Case Analysis Of A Company Stock Option

Executive stock option has been created and grown step by step with the development of economy of western developed countries. As a kind of long-term incentive programs, executive stock option can remarkably narrow the gap between employees'and companies'interests and reduce company's principal-agent cost. Frauds and scandals at Enron, WorldCom, and others damaged the credibility of most companies in the United States, to some extend , people think executive stock option should take responsibility for frauds and scandals. Though the controversy over executive stock option, it will share the significant stage with other forms of long-term incentives.This paper is based on the A company, to discuss the implication of executive stock option to company in our country. The paper is composed of four chapters, used the method of case analyze.The first chapter introduces the basic information of stock option, then discusses the advantages and disadvantages of executive stock option, followed by the introduce of executive stock option in the United States.The next chapter analyses the situations for executive stock option in our country, include the efficient-market, law, stick price, account and tax. Under current situation, companies of our country start to design and implement executive stock option to motive their employees, especially high-level managers.The third chapter introduces the executive stock option in A company for adding long-term value to the organization. This chapter analyses the problems of A company after introduce of A company, and analyses the reasons why A company implies the executive stock option and how to solve the problems in practice of the executive stock option. Lastly, the paper discusses the special affections of executive stock option in A company, such as the developing orientation of industry, salary level of industry, bases of incentive, distribution of dividends and company's character of non-listed. On these bases, draw the conclusion of this paper, the executive stock option has some limitations, it still play very important role in long-term incentives.