70 A Study on Corporate Governance to Executive Pay

Through a multiple regression analysis of relations between executive pay and corporate performance, control of large shareholders as well as the board's monitoring in a sample of 100 private listed companies from stock markets of Shanghai and Shenzhen (2008), the present paper finds that, there is a positive correlation between corporate performance and executive pay. The board's monitoring will strengthen this positive correlation, while the control of large shareholders may distort it. Executive pay is based on corporate performance. Once the ultimate proprietor starts to extract private interests, executive pay will turn into a major means to manipulate executives. So, it is beneficial for supervising the control of large shareholders and enhancing the board's independence to improve the level of listed companies' governance.