The executive-employee compensation gap, a newly focused dimension of the executive compensation packages by the previous literature, has been given a great deal of attention because of the growing inequality in the compensation practices within the firms over the past two decades in China. The CEO-worker ratio in the cash compensation level of the top 100 largest publicly listed enterprises has risen to the level of 50-to-1 in 2014 from a level smaller than 15-to-1 before the year 2000. Against this background, a series of remuneration control policies have been announced in China by the Ministry of Finance, the Ministry of Human Resources and Social Security and many other government departments. However, as a whole, the effects of such policies are rather poor. At present, nothing seems to catch Chinese corporations’ and even the Chinese economy’s attention like a threat to the pay and perks of the top executives and the closely related executive-employee compensation gap.
On the one hand, the executive-employee compensation gap is getting larger with unlimited growth in China. On the other hand, there is still a huge research gap in the executive-employee compensation gap’s forming mechanisms and its consequences on various organizational outcomes in China. Given the above two facts, this book attempts to systematically investigate the antecedents and consequences of the executive-employee compensation gap from the perspective of corporate governance. To be specific, the investigated antecedents in this book include CEO age, CEO tenure, the independent directors, the board of supervisors, the CEO’s educational background, female executives, the CEO’s downward overstepping behavior and the CEO-employee discretion gap, while the investigated consequences of the executive-employee compensation gap include workplace territorial behavior, knowledge loss, employee turnover rate, individual innovative behavior and the firm’s future performance.
The critical new findings of this book are shown as follows: (1) There is a positive relationship between the CEO’s age and the executive-employee compensation gap, and knowledge intensity can positively moderate such a relationship; (2) the CEO’s tenure can improve the enlargement of the executive-employee compensation gap in a nonlinear positive manner, and the CEOs with a longer tenure would enlarge the executive-employee compensation gap to the best degree with their self-served motivations; (3) the independent directors have the significant intention to enlarge the executive-employee compensation gap in Chinese listed manufacturing companies; (4) the board of supervisors has a direct negative effect on the executive-employee compensation gap, which is rather steady and significant, and it has various and unsteady moderating effects on the relationships between several critical corporate governance variables; (5) there is a cubic relationship between CEO educational attainments and the employees’ compensation, and there is a weak U-shaped relationship between CEO educational attainments and the executive-employee compensation gap; (6) the female executives have negative effects on the executive-employee compensation gap in Chinese listed manufacturing companies; (7) the downward overstepping behavior of the CEO has positive effects on the executive compensation gap, and the CEO’s downward overstepping behavior has positive effects on the executive-employee compensation gap; (8) the CEO-employee discretion gap has a much stronger positive effect on the executive-employee compensation gap than the effect that CEO discretion or employee discretion individually have; (9) the executive-employee compensation gap can determine the workplace territorial behavior via the mediating roles of psychological ownership, employee engagement, organizational citizenship behavior and the leader-membership exchange, while the effects are moderated by gratitude and trust; (10) the executive-employee compensation gap will be positively related to knowledge loss via the mediation effects of the leader-membership exchange and psychological ownership, while compensation communication can negatively moderate the positive relationship between the executive-employee compensation gap and knowledge loss; (11) there is an inverse U-shaped curve between the executive-employee compensation gap and the employees’ turnover ratio; (12) the executive-employee compensation gap has significant negative effects on the individual innovative behavior, which are partially mediated by the leader-membership exchange, psychological ownership and the sense of self-efficacy; and (13) technological intensity can positively strengthen the linkage between the executive-employee compensation gap and the firm’s future performance, and the positive pay-performance sensitivity strategy can improve the positive performance consequences of the executive-employee compensation gap. (Nova)