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Founder Net Capital Gains Rate Option Incentive Models

Posted on:2005-01-10Degree:MasterType:Thesis
Country:ChinaCandidate:Y B ChuFull Text:PDF
GTID:2206360122497417Subject:Business Administration
Abstract/Summary:PDF Full Text Request
In the recent years, the shareholders interests have been strongly emphasized, as a result, the companies have been paying more attention to the execute incentive measure .The Execute Stock Options(ESO) have shown its special roles in many aspects such as reduce the agent cost, focus on the shareholder's interest and correct the executive short-sight. Since it's emergence in the west country in 70's, it has became more and more popular. But the application of the traditional stock option has shown many problems under the circumstance of our country, such as the sources of the stocks for ESO, the realization of the profits, the less effect of the stock market, the manoeuvre of the stock market operation and so on. The same problems also have been shown in the west country.Some measures have been taken in the design of the ESO in the foreign company, and some scholars in our country are also studying some models adapting to the actual circumstance. Reference to many researches in this field, this paper use the index of Return On Equity(ROE) directly in measuring the performance of the manager instead of the price of the stock. Simulating the mechanism of stock option, this paper has established a ROE stimulate option model by using the Black-Scholes Option Pricing Models.This paper collects the ROE data of the Fangzheng Science and Technology CO.,LTD. from 1991 to Sep.30,2003 and design a stock option model. The date of authorization is OCT. 1,2003 and the validity term is 3 years. By using the Black-Scholes Option Pricing Models, this paper calculates the value per ROE option unit. The enterprise can work out the number of option base on the budget of every manager's bonus.The significance of this model is as following:Reduce the effect of the stock price unreasonable fluctuation and the manoeuvre of the stock operation; Avoid the obstacle of the stock resources for the ESO and give some reference to the un-public companies; Integrate the profit of the manager with the goal of the company through the restriction for the target ROE in the execute price; Avoid the subjectivity by using single financial index, making the result more scientific and reasonable.
Keywords/Search Tags:Execute Stock Option(ESO), Option pricing, Return On Equity(ROE), Black-Scholes Option Pricing Models
PDF Full Text Request
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