Chinese Listed Companies On Executive Stock Options

As a powerful instrument for production and capital amassing, company has experienced a rapid development since its emergence. With its rapid growth, collectivization, internationalization and the establishment of a full-fledged shareholding system, the organizational management of companies has changed accordingly and has adapted new governance structure which separate proprietary rights from management rights to suit the new environment of socialization of production. At the same time, how the owner of the corporate stimulates the manager who has the management rights to make decisions properly has been a focal point of concern.Decided by managers' nature of work, executive stock option (ESO) is a good method for stimulating managers in small or middle-scale public companies. The manager could gain a profile from the difference between the current price and the appointed price. Imported from western countries, ESO is at first not perfectly suiting the conditions of Chinese companies. So we must study its basic principle intensively and work out reasonable plan to make full use of ESO system.Whether adopt ESO system, company should consider it in a dynamic way. Though some western multinational have given up the ESO system, it is not the indication that the system have fatal flaw but the system needs an appropriate environment to work well.We can believe that Chinese companies adopt ESO system now is in an advantageous situation for most company in China are lack enough capital but have bright future.Because there were little example before for Chinese companies to consult and have no integrated law system to abide by, most companies made mistakes when they use ESO to stimulate their managers. In January 4th of 2006, China's Securities Regulatory Commission (CSRC) has issued a law to manage public companies' stock stimulation behavior, but there are still some flaws in the law. So, we can say that it needs the conjunctive effort by both government and companies to make ESO adopted by more companies and make ESO .an incitant factor for the development of both companies and China economy.