LEGAL REGULATION ON EXECUTIVES’ PAY OF STATE-OWNED ENTERPRISES IN CHINA: EXPERIENCE, DEMONSTRATION AND PATH SELECTION

Abstract

The source of the struggling legal regulation of executives’ pay in state-owned enterprises is that the executives of most state-owned enterprises are not selected from the personnel market but are appointed by the administrative agencies, which gives government departments in charge sufficient legal premises to regulate their pay externally. However, the strict broad-brush administrative regulations and policies intensified the irrelevance between executives’ pay and their business performance. It is necessary to classify the way and the extent to regulate executives’ pay in state-owned enterprises according to its different nature and function. It is also necessary to re-modify the strict control of executives’ pay policy on competitive state-owned enterprises. To achieve selection from the human resources market, we have to improve the market-based mechanism of pay contractual arrangements and implementation between the enterprise and the executives, and then ultimately achieve a high relevancy between the executives’ pay and the performance of management. The role of law is to guide, ensure and enhance this correlation.

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