Abstract: Considering turnover intention and dismissal tendency， managers’ two-stage dynamic incentive model was designed in which managers’ expected utility and enterprises’ expected return were determined according to the three possibilities and probabilities of re-election， compensation turnover and non-compensation turnover. Five conclusions were drawn as follows. Firstly， the greater a manager’s turnover intention is， the lower his effort is and the higher his requirement for the performance share ratio will be. Secondly， when a manager gets more dismissal payment than the increase of basic salary in the next period while he provides the same effort， the more the dismissal intention is， and the greater the manager’s effort is， the lower his requirement for the performance share ratio will be. Thirdly， the dynamic basic salary system can help to improve managers’ effort. Fourthly， the higher the proportion of monopolistic surplus is， the lower the manager’s effort will be. Finally， the greater the performance share ratio and the non-monetary utility sensitivity are， the higher the manager’s effort will be.

Key words: dismissal tendency, turnover intention, dynamic basic salary, monopolistic surplus, non-monetary utility