Incentives Of The State-owned Enterprise

In China's traditional planned economic system, the managers of state-owned enterprises were not held with a sufficient importance, their values were not really "discovered", and their talents were not fully exploited. To date, it is still an outstanding issue in the state-owned enterprises. In some sense, the value of "managers" in state-owned enterprises is regarded nearly the same as that of the government officials. With only the "administrative incentive", the managers are apt to decay in their later period of term.It is important to establish and consummate the incentive mechanism and binding mechanism. Under an appropriate mechanism, the managers can be reasonably rewarded, and at the same time they are prevented from incompetent performance and pursuing the extra latent and apparent incomes under the market and regulation restrictions. Those who have extraordinary abilities can make a fortune first. The strongest incentive is also the strongest restriction.To carry out the annual salary system is good for building up the modern enterprises' system and inspiring the enthusiasm of managers, It will also promote the forming of entrepreneurs'market and bringing up more skillful entrepreneurs, This system will strengthen the restrain system, impose restrictions on managers' corruption and degeneration and protect the investors'interests.Under the stock options system the targets of clients and agents will be identical to the highest level, It can cut the cost of companies'daily payment and save large amounts of capital, Besides ,it's good for the company's financial work and avoiding brain drain and even attract more excellent talents as well.The annual salary system is liable to short-term behaviors, and the social mentality of injustice will be intensified when the managersreceive too high cash income at one time. While under the stock options system, managers are usually unable to collect enough cash to purchase the stock shares, and this practice can only be conducted in public stock companies. A new incentive mode - annual salary plus stock options is designed, in which the advantages of the above two systems are adopted and the disadvantages are eliminated.Through investigations and literature studies, this thesis thoroughly analyzed the incentive mechanism for the managers in state-owned enterprises, and proposed some valuable suggestions and schemes.