Research On Stock Option Incentive Of Core Executives In Sunward Intelligent Machinery Co., Ltd.

Stock option incentive is a widely adopted incentive by listed companies and large-size enterprises abroad. Good stock option incentive can to the largest extent arouse the enthusiasm and creativity of the staff, reducing the short-sighted behaviors of the business operators, creating a profit and risk sharing relationship between the business operators and the enterprise, so that they will pay more concern to the long-term development of the enterprise. In this sense, the stock option incentive serves as a way of both encouragement and management.Based on the theory of principal-agency, theory of human resources and the theory of owners'residual claim, this thesis analyzed the function of the stock option scheme. In this thesis China's policy background at the current stage, and the exploration and the situation were introduced with reference to the mature theory and practice of developed western countries; stock option incentive schemes generally adopted in China and western countries were summarized; and comparisons among and analysis of the three mostly used incentive schemes in China's listed companies since 2006—stock option, restricted stock, and stock appreciation rights—were made in terms of their respective advantages and disadvantages, scope of application, cash methods of stock option and income source. This thesis also discussed some basic methods and procedures for stock option incentive and an empirical research was conducted in the case of Sunward Intelligent Machinery Co., Ltd. This thesis summarized Sunward's fundamentals, the challenges and opportunities it faces, the incentive problems, and thus derived the necessity of implementing stock option incentive scheme. In terms of the purpose of adopting stock option incentive scheme, this thesis discussed the principles of the specific scheme, focusing on incentive means, the personnel to be given the incentive, sources of the stock and the capital, quotas of stock option, exercising price, expiry, option exercising time, qualifications for receiving stock option, and the conditions for exercising stock option. The characteristics and the feasibility were evaluated. Finally, the appraisal index for an individual's being granted stock option incentive were explored, a performance appraisal system and the guarantees for adopting stock option incentive scheme to ensure that the stock option incentive scheme can achieve the expected effects were formulated. Sunward Intelligent Machinery Co., Ltd. is a listed company specializing in construction machinery, a private high-tech enterprise with human resources and intellectual capital as its core resources. It has clearly defined property right, relatively advanced management mechanism, and great growth potential, which make Sunward eligible for stock option incentive.