The Research On Executives' Incentive Reward And Its Accounting Problems

The establishment of executives' incentive reward mechanism is not only an important topic which has caught wide attention in modern enterprises but also a major practical problem which needs urgent solution in our enterprising reforms. This thesis gives a systematic explanation of executives' incentive reward mechanism and its accounting problems from four parts.The first part summarizes the theories of non-financial capital and comes to the conclusion: As a special form of property, non-financial capital has its own property right just like financial capital and it is a personal property which needs incentives to show its initiative. This provides the basis that executives get their residual claim and share the enterprises' profits with their ownership of non-financial capital. What's more, the first part outlines the theoretical basis of Executive Annual Salary System (EASS) and Executive Stock Options (ESO) and concludes that these two ways are beneficial to motivate executives.The second part interprets the connotation and specialties of executives and analyzes the strengths and weaknesses of EASS and ESO. In order to motivate executives in a more efficient way, we put forward a proposal of setting up a system of executive stock options and annual salary by combining EASS and ESO. In this way, it can not only meet the satisfaction of executives' basic life and security but also closely integrate non-financial capital value of executives and their profits.The third part introduces the different patterns of EASS and analyzes its practices in our country and the problems needing solved. By comparison, we get our conclusions: the objects of EASS should be executive class who own the actual controlling power and should share the residual claim, such as general manager, vice general manager and so on; the appropriate proportion between an executive's annual salary and an employee's income should be limited within 10 times.The fourth part analyzes the implementing requirements of ESO and outlines the disagreements on the nature, the recorded time, the measuring methods and reports of ESO. Besides, by explaining how to deal with Fixed Stock Option and Variable Stock Option, we conclude that we should choose to measure on the vesting day as for Fixed Stock Option while on the day that the amount of the stock and the exercise price are fixed as for Variable Stock Option.