| Compensatory Stock Option is to grant employees the right to buy appointed sum of stock at stipulated price at engaged time after they have been vested .It is an enduring effect pattern of enduring employees ,which emerged in 1950' s in U.S.A.. and spread in large corporations of western countries after 1980' s. The obvious advantage of this system is to measure the employees' achievements by the fluctuation of the stock price. In fact , stock Option is a financial bond option , which has history of short duration. But the history of commodity option is too long ,which can be traced back to A. D. 1200.Modern option trade started when the forward transaction market of U.S.A. came into being. At that time transaction in Chicago trade place practiced a "privilege" trade in order to protect their forward transaction .Such "privilege" is commodity option ,which developed to money option , stock option etc. in modern times. In 1952, a pharmaceutical company named Pfizer paid his managers with stock option, for the board of directors of the company found that the managers had to take out large part of their salary to pay personal income tax under the system of large sum progressive tax. If the company use stock option to pay his managers, they may choose when and how cash their income withoutlarge sum tax. Thus stock option was drown into the system ofemolument. After 1970' s, large companies of U.S.A. and other western countries reformed the system in a large scale. Now it has changed to an enduring effect encouraging system to specific crowd, which is called "Compensatory Stock Option " (CSO).This system has three advantages .Firstly, CSO may reduce the cost of encouraging employees. If managers exercise their right, the capital of company will increase; if not , the cash volume of flowwill not reduce, either. Secondly, CSO may encourage employees effectively, for managers' income links to their achievements closely. Even though they leave the company some day , later they may obtain shareholders' bonus by exercise right. Thirdly, CSO is an enduring effect encouraging system. It may impel employees surmoun mentality of lack foresight. Only making great efforts for a long time can they gain profits ,or they can not exercise their right .At the end of the 1990' s, a large number of companies in China, including some enterprises that had not changed into real companies , recommended and followed examples of CSO. To people' s disappointment, they can' t attain the expected aim. The basic reason for the above problem is that the Modern Enterprise System has not been founded and many companies have defect at corporate governance. Additionally, many reasons , such as imperfect law system and information revealing, also affect the normal development of CSO. Now some orgnization is revising the Company Law under the lead of State Council. The system of option will be taken into the law. Thus CSO will be standarded by law.After long-term law practice ,we realize that when preparing to establish a new system, we should make a thorough research on its facture, history, basic condition and corresponding measures in advance. Then we should establish a distinct and sound law frame, and carry it out .Therefore, this article introduces CSO of U.S.A. and puts forward some advice based on the practical circumstances of China. In general, there are two parts in this article. In the first part, the author makes an detailed introduction on the CSO, including the basic theory and implication of CSO, the outside conditions , the two types and characters of CSO, and the Stock OptionPlan. Such elaboration makes readers learn about the CSO in'the main and take a bedding for the next part. The second part includes two levels. In the first level, the author summarized five models of CSO in China and their common characters. In the second level , the author puts forward some advice on five aspects. This article emphasizes that the corporate governance of China is so peculiar that we can' t indiscriminately imitate... |
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