Analysis Of The Effectiveness Of Our Management Equity Incentive

Dominated by knowledge economy in twentieth century, the key competitive capabilities of the companies are embodied in their own human capitals and the development of the potential value of the key human capitals, which are represented by management. The incentive stock option of the management is the important part of the incentive system of the whole company. It helps to solve the delegation issues between stakeholders and the management, to keep the balance and union of benefits of both proprietors and management, to cultivate the management with the consciousness of master, by which they could devote themselves to their management. As an effective long-term incentive system, the incentive stock option of management is widely applied in developed countries.The Case of Enron Corporation attracted much attention to incentive stock option. This thesis brings it as an entry point, introducing the development process, basic principle, effect and common pattern of incentive stock option. It describes its development features in our country, with analysis of its necessity and positive effect. By means of using the experience and lessons of incentive stock option developed in USA for reference, it discusses its major effective elements in our country, providing with assumptions of some insufficient elements in our own practice. With the combination of theory and empirical research, supplemented by the data statistics, it brings about a creative point that the incentive stock option of management, as the economy booster, could facilitate the management. It aims at dissolving the doubt of incentive stock option of management, helping to apply it with practical effectiveness, and stimulating people to rebuild their confidence in it.It has been not long since incentive stock option of management came on, very few listed companies implemented it, therefore, its effectiveness is lack of universality and representativeness. At the same time, many companies did not fulfill their target designed in their incentive system because of undue incentive period, so the effectiveness of the whole incentive scheme is still unsure. The special issues carried over in our economic system, management system and political system, makes the association between the performance of the listed companies and the efforts of management become complicated and confusing, the controversial of the effectiveness of incentive is still very prominent. It is hard to distinguish the importance between the performance and the effectiveness of implementing incentive stock option. It is at the beginning of implementing incentive stock option, most companies implemented it due to the inertia of their rapid development of the past performance, however, they could not identify incentive stock option bring higher performance or enhance their potentiality. Good performance and high share price derive from combined efforts of many elements. It is hard to plot out the independent effectiveness of incentive stock option. The objective elements mentioned above dominate my further discuss in my thesis, deficiency will be expected developed in my future study.