Optimal Design Of Corporate Governance In China Tobacco Hunan Industrial Co., Ltd.

Establishment of a modern enterprise system, and build scientific corporate governance structure is the direction of reform in tobacco industrial enterprises. This paper analyze the current situation of tobacco industry in China and the corporate governance of Hunan Tobacco Limited Company (HTLC) . The analysis on current situation of HTLC shows several problems. The company has no independent decision-making body. the board structure is unreasonable. And it is lack of good incentive and restrictiveThis paper compares the large tobacco companies at home and abroad. The foreign companies have dispersed ownership, but HTLC is completely state-owned. There is a certain gap in the independence and function of the borad between domestic and foreign tobacco companies. And HTLC can use the board of supervisors for reference.The blue print to improve corporate governance of HTLC is proposed in this paper. In guarantee of single property, diversifying the equity by cross-shareholdings with other state-owned enterprises; Build the Board. Introduce independent directors. The Secretary of the Board should be strengthened. Straighten the relationship between the board and the party committee. Establish the board of supervisors, then designe the composition and function of board of supervisors; Perfect the incentive and restraint mechanisms of HTLC. Design performance evaluation programmers and incentive pay system for managers.