Incentives and Constraints of Independent Directors

Both incentive and constraint mechanisms are key to promote independent directors to work harder.In China,however,both mechanisms are not efficient.The lack of effective incentive and constraints has degraded the role of independent director system.We should provide appropriate incentive with independent directors to stimulate them playing active role in corporate governance;on the other hand,we should also set up effective constraints on independent directors,that is,if the independent director breaches his duty and cannot monitor the insiders,he should be penalized.