Mini-Review on the Relationship between Cash Compensation of Senior Executives and Bank Performance in China

Abstract

Employee compensation is the reward that reflects its value in providing services to the enterprise, including monetary compensation and non-monetary compensation. Monetary compensation refers to the economic income measured in currency obtained by employees by completing the work in their own positions, while non-monetary benefits are those that cannot be measured in currency, such as the distribution of self-produced products and provision of benefits such as health care services. Therefore, remuneration is a measure and manifestation of the value that employees bring to the company for their services. In this paper, reviews on the relationship between cash compensation of senior executives and bank performance are conducted from the aspects of definition of compensation requirement and bank performance, worldwide theoretical reviews, and empirical reviews. Based on the analysis of relationship between compensation and bank performance as well as managerial discretion and pay-performance sensitivity in different literatures, the laggings in China’s studies are discussed in the end.