Research On Stock Option Program Study For Listed Companies In China

Equity-based incentive is a long-term mechanism where stocks are objects,and directors,supervisors,advanced managers,and backbone employees in a corporation are given some stocks of the corporation and some economic rights,so that they will participate in the decision-making,share the profits,and take a risk at the same time,in this way they will try their best to contribute to the development of the corporation.Equity-based incentive was first proposed in the United States in the 1950s,and has attracted increasing attentions.Related laws and other measures have become more perfect and normative for now.In contrast,the equality-based incentive scheme was favored just since the 1990s,and it is backward both in theory and practice compared with that in U.S.The"Management measures" was published in 2005 before the equity incentive entering the actual operational phase,and provides specific policy guides and operation standards for the development of the equity-based incentive of listed companies in China.For now,this incentive measure has been adopted by quatities of listed companies.In the equity-based incentive,the design of the incentive scheme is essential and has a great influence on the development of a company.This thesis therefore concentrates on the design of incentive schemes,and analyzes the problems and valuable experiences of the incentive schemes of the listed companies in China using the technique of case study,so as to provide a reference for the other companies.In this paper,an overview and the theory of stock operations are first introduced as a theoretical basis for analysis of the case below.Then through an analysis of the incentive effects and the program terms of two stock options before and after the Zhangzidao incentive programs,I summed up the problems and experiences of this case,and explained why these problems and defects occurs,and subsequently proposed some corresponding measures and recommendations.Specially,this paper includes the following six chapters.Chapter I is an introduction for this paper,first the research background and significance is introduced,followed by graphically illustrates the ideas and framework of the thesis.Then the normative case studies combining research methods are described.Finally,on the contributions of this paper and the deficiencies are discussed.Chapter ? reviews related literatures,including domestic and international research both in theories and experiences.In theoretical studies,researchers generally believed that the equity incentive system can reduce agency costs,business owners and operators combined into an interest community,and improveoperational efficiency.While,in terms of empirical research,researchers mainly learn the relationship between the managerial ownership and the achievements of the company.Chapter III gives an overview of the stock options and its theoretical basis.First,the concept and the advantages and disadvantages of stock options are introduced.Then,the theoretical basis of the stock options is described,including the principal-agent theory,human capital,property rights theory,and transaction cost theory.Chapter IV describes the development status of the stock option system in China.It mainly consists of the following three aspects.First,the market environment for the implementation of incentive stock options in China is expounded.It is notable that Chinese scholars agree that China's capital market is still ineffective and that the stock price is a not true reflection of a company's achievements.Second,the relevant laws and regulations are introduced.Finally,equity incentive practices in China are introduced from both the selection and industry distribution of equity incentives.The case analysis of stock options programs of the Zhangzidao Company Limited are given in Chapter V.In this chapter,the contents of the two programs are introduced in detail firstly,and were analyzed afterwards based on the incentive effect and the program terms.Finally we safely draw the conclusion that incentive program in the first phase is better than that in the second-period one.Chapter VI concludes this paper and proposes some reasonable recommendations.Through the case analysis of the two equity incentive programs of the Zhangzidao Company Limited,I epurate the valuable experiences of stock option programs in our country.In addition,some of the problems and deficiencies in the Zhangzidao stock option programs and the reasons leading to them are analyzed.In the end of the article,I propose some measures and recommendations for improvement.The main contributions of this thesis are as follows:based on this classic incentive case,I analyze widespread problems in the design of equity-based incentive schemes and the abstract the valuable experiences worth learning and an analysis on the reasons why these problems occur let us safely draw the conclusions that there are various defects in the vesting conditions,ways of using power,and incentive amount in China's stock option programs;the reasons behind China's equity incentive regulations are not perfect,the market environments are not yet mature,and the corporate governance structures are not perfect;therefore,it is necessary to develop relative laws and other supporting facilities,and the incentive program design needs to be further supplemented and developed meanwhile.However,this paper still has a downside,i.e.that one case cannot reflect all the defects and experiences existing in the incentive plan programs in China.So the study is not yet complete,it still need some improvements and supplements.