The Establishment Of The Stock Option Program At H Corporation

The final goal of corporation is to maximize the stockholders' wealth. But the goals between the company's stockholder and the senior executives are not always the same, sometimes even going the opposite. How could company to use effective way to incent the senior executives and how could find long term incentive and effective method to solve the conflict between stockholder and senior executive, so as to reach two-to-win of both stockholder and senior executive? EVA stock option program can solve this problem effectively.The original stock option incentive uses stock price as the standard to evaluate the senior executive. The future exercise price is designed according to the stock price. But this way has a lot of irrational phenomenon in the reality. Or it either makes the senior executive take a lift or does not have a good incentive effect. And there are still some legal obstacles in taking it into action. This paper focuses on the two aspects. Based on the EVA evaluation standard, an option incentive designing project is drawn. Senior executive's outstanding achievement is decided according to the company's adjusted economy increase value. That is to transform the accounting profit into economy profit based on EVA, to perform program based on the EVA stock option.This paper by using comparative methods, analyzes the incentive deficiency on the senior executive on H Corporation, designs an EVA stock option incentive program for H Corporation. EVA stock option incentive program is part of the long compensation system. It uses the option principles, characteristic and operating method as the reference, relies on the implemental process of the stock option program, and makes some improvement. The practical implement is based on the company's annual final EVA data to evaluate the senior executive. When the senior executive reaches the prospective achievement, reward is granted. The award is a combination of both cash and virtual stock option, which makes the senior executive to work hard as well as the stock holder for company's long term development and enable senior executive's working enthusiasm to the greatest.This paper by using EVA economic value added to evaluate the achievement of the senior executive has an incomparable advantage in its index. This paper designs the stock option program based on EVA has an important instruction and practical value to H Corporation.