Research On Stock Option Incentive Plan In Listed Companies:

Stock option incentive is an effective long-term incentives which can effectively alleviate agency problem between business owners and managers, and avoid managers taking short-term actions for personal interests as well, it is one of the hotspots discussed in recent years. Generally the stock option incentive plan in China is not applied so quickly as foreign listed companies, and its development is very slow, what is the deep-seated reasons or institutional context in this, whether the payroll control of state-owned listed companies as well as the complexity of principal-agent have effect on the application of stock option incentive plan, whether the application of stock option incentive plan is beneficial for our listed companies, how to play the role of stock option incentive plan in China’s listed companies, these are all important issues which need to be studied.This paper studied the actual situation of Luzhoulaojiao at first, then we use stock option incentive theory and do comprehensive and detailed analysis about the two stock option incentive plans of Luzhoulaojiao, and summarizes the problems and defects existing in the incentive plan to analyze the reasons of these problems and defects in order to put forward corresponding countermeasures. Finally, we try to draw useful suggestions and inspirations for the application of stock option incentive plan in China’s listed companies.This paper includes a total of six parts, each part of which reads as follows:The first part, the introduction. Introduce the research background and significance of this article, research case choice and the research framework, methodology and characteristics are described in detail as well. At present, China’s stock option incentive plan is still in the exploration and development period, and how companies should design the stock option incentive plan, how to determine incentive plan targets and how to regulate the behavior of company managers, these are the operating problems in reality, and discussions on these issues have significant meaning and value. The second part, the theoretical foundation and literature review. This part introduces the definition stock option incentive plan, followed elaborated related theories including agency theory, human capital theory and contract theory, and finally we use domestic and foreign literature to summarize and conclude the stock option incentive plan from the relationship of the stock option incentive and corporate performance, stock option incentive effectiveness, several impact factors of stock option incentive plan.The third part, institutional background and situation analysis. This part mainly sum up and review the institutional background and do a brief situation analysis from five aspects:source of stock option incentive, subject matter of stock option incentive, incentive target,validity of stock option incentive and proportion of stock option incentive.The fourth part, case study. Introduce the basic situation and the context of the implementation of stock option incentive plan of Luzhoulaojiao, and explain the content and reason of implementation of stock option incentive plans, and use comparative analysis to analyze two stock option incentive plans of Luzhoulaojiao and reveal differences in two stock option incentive plans, explain why the first stock option incentive plan ultimately failed to implement, by comparison, study the defects of second stock option incentive program, explained the reasons of these problems and defects.The fifth part, the problem improvement and enlightenment. This section mainly put forward some proposals of improvement of Luzhoulaojiao stock option incentive plan, and draw useful suggestions and inspirations for the application of stock option incentive plan in China’s listed companies.The sixth part, conclusion and outlook. Summarized the main points of this article, and elaborated on the limitations of this study, give a clear direction for the future study.By the case analysis of Luzhoulaojiao, the main conclusions are:At present, stock option incentive ideas and systems of China’s listed companies are not mature, in this case, the stock option incentive plan failed to play its role. The reasons are, first, because of the current external environment is not sophisticated, and there are still internal governance structure defects, these factors have hampered the development of China’s stock option incentive plans; Second, there are differences about industry and scale of the companies, so there are also differences about stock option incentive model, incentive systems, performance evaluation and incentive effects they choose. The listed companies in China should formulate appropriate stock option incentive plans according to their own needs. Finally, in our current business environment in which external market factors, relevant laws and regulations and internal governance structures are not perfect, listed companies in China need to work together with the central and local governments and the Commission and other departments to ensure successful implementation of stock option incentive plan.The main features of this paper are:this paper use stock option incentive plan of China’s listed companies as a starting point for the analysis of practical problems, by using financial indicators analysis and case study methods to give comparative analysis of two stock option incentive plans of Luzhoulaojiao, provide some inspiration and useful suggestions for the application of stock option incentive plan in China’s listed companies.This paper still exists many problems in terms of scope and depth of the analysis which need to explore in the future study, including:the case enterprise lacks of adequate representation, and the data is relatively small, it is difficult to avoid the influence of other factors on the results; the analysis of the optimization of internal and external environment is not enough. These issues can be further expand and research.