Executive compensation is a means to reduce agency costs and to motivate company executives. In practice however, the ever – expanding powers of executives destroy the effectiveness of corporate board as a mechanism to manage conflicts of interest. This further leads to the lack of pay – performance association and self – determination of remuneration by company executives. In this respect, in line with an increasing trend of shareholder democracy, many developed market economies have introduced various forms of shareholder vote on executive remuneration. This paper argues that China should establish its own system of Say on Pay by mandating a binding shareholder vote on proposed executive remuneration policy for current financial year and a non – binding vote on the implementation of the policy or past year through company legislation.
|Number of pages||17|
|Journal||Journal of Comparative Law|
|Publication status||Published - 2016|