Theory And Application Of Stock Options

According to statistics, more than 70% of the published drafts of the company equity incentive plan stock options are used incentives. Stock options as an effective solution for modern business the principal - agent problem of incentive pay system was a huge success. However, due to continuous since 2002 until the outbreak of the financial scandals of the financial crisis in 2008, stock options were an unprecedented challenge. Because stock option system is a double-edged sword, and its back is the intrinsic motivations of weaknesses which under certain conditions may be the owner of alienation into harm the interests of managers "incentives", making it a potential financial scandal incentive become a driving force within the company of fraud. Stock options as an incentive system have a profound basis in reality. From a practical point of view based on the modern enterprise in the separation of ownership and led to the principal - agent problems resulting from the possibility; economic life of the complex shows the presence of asymmetric information in the principal - agent problem become a reality; and the characteristics of the human capital internal and external controllability makes difficult to detect the principal - agent problem further. Therefore, the logic a viable option is to integrate as much as possible the interests of operators of interest to go to the owner, and between the two sensitive positive relationship, or to build a consistent owner and operator The objective function of interest, stock options system to solve this problem it is designed. The incentive theory can be summarized to some extent the incentive for a virtuous cycle of logic: -- beneficiaries of stock options granted to work hard to improve company performance -- beneficiaries of stock prices -- profitable exercise of an option beneficiary to work harder.In this paper, Vanke stock option plan as the background to in-depth analysis of the stock option system, and based on the proposed improvement of the system of stock option ideas.