Chinese Enterprise Managers Of Stock Compensation Incentives

With the furthering of enterprise reform and the establishing of modern enterprise system, more and more people have realized that the executive is the key person in a company. But the fact is that there are big problems in executives' incentive and constraining mechanism. On one hand, the executives are not adequately encouraged to pay more attention to the development of the companies, which is mainly because the executives can't get what they should get when they make the companies better, which is the problem of incentive. The reason lies in many factors, such as the shortcoming of present enterprise system in many companies. On the other hand, many executives have got much bigger fortune than what they should get. It's the problem of constraining. Of course, many reasons explained this phenomenon: the unperfected law system, the executives' wrong attitude to the law, the lack of effective harnessing structure in many of the companies and the problem of incentive in the procedure of reforming from command economy system to market economy system. So, as we can see, the lack of effective incentive and constraining mechanism has resulted in serious lose of state-owned assets. It also hampers the healthily growing of the whole enterprise group.In the west developed countries, the income from the stock based compensation (mainly Executive Stock Options, ESOs ) has taken a large proportion in the annual income of the executives. In spite of the great slowdown in the stock market at the end of 90's, many specialists in west still believe that ESOs would be the main style of long-term incentive. So it is necessary for the companies in our country to introduce ESOs system. However, we have to be careful in how to carry out it and at the same time, we have to research in which degree ESOs can solve our problems. No need to say, this is exactly what I will analysis in this thesis.Thinking of the complexity of the question of incentive itself and also, the complexity of carrying out ESOs in our country, I used special way to study this question. Firstly, with the information of one survey I took part in in 2001 and the data of other surveys conducted recently, I described the present condition of executives' stimulating and constraining in different kind of companies. From this, I explained why we should introduce a new form of incentive. Secondly, I analyzed the problems we had faced or we might face in the process of introducing ESOs. In the end, I gave my suggestions in introducing ESOs and emphasizedthat we should introduce ESOs step by step.