Legal Regulation Of Executive Compensation Of Listed Companies

In recent years,the level of executive compensation of listed companies has increased significantly.It is widely believed that the problem of excessive executive compensation poses a threat to the "vitality" of the market economy,not only infringes on the rights and interests of relevant stakeholders,but also brings risks to the governance of the company itself.For this reason,China has also taken some salary limitation measures,and although they have achieved some success,the issue of reasonable regulation of excessive executive compensation still needs to be further addressed.Therefore,it is necessary to continue to conduct systematic research on the issue of executive compensation.This paper analyzes the main problems of executive compensation of listed companies in China and the shortcomings of the current legal system,draws on the successful experiences of developed countries,and then puts forward constructive opinions on the legal issues of executive compensation in China.Except for the introduction and conclusion,this paper is divided into four parts.The first part is a basic overview of executive compensation of listed companies,which mainly defines the concept of executive,and further elaborates the legal basis and institutional significance of regulating executive compensation of listed companies by law.The second part mainly presents two main problems of executive compensation of listed companies in practice and the current legal regulation.Firstly,the author briefly analyzes two problems in practice: firstly,through the inquiry to understand the development of executive compensation of listed companies in the past five years,it is found that the correlation between executive compensation and company performance is still low;secondly,the structure of compensation is not very reasonable,and there is a single incentive mode,mainly basic salary and short-term performance incentive,and the proportion of long-term incentive is low.Later,by combing the current relevant laws on the regulation of executive remuneration of listed companies,we find that there are three problems at the level of legal regulation as follows: firstly,the system of deciding executive remuneration of listed companies is not reasonable enough,the remuneration committee does not play a real role,and the influence of small and medium shareholders is limited;secondly,the disclosure system of executive remuneration of listed companies is not perfect,although China has basically built a set of relatively complete executive remuneration disclosure system of listed companies.Although China has basically built a relatively complete disclosure system for the remuneration of listed executives,there are still many problems in details that cannot be ignored.For example,the disclosure content is not detailed enough,the disclosure form is scattered,and the disclosure tool is single,etc.;thirdly,there is a lack of a set of systematic reference standard for the judicial review of the remuneration of listed executives.In the third part of this paper,in view of the problems of legal regulation of executive remuneration of listed companies in China,we introduce the successful experiences of developed countries with strong target in foreign countries,mainly the following three legal systems: firstly,the shareholder advisory voting system established by the UK and the US;secondly,the executive remuneration recovery system established by the US through Sarbanes-Oxley Act,Emergency Economic Stabilization Act and Dodd-Frank Act;secondly,the executive remuneration recovery system established by the US through the Sarbanes-Oxley Act,Emergency Economic Stabilization Act and Dodd-Frank Act.The third is the judicial review system based on the criteria of duty of loyalty,duty of care and waste of corporate property.This section compares the above-mentioned foreign regulatory schemes and evaluates these regulatory schemes in order to gain useful experience and provide a realistic path for China’s regulation of related issues.In the fourth part,it proposes measures to improve the legal regulation of executive compensation of listed companies in China,which is divided into three parts: in the first part,i.e.,at the stage of proposing the compensation incentive scheme,a set of shareholders’ advisory voting system can be established to strengthen shareholders’ participation in the matter of executive compensation of listed companies.At the same time,a third party compulsory evaluation mechanism can be introduced,which is in a neutral position between shareholders and executives and can make a neutral judgment on the reasonableness of the compensation plan;in the second link,that is,in the implementation stage of the compensation incentive plan,the shareholders’ supervision on the executive compensation can be strengthened by improving the compensation plan disclosure system;in the third link,that is,the post-facto correction of the unreasonable compensation of the executives of listed companies,starting from judicial review of executive remuneration of listed companies in terms of legality and reasonableness,improve the system of recovery of executive remuneration of listed companies,and strengthen the supervision of the phenomenon of self-determined remuneration of executives.The regulation of executive remuneration of listed companies by law should be carried out throughout the whole process of executive remuneration management system.