Research On Stock Option Based On Incentive Mechanism

In the age of knowledge economy, the manpower capital has been the most active factor of development for enterprises. However, in order to make full use of the manpower capital, it is necessary to introduce an effective incentive mechanism, of which the most outstanding is stock option, to activate the owners of the manpower capital. The stock option has obvious advantages: decreasing agent cost, encourage the senior executives to take necessary risks, reducing investment of valuable projects when the senior executives retire, and make good achievement and revenue for the company.The separate of proprietorship and management right results in the problem of principal-agent. The stock option is a contract to make the benefit of principals and agents convergent. It can alleviate their conflict effectively, urge the agents launching suitable activity, increase benefit for the principals furthest, decrease losses due to moral risks and converse choice, and encourage the managers to innovate and pay more attention on the long-term development. The author introduces several incentive theories and their functions briefly at first. Then, on the basis of exposition of the theoretic basis and incentive effect of the stock option, the author discusses the superiority of the incentive mechanism of the stock option by Game Theory. At last, based on the analysis of the problems in implementing stock option in China by several typical cases study, the author gives some suggestions on how to select the right index and confirm reasonable weight, stock price, quantity and valid period, as well as a set of effective resolutions, hoping to help China's enterprises in implement stock option and establish and perfect the incentive and obligation mechanism effectively. The new idea of this dissertation lies in confirming comparatively reasonable incentive index by combining market-oriented index and financial index, and probing into the effective methods to carry out stock option in China's enterprises. Nowadays, the most urgent problem need to resolve in China's enterprises is the innovation of business administration and distribution system. The system of stock option is such a new distribution system. It is instructive for China's enterprises to reform their management.