Abstract: From the perspective of business policy burdens and the governance of compensation committees, this paper studies the issue of managers’ over-payment in China’s state-owned listed companies after the split-share reform. After controlling the institutional factors leading to over-payment, it is found that business policy burdens can significantly reduce managers’ over-payment, while the independence of compensation committees cannot inhibit managers’ over-payment. In companies with lower policy burdens, the independence of the compensation committees would weaken the strength of supervision over the managers by the major shareholders. Further studies show that managers’ over-payment cannot bring down the company agency costs, only the normal payment can reduce the agency costs. The findings of this study can support the“payment defense hypothesis”and the“executive power hypothesis”, which can promote the study of the theory of state-owned executive pay.

Key words: policy burdens; independence of the compensation committee; excessive payment; state-owned enterprises