Operators Of The Stock Option Incentive Mechanism

The managers play important roles in modern enterprise management, whose policy decisions and action are directly related to enterprise's existence and development. Executive incentive is an important problem in the process of enterprise reform and development. Presently, executive incentive mechanism in China is not yet perfect. In the process of enterprise reforming in our country, with modern enterprise system increasingly perfect, separation happened in enterprise ownership and control. The managers have grasped the enterprise controlling power gradually, but haven't own the right for asking for enterprise surplus. Managers' monetary rewards were relatively insufficient, but they can seek the domination income and the improper personal benefits by the domination which they grasped. The executive incentive seemed insufficient. In fact, warping happened in the executive incentive mechanism and managers' short-term behavior inclination happened obviously. This is the background and starting point of this study.Stock option is one kind of long incentive way, which starts from medium term ? in 20 centuries and becomes popular in big company of Western countries in eighties. This new incentive mechanism combines managers' reward well with company long-term benefit, by giving the right of asking for enterprise surplus to managers, changes executive incentive and restrain from outside to self-control, and encourages managers giving high light to company's long-term development. The outstanding advantage of stock option lies in bounding owner's benefit with managers' benefit, connecting executive incentive with the enterprise long-term development targets and resolving the executive incentive problem on basis of enterprise long-term development. Stock option is one kind of effective incentive mechanism, which is beneficial to stimulating managers to work hard to improve enterprise achievement and decreasing agency costs; beneficial to attracting, protecting and making good use of Talented person; beneficial to combining executive incentive with enterprise long-term development organically; ultimately beneficial to improving enterprise competitiveness and economic achievement of the enterprise.This paper studies the executive stock option incentive mechanism and its application in modern enterprise in our country on the basis of manpower capital value theory, Principal-Agent theory and controlling power theory. This study makes point to building-up and improving executive long-term incentive mechanism, making good use of human capital and improving economic achievement not only in theory but also in practice. With the improvement of the legislation, the increasing maturity of our capital market, the constant perfection of the corporate governance and our more understanding of the ESO system, the ESO plan will bring more and more benefits to our corporate reform and the long-term incentive to the managers.The organization of the paper as follows:Chapter One, analyzes managers' short-term behavior inclination, discuss its reason from the angle of controlling incentive, and points out the necessity of operating executive stock option.Chapter Two, analyzes the definition, inherent logic and characteristics of stock option, points out its effect, and studies its theory basis and application condition of using stock option.Chapter Three, compares the practice of executive stock option application in China and in America; puts forward a stock option incentive scheme; studies the stock option incentive mechanism application in our country combined with a case.Chapter Four, sums up the paper, and brings forward a few problems and suggestions to perfecting and applying executive stock option incentive mechanism in modem enterprise of our country.