Firm Size and Executive Compensation Structure

摘要

With the increase of executive compensation and the disclosure of executive sky-high compensation events，people start to query about the incentive mechanism based on executive compensation level and pay more attention to one based on executive compensation structure ,and have gradually formed two opposite opinions--tournament theory and behavior theory. This paper makes an analysis of the relation between executive compensation structure and firm performance among large and small firms. The result indicates that competitive pay structure has a positive effect on firm performance.Furthermore, large firms are more appropriate to apply tournament theory to design executive compensation policies than small firms.