Stock option plan (SOP) is a plan through which a company grants the managers the right to buy its stocks at a specified price by a specific date. As a long-term incentive with the characteristic of profit sharing, SOP has been widely used in western developed countries. In China, SOP has been introduced to and implemented in many state-owned-enterprises (SOEs) during the SOE reform process and has been reported favorable results.The report begins with the SOP's definition and its practice in western countries, then it introduces and analyzes the SOP tryouts and implementations in Chinese SOEs. A typical SOP comprises 6 elements, namely the target enterprise, the target employees, the stock sources, the exercise price and the exercise schedule. Following the 6 elements, the author compares and analyses the related policies among various local governments in China, accompanying with a true case in later chapter.Despite the various obstacles confronted in its implementation in SOEs, SOP enjoys unique advantage as an incentive scheme that provides long-term incentives and constraints for managers. As such, SOP attracts more and more attention from both the enterprise side and the government side. The author believes that with the establishment and improvement of the underlying infrastructure and environment, with the development of the SOP tryouts in SOEs, SOP will undoubtedly exert profound influences on the reform and development of Chinese SOEs.
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