Equity Incentive System

With the development of modern enterprise system and knowledge economy, the human capital becomes the most valuable resource in enterprises, it attracts people's attention more and more. The incentive mechanism to the human capital becomes the key question of company's administration structure. The stock incentive as a kind of new-type encouragement way, have some advantages different from other traditional salary encouragement. It is paid closely attention by people more and more. But there are some questions in the practice of stock incentive in our country, the effect of encourage is not remarkable. So, this text regards stock incentive system as the focal point, through the analysis of the ESO and ESOP, attempt to put forward some suggestions to improving the validity of stock incentive.This text has four parts in all: The first part, corporate governance and stock incentive, introduced corporate governance and stock incentive system briefly, and the stock incentive system is significant to improving corporate governance. The second part, the comparison of ESO and ESOP, explain them in detail separately. The third part, the practice and problem of stock incentive in our country, expound the question in ESO and ESOP separately, and analyse the reason. The fourth part, the way to improving stock incentive system's validity, propose some suggestions to the effective implementation of ESO and ESOP separately.