Abstract: The quality of incentive and restrictive mechanism guarantees the top managers' governance, however, the CCGINK(China Companies Governance Index) indicates that the incentive and restrictive mechanism is incompatible with the development of the top managers' governance. With the methods of the historical analysis, this paper analyses the present incentive and restrictive mechanism--yearly salary, stock holding and profit sharing system, and establishes a modified incentive and restrictive compensation function.