Abstract: Short-term behavior problem of the managers is very serious in China's state-owned enterprise (SOE). It seriously prevents the state-owned enterprise's long-term development. To make China's economic prosperity and development, the SOE managers must implement the effective long-term incentive. Under the principal-agent theory, taking the goal of principal (maximizing the company's future performance) as foothold of research, the optimal combination of long-term incentive is studied and a combined model of double reputation (market reputation and political reputation) incentive and stock options incentive for SOE managers is proposed. Combining with the characteristics of China's SOE managers with the payment form of stock options, political reputation is modelled, and long-term incentive effect of double reputation, the optimal level of reputation influence coefficient and the optimal level of profit sharing ratio is studied. On the basis, the influencing factors of the manager's behavior choices characteristics, optimal incentive level of reputation and its' influence coefficient are analyzed. Finally,some suggestions are proposed for SOE manager's long-term incentive based on research results. This paper found that the rise of incentive degree can make the manager's behavior more in line with the interests of the enterprise. And the strengthening of optimal incentive degree can be though adjusting the impact factor to realize. In reputation incentive, the reduction of political reputation influence can lower the managers' speculative behavior level. And the reduction of political reputation influence coefficient can realize through the increasing the utility coefficient of market reputation.

Key words: SOE managers, double reputation, stock options incentive, long-term incentive, optimal combination