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Remuneration of senior managers of companies listed on the

Author: ZhangLingXiao From: www.yourpaper.net Posted: 2009-06-02 16:43:31 Read:
[Paper Keywords]: senior managers of listed companies pay
[Abstract]: This paper start from the definition of senior managers of listed companies and remuneration concepts, review and references to the relevant theoretical research, summarizes the senior managers of listed companies in China pay incentives influencing factors and problems, and proposed to solve the lack of response and the direction of thinking.

With the development of China's market economy, listed companies has become the main form of the establishment of a modern enterprise system and one of the trends. Which related to executive compensation issue has become increasingly important. And domestic business executives pay only flourished in the last ten years, the paper through a comprehensive analysis of this issue in order to enrich the understanding and awareness of the issue to explore the idea.

, Listed companies in the definition of the concept and theoretical basis of the high salaries

(A) Definition
Listed companies in equities issued by the State Council or its authorized securities regulatory authority, stock exchange listing and trading Co., Ltd.. According to China's relevant laws and regulations, the senior managers of listed companies, including the chairman, directors, supervisors, independent directors, General Manager, Secretary of the Board.
Remuneration as a party to the employment relationship of the employee from the employer currency and monetary income. The main manifestations of the remuneration is divided into the monetary and monetization two. Traditional composition, remuneration is divided into three parts, namely the basic salary, performance pay and allowances and welfare.
(B) the senior managers of listed companies pay the theoretical basis
1, agency theory
Most representative of the agency theory is Jensen and Meckling expanded, in the case of separation of ownership and management rights within the enterprise managers incentives. In the modern enterprise system, the separation of capital ownership and management, to establish an agency relationship between the operators and owners of capital, this agency relationship between the interests of executives with those of shareholders may be inconsistent, so that managers may moral hazard in conflict with the interests of shareholders. Companies have to rely on the compensation mechanism to motivate and constrain the behavior of executives, on the one hand, incentives they dare to risk, on the other hand, bind them to avoid the risk tendency.
2, human capital theory
Human capital theory is emerging theory of capital homogeneity assumption for traditional capital theory in the 1960s, the main representative of Schultz and Becker et al. Schultz was first proposed and explained the concept of human capital, Becker from the microscopic point of human capital specific research, especially the relationship between human capital and income distribution research reveals human capital to capital elements of the form the essential requirements in the production process, provides a theoretical basis for the value of human capital for our research managers.
3, tournament theory
Championship theory explains two problems. First of all, the enthusiasm of the managers work depends not only on current income, but also on future income. Second, the closer to the top, the less opportunity for the rest of the income, the less the smaller the enthusiasm of the people's efforts. How to reduce the chances of reducing the residual income and increase the incentive approach is to give high returns for high-level personnel.

Second, the impact of senior management remuneration factors

For its part, the national policies of the great changes to top management remuneration played a great impact. None other reforms of the initial distribution according to work, from the 1970s to the mid-1980s began to establish and confirm the contract responsibility system reform, until the initial establishment of a modern enterprise system in the early 1990s, along with this process, pay levels and pay structure for executives of listed companies are constantly improving and improving.
The industry is also affected an important factor in executive compensation. 2006 statistics show that in the listed companies in 22 industries, the per capita annual income above average seven, including financial, insurance companies, the highest, followed by the electronics industry. Especially in the financial sector, the financial sector accounted for 75 million a year more than 171 executives.
In here for a special analysis of the relationship between the level of operating results of listed companies executive compensation and corporate, for now, the company's results of operations are the most common and the most important factor to examine and decide the level of executive pay. An Empirical Study on the relationship between executive compensation and corporate performance has been endless. In a large number of empirical studies on the relationship between CEO compensation and corporate performance, the vast majority of studies found no evidence of the existence of a significant relationship between executive compensation and corporate performance. Such as Tosi, a study showed that only less than 5% of CEO compensation can be explained by the performance of the company. Domestic research, Weygand empirical evidence of the use of listed companies in China investigated the relationship between the operating performance and executive incentive of the 101 listed companies. The results show that the executive's annual salary and operating results of listed companies is not there is a significant positive correlation between.
Considered from the manager's own point of view, the main factor to affect their remuneration, including the managers of the value of human capital and output manager's hierarchy of needs, achievement motivation. Due to differences in people's knowledge and ability, human capital manifested a lot of non-homogeneity. Therefore, the listed company's performance appraisal system design is reasonable and fair, whether the execution of pragmatic place, will influence executive pay. According to Maslow's hierarchy of needs, the executive hierarchy of needs will also affect the design and formulation of the remuneration. Three. Incentive pay of senior managers of listed companies in China

1, managers value of human capital is difficult to measure precisely
Executives how to measure the value of human capital and its output is a cause of extensive research in management, economics field. Because human capital is very difficult to quantify and distribution, and in many cases can only be placed in the accounting, we have no direct evidence that executive pay incentive to bring higher performance, resulting in human capital is difficult to fair fair participation in the distribution of the residual interest in the enterprise. In fact, the next few problems are the root cause of this.
2, the top management incentive pay less than
-Century financial survey of executive compensation ranking of listed companies in China in 2005, the correlation coefficient between the growth rate of executive compensation and corporate net profit growth of only 0.01 096 This shows that the interpretation of the growth performance of salary increases very limited capacity, which can easily lead to executive human capital is undervalued, resulting in insufficient incentives The remuneration.
3, pay system design is unreasonable
Unreasonable compensation design is mainly reflected in the following three aspects: (1) short-term returns, long-term returns. (2) the importance of material incentives, ignore the mental stimulation. (3) of the active treatment, post-employment benefits. Most prominent manifestations of executives of listed companies pay relatively simple form of incentive, especially the lack of long-term incentives. The vast majority of executives of listed companies pay Payment is in cash, operators equity incentive not large-scale promotion in listed companies.

Fourth, the senior managers of listed companies pay Thoughts and Suggestions

(A) pay and performance-linked
An effective compensation system should be able to put the interests of the executives and the company's interests closely linked to mobilize executives initiative, collaboration and innovation play. Executive compensation tied to performance of the company, to share part of the operational risks, and strive to improve business performance, so that the objectives of owners and executives converge.
(B) monetary incentives and non-monetary incentives. associated
The monetary remuneration typically take cash or intended to cash (equity) in the form of non-monetary remuneration, including the privileges and rights of other non-monetary. In the era of knowledge economy, the concept of pay already exceeded the scope of money and material, and indirect income (such as benefits) and non-economic compensation (such as work experience) in compensation design is becoming more and more important. John E Tebo Man comprehensive remuneration system that remuneration is neither a single wage, nor is it purely monetary forms of remuneration, it also includes spiritual incentive.
(C) short-term incentives and long-term incentives combined
Short-term incentives and long-term incentives, annual salary system plus Option Scheme incentives, while developing long-term protection of the welfare policies, the risk of revenue in the annual salary system and past linked to the short-term benefits, while Option Scheme can play its advantages, to make up for the short-term behavior of the annual salary system, linked with the future of the senior management, long-term gains. Through the various measures, executives achieve more effective incentive to promote their efforts to enhance the performance of enterprises, to achieve a win-win situation between the shareholders and executives.
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