Research On The Employee Stock Owner Mechanism Of Telecommunications Enterprises

Employee Stock Owner (referred to as ESO) is an important, long-term incentive mechanism, and widely used by international companies, which can tie to the interests of shareholders and managers effectively. It is a good solution to principal-agent problem, and it has played a role in attracting excellent staffs and retaining them. ESO is very mature in European and American market, but it is immature in the Chinese market. There are still many obstacles and many barriers that hinder its effective operatioa For example:there are still many problems in Chinese laws and regulations, manager market, internal governance, and so on China’s telecommunications enterprises also lacing the above problem in the long-term incentives are an import part of Chinese enterprises.The key issue is how to attract talent and how to ensure the long-term incentives operate effectively. This paper references the theory and practice of ESO mechanism at home and abroad, combining with the development of China’s telecommunications enterprises, and multi-angle studies the enterprises’ESO, such as design, operating environment, internal governance, to give my recommendations and strategies for the effective development of ESO. The first part of this paper is a review of theory and literature of incentive stock options; The second part describes the main elements and design process of ESO; The third part gives an optimal contract based on principal-agent relationship model to explore the main factors on the impact of equity incentive operating effectively; Part IV, according to the third part, studies China Mobile’s three kinds of ESO plan from the perspective of the company, managers and market,to find the reasons for effective operation, so that I can give some recommendations and strategies on ESO’effective operation; Part V, I present the summary and prospects.