The Study Of Stock Option Incentive Issue Of Enterprise Operator

With decentralization of corporate equity and sophistication ofmanagerial technologies, the separation of ownership and controllingpower is becoming an increasing trend in multi-national companies.To effectively manage the issues of entrustment and motivatemanagerial staff as well as core technical staff, many Americancompanies adopted various incentive tool including Stock Options.Stock Option was well developed and received in 1980s in the UnitedStates. This incentive tool then was introduced to many developingcountries in 1990s. Today, stock option has become one of the mostimportant incentive tools in public listed companies in the world. In contrast, the development of incentive measures in Chinesepublic listed companies was far behind. The public companies are notable to launch stock option scheme given the very sophisticatedsituation. Although stock option scheme was developed by somepublic listed companies and submitted to China Stock ExchangeCommittee for approval, however there is no stock option scheme bepublicly announced. It's believed that there is no standard stock optionscheme launched in China so far, which is obviously notcommensurate to the rapid development of stock exchange markets inChina. Given the above situations, how to retain the talentedemployees and core staff by adopting proper incentive measures wereput on the top priority of management agenda. The author gives adetailed study and analysis of stock options in this article. The article consists of five key elements: 551. Corporate Managers and Equity-based Incentives Tools 2. Introduction of Stock Options and Its Application 3. Positive and Negative Effects of Stock Options 4. Environmental Analysis and Impact 5. Study of Stock Option Application and Suggestions The first part elaborates the relationship between corporatemanagers and equity based incentive measures. Firstly, the relationshipbetween corporate managers and corporate sustainable developmentwas discussed. As a universal rule, effective management andinnovation are the fundamentals for a company in an intensifiedcompetition environment, which is the core competency that enablesthe company's sustainable growth. Effective management is the basisand innovation is momentum. Secondly, the stock options help toestablish a shared interest between cooperate executives, managers,senior technical staff and the Company. With the establishment ofstock options, it's believed that the staff shall give much more focus onthe company's long-term interest, rather than short-term interest.Finally, stock option is very meaningful in China. Its understood thatthe incentive for corporate managers have been a weak point in China. The second part elaborates the basic concepts of Stock Option andits application. First, the definition of stock option and developmenthistory. Stock Option is one of regulation arrangement about surpluspartition in model enterprises system. It refer to a power that corporatemanager can buy certain quantities of company stock with certain priceat certain period provided by enterprise owner. Enterprise owner earnprofit by ownership. Second, the main basic characters of stock optionare as follow: 1. Stock option is power not obligation; 2, Stock option 56is a future concept. Finally, Incentive stock option and function.Incentive stock option (or statutory stock option) is one of the mostcommon stock option.. The incentive functions of stock option are asfollow: 1. Coordinate the conflicts between enterprise owner andcorporate manager; 2. Solve the conflicts between long-term interestand short-term interest; 3. To recruit and retain talents. . The third part elaborates the positive and negative Effects of stockoption. First, the positive effects of stock option are mainly as follow:1. To decrease agency cost; 2. To improve company perf...