Legal Regulation Of State-controlled Listed Company Equity Incentive

January 1, 2006 the China Securities Regulatory Commission enacted the "Stock incentive management approach". Close March of 2008, there have been 80 listed companies whose board of directors have announced the stock incentive plan, including 15 state-controlled listed companies. Stock incentive is a major institutional innovation. After more than two years of practice, these state-owned listed companies' performance had been remarkably improved, but how to make good use of stock incentive system is far from being stopped. This paper is from the perspective of legal practice, focusing on the emerging legal issues of stock incentive in practice, and putting forward reasonable proposals to improve it.This paper is divided into three parts.The first part discusses the legal issues in establishment an incentive plan. First, the author introduces the existing system and cases analysis of the incentive plan from the way of incentive tool choice, incentive targets, incentive rate, stock prices, and then the author points out that the part of the incentive plans still have some problems: the scope of incentive plan is too small, and some plans violate the fair market price principle.The second part discusses the legal issues in the implementation of the stock incentive plan. The problems in implementation of cases are the main line in the following analysis, including the implementation of procedures, the disclosure of information, stock price manipulation, incentive costs and the accounting process, etc. Some of the problems lie in unregulated operation in some listed companies; the others lie in deficiencies in the current system, such as the quality of disclosure of information, and accounting rules.The third part, also the conclusion part, aims at the problems involve in the first and second part, and gives three suggestions to improve the entire stock incentive regulations. First of all, we should improve the system of outside directors and the remuneration committee to perfect the governance mechanism in state-controlled listed companies. Second, we should improve the current system of information disclosure rules related to stock incentive. Finally, in response to problems in the practices, we should pay attention to adjustment of high costs of incentive plan, and improve the accounting rules and aggravate the intensity of punishment.