The purpose of this study is to clarify the relationship between executive compensation and company performance in China's pharmaceutical manufacturing industry. In recent years, scholars at home and abroad have studied how executive pay affects company performance from different angles. However, the academic community has not yet formed a consensus on this issue, and most scholars have not yet conducted research on this issue based on specific industries. The research on China's pharmaceutical manufacturing industry is even less. Therefore, this article is based on the unique industry of Chinese pharmaceutical manufacturing industry, combined with the principal-agent theory, tournament theory, and scale economy theory, based on the analysis of the performance of pharmaceutical manufacturing companies and executive compensation status. Taking data from listed companies in the pharmaceutical manufacturing industry as a sample, this paper explores the relationship between executive pay and company performance from three aspects: executive pay level, executive pay structure and executive pay gap.
Empirical results show that executive compensation is positively correlated with corporate performance in China's pharmaceutical manufacturing industry. Therefore, when formulating salary incentive system, Chinese pharmaceutical manufacturing enterprises should fully consider the influence of salary level, salary structure and salary gap on enterprise performance, properly improve the salary level of senior managers, improve the salary structure and increase the salary gap in order to motivate senior managers to work hard and maximize the improvement of enterprise performance.