Chinese State-owned Enterprises To Implement The Stock Option System Operators

Since the reform and opening policy was performed in the past more than 20 years, the state-owned enterprises (SOEs) have made remarkable progress. However, the unreasonable inspiration mechanism still exists in the enterprises, which has prevented their development for a long time. Therefore, we will study and explore the status on Executive Stock Options (ESOs) in China in this paper. ESO refers that the option right of an enterprise executive buys a company' s stock at a given price within a certain period of time in the future.The theory of entrustment and agent thinks that it is necessary to standardize the manager' s behaviors by certain inspiration and restraining mechanism in order to reduce agent cost and moral risk to a great extent. In the theory on property right of manpower capital, it is believed that an enterprise consists of the manpower capital and the material capital, while the manpower capital can increase the value. With the market competitions becoming more and more furious, those executives, as the special and rare owner of manpower capital, have a continuous increase of their actual power in the talks on the sharing of surplus demand right of enterprises.ESOs has been introduced widly by the big corporations of western countries from 1980s. It can inspirit, executives for a long period of time and settle the benefit conflict between proprietors and executives.The market economy of China is immature, so there are some problems in the practise of ESOs. But economic environment, such as market and law, is getting better and better, as the result ESOs must become the most important part of salary combination, and make for the development of corporations in the future.This paper emphasises the combination of theories and practices. Based on the study of theories and practices of ESOs of western enterprises and our SOEs, the paths to perfect ESOs are put forward.