Research on the Key Factors of Executive Compensation in Listed Private Companies

Executive compensation depends on not the institutional arrangement,but finance and corporate governance structure.Based on 224 private companies in 2002~2004 Shanghai and Shenzhen stock markets,using panel data processing method,this paper does an empirical research on the relationship among performance,governance mechanisms and executive compensation.The results show that the executive compensation is just related with performance,the internal shareholder proportion is just related with the executive compensation,while the exterior board director proportion is negative related with it.It shows that high level of internal shareholder proportion will bring higher executive compensation.In other words,the redeemability action is discovered in the model, and outside directors solve the insider controlling problem effectively,so the board plays a strategic role in corporate governance.