State Enterprises, Equity Incentive

Since the Reform and Opening, Chinese government has taken a series measures for improving the Performance of the state-owned enterprises. These measures include expanding the operating rights, implementing the system of economic responsibilities, and putting the annual remuneration system into practice.However, the agency problems in the state-owned enterprises have not been resolved and the executive incentive and binding systems have not been established because of the many factors such as policy environment, economic environment, society civilization and the internal conditions of each enterprise. While the remuneration of the executive in the state-owned enterprises has composed of salaries and bonus for a long time. The long-term monetary compensation is almost zero. The executive remuneration is irrelevant with the operation performance.In accordance with remuneration problems of state-owned enterprises, the paper uses the experience of the executive incentive compensation in western countries for reference. The executive stock-ownership incentive system may take the forms of stock, deferred stock, stock options or stock benefit. The purpose of that is to make the revenue of the executive is relevant to the company's long-term performance.Carrying out incentive mechanism of stock-ownership of state-owned enterprises not only need the executive stock ownership incentive plan which suits the enterprise, but also need inter and outer environment of which fits the enterprise. The building of environment is the guarantee of carrying out the stock incentive plan. The paper approaches a subject to the environmental problems of the state-owned enterprises and poses some ways to solve the problems.At the last part, the paper analyses the project principles and points of executive stock-ownership incentive system in state-owned enterprises. It also discusses the issue about accounting for the stock-based compensation. At the same time the paper considers the factors which effect the choice of executive stoek-ownership incentive patterns.