The Study On The Implement Of Esop In The Listed Company Of China

The target of our economic system reform is to build the socialistic market economy up: Not only can the market allocate the resources efficient, but also it can set up a valid incentive and restrictive mechanism. As one of these mechanisms, ESOP can solve the agent conflict between the executives and shareholders, and also it can "turn the executive into legal shareholders through stock options". Still the widely applications of this incentive tool have shown mighty life-force in developed market country.To achieve a good incentive effect, how to design the program is very important. But most published literatures view the executives as normal investors and ignore their risk-averse characters and welfare restrictions. Providing all the institutional conditions are satisfied, this paper stands on the point of executives to redesign the critical elements of the program. It is useful to those listed companies intended to carrying out this program.But in practice, the institutional conditions are not satisfied completely. This paper then look into the institutional difference between America and China, which shows that the degree of maturity of Chinese market economy,competition of the product market and development of professional executive market are still very low, that the ideology of Chinese are still an obstacle to carry out this program. At last, this paper focuses on the stock market validity which have a direct relation to the ESOP and the effect of present incentive plan of stock property, which shows that the stock price have no real performance to uphold and that the incentive effect is not obvious at all. So I draw the conclusion that the condition to implement this program is not satisfied well in China. But it is practicable that allow those have clear property relations and regular institutional systems to experience, and then find a new way to propel the reform. Although there are many gaps in Chinese institution comparing with developed market country, the study on America also shows it is a reciprocity relationship between the maturity of the institutions and the implement of the ESOP. So, as long as we hold the market economy as the target, the implement of ESOP will benefit to the reform. At last, some advices are given aimed at the flaw of Chinese market system,law system and the corporate governance, as well as the management of this program and the cooperation with other compensations.