Based on the game theory,the relationship of principalagent between the government and the managers of state owned enterprises is analysed.A principal-agent incentive model is set up.The symmetric information and asymmetric information are analysed.As a principal-agent mechanism is designed,if incentive for managers in an enterprise is considered the risk costs and agential costs of principal are smaller than that if not considered.It is proved in theory that incentive for managers in an enterprise is necessary and provides a theoretical basis for annual salary system of enterprise.