Research On The Stock-based Incentive In Financial Enterprises Of China

Stock-based incentive system has been regarded as a long-term incentive system which can combine with interests of shareholder, enterprise and individuals, reduce the short-term behaviors of business dealer and maximize the benefits of parties. Therefore, stock-based incentive has been considered as a significant subject of modern enterprise system. The contradiction of entrust-agent mechanism and the separation of power of corporate structure could be efficiently decreased by operating the stock-based incentive system which reflects the value of human capital. Hence the stock-based incentive system has been widely used since it emerged in western countries, especially in financial enterprises.With the development of Chinese economic open, increasing of market competition and continuous financial system reform, the stock-based incentive has been introduced to some Chinese listed financial enterprises. However, the defective pay system of Chinese financial enterprises and the insufficient market brought the operation of stock-based incentive in financial enterprises has been suspended. As to developing and implementing the stock-based incentive system, it needs several factors which can involved the external restrict factor such as free competition under produce market, perfect professional manager market and sufficient stock market ; perfect corporate governance structure and comprehensive legal system . With respect to Chinese stock-based incentive of financial enterprises, there are barriers of developing and implementing on system, internal and external restrict factors as well as legislation. Therefore, regarding the situations of China, it is very important to research a stock-based incentive system which can satisfy the particular requirement of Chinese financial enterprises. And the system should be developed to increase the positive functions to improve the competitive power of Chinese financial enterprises , and to prohibit the negative effects.This thesis is based on the fundamental principles of stock-based incentive. Then it refers to the stock-based incentive legal systems and practices of financial enterprises of foreign country, analyses the necessity, feasibility, status of implementation and existing problems of the stock-based incentive system in our country. At last, some proposals would be suggested to improve China's stock-based incentive relating to financial enterprises.