Corporate Incentive Pay Model Selection

The separation of ownership and operation of modern firms builds up a principal-agent relation between stockholders and operators. Under asymmetric information it is necessary for the principal to set up a mechanism of incentive and constraint for the agent' s action. Designing an incentive and operative salary system which basic salary as it' s center is most important to attract core stuffs and bestir a great of employees. I am intended to discuss in theory that incentive mechanism' s structure should be optimized. Combining with enterprise management practice, I design our country' s incentive salary modes that can be chosen by enterprises.