Research On The Implementation Of Executive Stock Option Several Legal Issues Of Listed Companies

Executive stocks option (hereinafter referred to as ESO) is a contact that gives the seniormanagement the right, but not the obligation, to buy a share of stock at a Pre-specified exercisePrice for a Pre-specified term. Although China has started the normative practice of ESO since2006, the conditions which do help ESO to play validity are not adequate, the theory field andthe practitioners lack of comprehensive and deep understanding on the ESO and the mechanismof ESO. Using the advanced legislations of other countries for reference and in the light of ourspecified conditions, the author starts with basic theories of stock option involves several legalissues of listed companies, and put forward to some advises to the legislative authority. in orderto better play to its long-term incentive effect, promote the company’s benign operation andsocial and economic progress.Whole thesis includes three Parts, namely Preface, main text, and conclusion. The mainbody is further divided into four subsections as fo11ows:The first part investigates the legal issues during the period of awarding stock option Thereare three problems being involved from the point of the author.That is the applying scope andtargets, the awarding and managing subject, the quantity and opportunity of awarding. the authorthinks that the first question is how to deal with the core of corporate governance and corporateperformance of the relationship, The second should be main concern of the object of incentiveand restraint mechanisms assessment, The third should be based on the objective lawcomprehensive consideration of the award amount and award process flexibility, realize theincentive object and big shareholders interest coordination.The second part discusses the stock sources in stock option plan. In foreign countries,there are usually three channels to get stock for exercising but in our country there exist legalobstacles. In addition, the author holds that the ways we get stock in our practice have quite afew drawbacks. on the basis of the United States and other developed countries for reference onthe issue of experience, the author suggests that virtual stock, stock appreciation rights should besolve the problem of lack of stock source for stock option. The third part is devoted to the study of the legal issues in the period of exercising rights.This part contains five problems, including the price of exercising rights, the exercising rightsperiod of time and validity, the opportunity for exercising rights and stock sold, in the way ofexercising rights and the alteration and loss of the right, The author thinks that the taxpreferential and support, no matter to option holders or stock options on the implementation ofenterprise is urgently required. So necessary law revising is suggested for the enterprises to carryout stock options to create a good environment tax law.The fourth part is about to stock options award process and information disclosure. Stockoptions granted in the procedure, the author argues that by shareholders to balance their owninterests and the management, equity incentive plan to review the shareholders’ meeting; In theinformation disclosure, the author argues that we should not only need to strengthen thatinformation disclosure of the authenticity in the content of the control, but also rely on a set ofperfect accounting and auditing standards to ensure the validity of the information disclosure andsufficiency.