Reward contract and agency costs on comparative performance information

The effective reward contract is the best motivity that the owners encourage the managers. Considering the comparative performance information, the paper used principal-agent theory to study the best reward contract for the managers which regarded money income and enjoying leisure as managers' goad, and analyzed the agency costs under asymmetric information. Then it educed the relationship model between the profit sharing coefficient of managers and the influencing factors, and the relationship model between the agency costs and the influencing factors. The paper also designed the stock options incentive mechanism, and analyzed a case against a firm. The paper clarifies that the stock options incentive mechanism is an effective means to activise managers which combines managers' long-term behavior and benefit with firms' long-term aim.