The Research On Accounting For Executive Stock Option

The main objective of this article is to study the recognition and measurement of Executive Stock Option. As a long-term incentive system, in possession of the distinct superiority on incentive effect and cost, ESO played an important role in productivity growth and technological innovation among US companies. Since 1990s, some enterprises in China introduced this system. With the constant improving in the capital market and legal regulations, we believe there must be more and more Chinese enterprises apply this incentive mechanism.This article is based on the fundamental principle of accounting, combined with the analysis and comparison of foreign and domestic scholars' different viewpoints. In order to find an explanation for the new Financial Accountancy Standard, which supports the opinion that the compensation cost should be recognized, the article discussed both the theories feasibility and realistic necessity. Then the article also concluded that the fair value of ESO is the Present Value of Future Cash Flow. Finally, the article concentrated on the design of ESO, and combined the special circumstance among Chinese enterprises to put forward some suggestions, so as to provide some reference for the practice of ESO in our country.