Study On Making Exercise Price And Exercise Condition Of Equity Incentive Plans Of Listed Companies

Equity Incentive Plan is one of the most popular types of incentives that wildly used by western developed countries. It is proved that Equity Incentive Plan tied the wealth of top managers to shareholders'wealth and the future development of the company. Thus, Equity Incentive Plan is expected to reduce the interest conflicts between shareholders and top managers, solve the commission-agency problem, and it also can improve the corporate governance.Equity Incentive Plan is currently become the focus of a hotly international debate immediately after the accounting scandals of famous American companies like Enron. It made us realize that Equity Incentive Plan also has many negative effects. While in our country, accompany with the Share-trading Reform, the Chinese Securities Regulatory Commission had issued the"Measures for the Administration of Equity Incentive Plans of Listed Companies"at the beginning of 2006, and announced the Share-trading Reform had almost completely done in October of that year. It is extremely essential to carefully survey Incentive system of shares ownership right now.After Share-trading Reform,we should focus on issue about how to work out a better way for our country's Equity Incentive Plan. This reason is the motivation of writing this article.This article is based on the state of financial markets which is evolved after Share-trading Reform. Chapter two simply review the history of Equity Incentive Plan in overseas and in China, and also expatiate the basic theory of Equity Incentive Plan.Chapter three tries to find deformity of the companies'Equity Incentive Plans after analyzing them. When it finds the disfigurement of all the Equity Incentive Plans, this article introduced new method of making Exercise Price which named floating index in chapter four, and in the next chapter, this article focuses on making Exercise Condition of Equity Incentive Plans in detail.Meanwhile, this article also considered the right side and the reverse side of bringing Equity Incentive Plan into operation in financial markets at present, and gave some useful suggestion in chapter six. This article thinks that it is necessary to perfect the rule of law related to Equity Incentive Plan, and it is important to enhance intendance on Equity Incentive Plan.This article means to indicate that Equity Incentive Plan is a good choice of launching incentive. But, we must realize that if Equity Incentive Plan is incorrect used, it can bring much negative effects. So, our best way to use it is just"enhance strong points and avoid weaknesses". It can be achieved only when we solve those problems like remending the shortcoming of financial markets, improving the defects of corporate governance, enhancing custody and so on. Only in that condition can Equity Incentive Plan become a real"Golden Handcuffs". Our country faces a new situation that never appeared before and there are also many new problems that we have to handle in future. Equity Incentive Plan will be generally used in a short while, and we can anticipate that it will be an important way to perfect the incentive mechanism of companies.The innovation of this article are as follows: the first innovation is that the article take a systemic research on both questions about making Exercise Price and Exercise Condition of Equity Incentive Plans for the first time; Secondly, this article raise a point of how to establishing the sound Exercise Price of Equity Incentive Plans. After serious thinking, this article shows a new kind of method named"floating index". The last innovation occurred when this article has a research on how to making Exercise Condition of Equity Incentive Plans. It thinks we should take account of the lifecycle of the company the moment we making details of Exercise Condition.