises executive compensation.In supervision of compensation,compensation disclosure is undoubtedly the best way.At present,in some state-owned enterprises in our country,some small and medium-sized shareholders are not very concentrated,so that information about how to operate the company cannot get access to shareholders especially to some small ones.Therefore it shall be in strict accordance with the provisions of the relevant disclosure rules,fully displaying state-owned enterprise executive compensation' decision mechanism,the calculation standard,compensation amount and channels for complaints and suggestions,indeed playing the role of effective supervision of state-owned enterprises executive pay.From the perspective of government supervision,under the background of enterprise separating,it increased the difficulty for government supervision.But as a state-owned enterprise,to avoid the loss of state-owned assets,we need to make full transparency to the government,so that the government can effectively guide the pay for executives of state-owned enterprises In addition,in the process of compensation decision,issued and supervising,if there is illegal behavior,the judicial organs reserve the right to correct the behavior.Justice is referred as the last bottom line in many social problems,and here it is the same.