Research On The Compensate Inspiration Mechanism Of Executive In Natural Monopoly Industry

Compensate inspiration is an effective method to solve the agency problem bet-ween managers and owners.Due to monopoly profit which exaggerate executiveperformance in natural monopoly industries,there is no substantive incentive effect ofcompensate inspiration.Compared with Non-monopoly industries,monopoly profit innatural monopoly industry expands the standard of executive compensation.Onthe basis of objective evaluation about executive actual operating performance,thispaper establishes executive compensate inspiration mechaism of natural monopolyindustry.There are some problems in natural monopoly industries,such as high income ofexecutives,irrational salary structure,and excessive job consumption,and excessivecompensate incentive.To solve the issue of executive compensate incentive,we mustmake an objective evaluation about executive actual performance.According to theeconomic characteristics of natural monopoly industries,the efficiency of resourceallocation and the rate of scientific and technological progress are the content ofperformance evaluation.We establish executive performance indicator system fromtwo aspects.Selection of performance indicator system,and reflect the contributionrate of technical and the contribution rate of management by TFP.To design executive compensation incentive,we take into account short-term andlong-term incentive and establish executive annual salary model.Basic salary ofexecutive in natural monopoly industries refers to the method which determines basicsalary of the person in charge of the central enterprises;Performance bonus refers tothe executive actual operating performance and it reflects the operating performanceof executive and eliminates the effect of monopoly rent.In addition,we consider equityincentive in annual salary and make equity income as executive compensate inspirati-on,which is deferred payment,in order to incentive and contraint the behavior of executive,and make risk sharing and benefit sharing true between executives andowners.