Research On The Application Of Stock Option Pricing Model Based Performance In Managers' Incentive

Incentive is the core of management.Managers' incentive can abate the divergences the interests of owner and manager effectively and improve the management level of the enterprises.The incentive of executive stock option can promote the enterprise's development better and faster.Chinese enterprises are facing a severe competitive environment at home and abroad in the situation which China's economy and market develop fast.Implementing the incentive of managers stock option in the enterprise that can keep it develop healthy and sustained.Because of the difference between culture and system,the executive stock option policy of abroad can not play its due role.Therefore,we must improve the existing stock option pricing model and adapt it to situation of Chinese so as to make Chinese enterprises develop healthy.In this paper,firstly,we construct a performance stock option model to replace the stock price to enhance performance relevance of stock option pricing in China's securities market.Secondly,Constructing the relative EVA performance evaluation model which combine with the stock option pricing model above to appraise the relative performance and absolute performance to enhance the equity of manager performance.Then limiting the fluctuation range of the performance stock price and formulate the corresponding compensation mechanism to reduce the systematic wind of the option pricing model and human manipulation risk to enhance the accuracy of option pricing model option pricing.By the end we apply the improved option pricing model to the example and prove the effectiveness.Based on the ideas above,this paper is divided into the following four parts.First,we summary the incentive theory and its development,and then gathering the summary of the research results of managers' incentive at home and abroad which get a conclusion that it is necessary to inspire the Chinese managers in modern times;Secondly,we analysis the Black-Scholes stock option pricing model and then point out its defects and shortcomings through the literature review with the combining with the status quo of China actual society,And then we select the index to construct the relative EVA performance evaluation model aimed at the shortcomings above.After that we apply the two models into the stock option pricing model of Black-Scholes to get the improved model.Then we analyze the influence of the parameters in the improved model.Finally,we apply it into the actual case.through the actual case we can see its advantage and better incentive effect by contrast with the traditional Black-Scholes stock option model.