Abstract: Nowadays,research on managers' incentive mechanism usually takes net profit as performance standard,applies the system of fixed basis compensation and mostly confines to salary incentive.This paper regards value creation as performance standard,integrates salary and non-salary incentive into managers' incentive model with dynamic basis compensation system and has three conclusions beyond principle-agent model: firstly,the system of dynamic basis compensation may increase manager's effort level; Secondly,the means of salary and non-salary incentive's combination should be adopted in manager's incentive and the flexible assembled proportion of salary and non-salary incentive should be designed by non-salary incentive sensitivity; Thirdly,managers in monopoly industries make less effort than ones in competitive industries,so it is necessary to introduce competitive mechanism.

Key words: managers, incentive mechanism, value creation, dynamic basis compensation