The Study Concerning The Stock Option Incentive Mechanism In The Listed Companies In Chinese Power Grid

The incentive to the management level in the power grid has been an important issue obsessed with the financial circle in China. Currently the issues about the stock option have been fiercely debated but as a newly emerging thing we know only part of it. This paper introduces the basic theoretical knowledge and the practice in the western world, analyzes the problems of the application of stock option mechanism in the listed companies of national power grid and offers the prospective about the stock option design.The content is divided into four parts:Part one: mainly illustrates the research background, purpose, the significance and the practice value .Meanwhile it defines related concept and sorts out the research results .Furthermore it introduces the methodology and frame of the study adopted by this paper.Part two probes deeper to the problem which occurs in the incentive mechanism in the current practice given the all dimension analysis and pinpoints the reasons.Part three based on the various incentive theories stock option incentive and the relation among fairness incentive and efficiency. proposes the solution of structuring this mechanism, improving the management structure, lowering the proxy cost, upgrading the management efficiency ,enhancing companies cohesion and market competence and hence accomplishing the goal to enhance the efficiency of management.Part four studies the general structure and the detailed content of the incentive mechanism in the western world. It clarifies the negative consequence by the incentive mechanism and enlightens the listed companies in the national power grid.Stock option incentive is the one given by the owners of companies to the management and the core technicians, by giving them some economical rights, making them participate in the process of decision-making, profit-sharing, risk-taking, to serve the companies targeting at the long-run development. The modern corporate theories and the practices show that the normative ownership incentive could play a pretty positive role in improving corporate governance structure, reducing proxy cost, upgrading management efficiency, enhancing companies' cohesion and market competence, and lead to the win-win consequences with the managers.