The Exploration And Discussion On Incentive Mechanism For Share Option In Listed Company

Incentive mechanism is a significant content of enterprise system. The corporation is a complicated nexus of contracts composed of material capital and human capital, or very simply put, financial capital and knowledge capital. Material or financial capital needs effective allocation but no incentives are required, whereas, how to allocate them depends on the activities of the owners of human capital. However, human capital cannot be separated from its owner, and its impact is both indeterminable and flexible. Consequently, what human capital needs are not only the incentives, but also whether and to what extent they are appropriate. In particular, whether or not the incentives are appropriate for the entrepreneurs is vital to the survival of an enterprise.The significance of establishing incentive mechanism is purported to improve the management, inspire managers to be zealous in their work, and explore their full potential creativity to serve the enterprise diligently for its long-term development. Nevertheless, for systemic reasons existed long time before, little has been done in creating powerful incentive structures. The lack of strong incentives resulted in the ineffectiveness of China's enterprises. This article is designed to highlight the importance of further research and exploration on the aspect of building powerful incentive structures, and thus draw on the experiences of foreign countries in creating effective incentive structures to establish incentive mechanism with Chinese characteristics, and therefore promote profitability of listed companies.