Social Sciences in China (Chinese Edition)

No.8, 2015

Research on the Disparity in the Remuneration of Senior Management in Chinese Enterprises

(Abstract)

Fang Fang and Li Shi

Our analysis of the inter-enterprise disparity in senior management salaries is based on 2005-2012 data on listed companies. We reached the following conclusions: 1) Quite large disparities exist in payments to senior management in different Chinese enterprises. For most years, the disparities are even greater than those between the wages of ordinary personnel in different enterprises. This is mainly because of the excessive remuneration paid to a few senior officials. 2) Between 2005 and 2012, such inter-enterprise disparities expanded rapidly at first and then gradually decreased. The dominant factor in this fluctuation was the dramatic rise and fall in senior management salaries in a few financial enterprises, with the falls being accounted for mainly by the government’s policy of restricting senior management salaries in state-owned enterprises. The central government’s restrictions on such salaries were aimed at helping to control the excessively rapid growth in the remuneration of enterprises’ senior management across the whole society. 3) In the course of this rise and fall, notable differences remained between the decision-making mechanisms for senior management salaries in state-owned and non-state-owned public enterprises. 4) The decision-making mechanisms in senior management salaries at state-owned enterprises and the structure of corporate governance did not play the role they should have in mitigating the excessively rapid growth in senior management salaries and decreasing the disparities among them.