Because the operational performance of state-owned enterprise executives is difficult to be accurately measured, and because of the unperfected supervision and constraint, the excessive compensation of the executives of state-owned enterprises becomes a typical expression of their principal-agent problem, therefore, the governments use executive compensation limit as a response measure to reduce the principal-agent cost to mitigate the principal-agent problem. The analysis by taking A-share listed companies during 2011-2018 as samples and by using the difference-in-difference method（DID）shows that the “central management enterprise salary system reform” （the second pay ceiling order） has effectively restricted the salary level of state-owned enterprise executives since it was implemented in 2015, but has not significantly effected on duty consumption, so it has reduced the agency cost in this way, however, it has also reduced the incentive effect, which leads to the reduction of the efforts of senior managers, as a result, the resulting loss of profits became a new kind of agency cost. The compensation system reform of state-owned enterprises faces two difficulties of incentive and limit, the governments should use different incentive measures for the executives of different types of the state-owned enterprises based on the classification reform of state-owned enterprises, increase political promotion for non-profit enterprises and special industrial enterprises, and use market-oriented measure and meanwhile loose the compensation limit for the state-owned enterprises in competitive industry (profitable enterprises) so as to effectively reduce principal-agent cost and to solve the principal-agent problem of the state-owned enterprises.