FTSE (Index 100) indentified that the average compensation of board members in public held corporations in U.K. increases by 49%. The average compensation is 2,700,000 pounds (USD 4,160,000). According to the information promulgated by SEC, the deficit after tax amounted to 34,000,000,000 for Cosmo Bank. However, compared to the year of 2009, the compensations of Board members while serving as corporate employees skyrocketed to NT$51,810,000, the average compensation while serving as corporate employees increased about NT$1,500,000 more that ranked the number one ”fat cat” in listed companies. In order to curtail the significant wealth difference and to easy the complaints of general public, Section 14-6 of Securities Exchange Act is amended to stipulate that corporation with capital exceeding 10,000,000,000 shall set up compensation committee, while corporation with capital less than 10,000,000 in November, 2011. However, the functions and operation model of compensation committee were not well regulated as those of auditing committees and independent directors. Although compenations committee derives from Anglo-American countries, the encountered problems are different. The compensations committee aims to prevent agency problems that existed in the U.S.A. and U.K., while eliminating or coordinating the conflict of interest between dominant shareholders and small shareholders in Taiwan.The study tries to criticize and comment the establishment of compensation committee, while analyzing its functions and operation model for the purpose of rendering suggestions for the new implementation rules and regulation by government. A sound, fair, reasonable, transparent compensations committee coupled with corporate managerial strategies, independent consultant, operations performance and internal auditing mechanism may enhance corporate integral competiveness.