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A Research On The Long-term Incentive Theory And Its Amending To The Flows In The Application Of ESO

Posted on:2003-11-06Degree:MasterType:Thesis
Country:ChinaCandidate:L W FengFull Text:PDF
GTID:2156360092965990Subject:Technical Economics and Management Studies
Abstract/Summary:PDF Full Text Request
How to design an effective incentive mechanism of senior managers is an important part in the modern enterprises incentive theory. In the developed countries, the traditional entrepreneur compensation mechanism consisted of basic salary, final-year bonus and so on has transformed into the long-term incentive mechanism such as Executive Stock Option (ESO). But in China, the long-term incentive mechanism has not been set up in many enterprises; many scholars and people in enterprises are blindly optimal to it and think that it can solve the problem. Chinese enterprises facing in the failure of incentive, some scholars know the bugs of ESO but do not do more further researches in its countermeasure. So that makes the purpose of the research in this thesis. Why should we set up the long-term incentive mechanism? Why ESO is not efficient all the time in China and even in some western countries? Since ESO suffers the problem of lacking efficiency, which long-term incentive tools can settle the problem of senior managers in Chinese enterprises lacking incentive? Above are the problems to be discussed in this paper.When analyzing specifically this paper, based on the fact that the effect of long-term incentive in the practical application has gradually increased, concentrates in ratiocinating with rigorous models. At first, the contrast between the traditional compensation mechanism and the modern long-term incentive mechanism is differentiated and analyzed in detail theoretically. When the positive function of long-term incentive mechanism is affirmed, this paper theoretically analyzes ESO that is important in the western long-term incentive tools with a contract model under the condition of asymmetric information, and finds out some factors that make ESO inefficient. Then combining with the bugs of ESO in application, it systematically analyzes such western long-term incentive tools as performance planning, restricted stock, stock appreciation rights and deferred compensation plan .At last, aimed at the fact that ESO is difficult to carry out in China, after the experiential analyze of the system of administrators or future shares in China now, this paper puts forward the countermeasures as that the long-term incentive tools we should focus on are performance unit, internal price phantom stockplan and deferred cash income and that various long-term incentive tools should merge together in the future.
Keywords/Search Tags:traditional salary and compensation mechanism, long-term incentive, Executive Stock Option, the bugs of ESO in application
PDF Full Text Request
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