The Study On China Stock Option Incentive Mechanism

For a long-term, the empowerment of the business executives has been an important subject for the enterprise's owners and the stockholders. Under the detachment system of the ownership and operating power, the relationship between the owners of enterprises and the enterprises' executives is the agent relation. In the process of agent, the "adverse selection" and "moral hazard" resulted from the information asymmetry and the incompatibility in the object functions for the both bodies of the agent may be brought on with the result of the enterprise's value decrease. Executive Stock Options (ESO) is vital to resolve the issue. Since 1990s, ESO has been prevailing in America and has been playing a due encouragement role in the practices. The 21st century, companies such as Enron financial scandal came to light frequently, stock option incentive system encountered unprecedented difficulties and problems. As for our country, some enterprises in our country have already adopted ESO since 1990s. Meanwhile, the application of ESO is restrained by a series of systems in China atpresent, and it is still irregular. In practice there is no incentive to obtain better results.Based on facts above mentioned, we believe that the study of incentive stock options to our country set up a sound corporate incentive and restraint mechanisms, regulate the operation and sustainable development will have a important practical significance.The full text is divided into six chapters, the first chapter is the Introduction, including the selection of the driving forces of this article, research significance, methods, and innovation, and related literature at home and abroad are reviewed.Chapter on the meaning of stock options, classification and characteristics of a brief introduction, incentive stock options and the theoretical foundation, operation mechanism and the effects of positive and negative aspects of the analysis. Chapter III analyzes the design of stock options: stock grant sources and targets, standards and the amount awarded, pricing and pricing model range, the right and effective way, the stock options the right to change and disclosure.Chapter IV discusses the stock options practice in the United States: including its rise, development, and the current difficulties and new problems; and then the recent application of the ESO in our country: including Beijing model, model in Shanghai, Wuhan and share division mode, and Shanghai Belling Corporation, Bao shan Iron and Steel Company and wan ke Company for detailed analysis of cases.Chapter V from the various angles of the stock option incentive system that may be encountered in our implementation of the validity of weak capital markets, managers of human capital market has not yet been formed, the existence of deficiencies in corporate governance structure and performance evaluation system does not sound barriers, such as a more in depth analysis, and proposed measures to remove these obstacles and recommendations.Chapter VI proposes some questions that should be further studied in the field of ESO.