| The structural imbalance and strength shortage of incentive reward mechanism have been puzzling China's state-owned enterprises, and we always lack a good method to settle the ultimate drive for the development of our enterprises. Although the matter of incentive also exists in western enterprises, due to the theory innovations and practices after World War â…¡, they have many research in the design and management of incentive reward mechanism, especially in Stock Options, and their effect is obvious. So, on the basis of considering their culture, time and environments, we shall take their experiences for references, and accelerate the development of our enterprises and our economy. So is the purpose of writing this essay. ESO is very important in the reform of state-owned enterprises in China and in the perfection of the corporation governing structure. We shall use the existing sophisticated schemes of developed countries for reference, explore and push the Stock Option Scheme of China, and establish the long-term incentive reward mechanism for our enterprises. The functions of Stock Option Scheme for China are as followings:1. Benefit for the set-up and perfection of Modern Enterprise System; 2. Benefit for the introduction of person with ability, and avoid the weakness of traditional reward distribution system in great degree; 3. Benefit for the settlement of the inherent contradiction in the system of state-owned enterprises, and reduce the agency costs; 4. Benefit for the reduction of short-term actions of executives; 5. encourage the top executives to undertake necessary risks; 6. realize incentive of low cost; 7.benefit for the foster of professional executives.The purpose of stock option incentive is to form a interest-community of the incentive person and the enterprise, reduce the agency cost of the stock company and obtain the incentive-consistent mechanism. But the stock option incentive relies on a high-effective security market and reasonable fair stock price, and there are still lots of state-owned enterprises remain unlisted, so it's impossible to implement standard stock option plan. Therefore, this essay put forward that, some up-going listed state-owned enterprises be chosen as experiment for stock options, and more enterprises join when conditions mature. Under the basis of absorbing the western advanced experience and taking into considerations the characteristic of Chinese enterprise system & the situations of currentcapital market, the author designed a feasible stock option scheme which including the following key contents: granting period and amount, stock sources, exercising time, exercising price, exercising mode and maturity period, etc. The first practice of ESO in China started in 1997, and ESO spreads after 1999. although different from foreign ESO ( some even cannot be called ESO), these ESO practices in China are obviously determined by the economic and policy situations of China, and have the features of adaptability, versatility and transitivity. After analyzing and studying several model case in China, we found that, as an innovation of distribution system, ESO is the definite result of the reform in property right system of Chinese enterprises. However, in many respect, we still lack some postulates necessary for implementing ESO, especially in policy, law conditions and the enterprise internal governing mechanism. The main obstacles in the respect of law and policy are: 1. The set up of ESO system still lack correspondent backup of law and policy; 2. The law status for some basic organizations to implement ESO plan, such as employee share holder's committee, still remain unsettled.3. the restrictions of current stock issue rules and stock buy back rules; 4. the non-negotiability of state share and corporation share; 5. The policy restrictions in executive share holding and selling made it difficult to design ESO scheme. Additionally, the following issues may affect the smooth implementation and validity of ESO system to certain extent: the misunderstand... |
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