Equity Incentive Applicability Of Research

Whereas Stock Incentive System had successful experience in western countries, many people expect it could solve the problems of State-Owned Enterprises in the reform process in China as well.In fact, Stock Incentive System can not ravel out problems in Property Right System of State-Owned Enterprises. Moreover, the performance of Stock Incentive System is limited by the existing immature environment of China.What are the intrinsic factors of expensive cost in senior management level that has the highest income in ST Company? Is it just because of lacking motivation? Based on latest academic theories of the economist, this thesis analyses the statistics from annual report of listed company in Stock market in a simulated Stock Incentive System and I hope it could provide a clearer idea to the enterprise when they want choose Stock Incentive System as strategic tool.The innovative parts of this thesis are Chapter One, theoretical analysis and chapter three, conditions to conduct Stock Incentive System and analysis.The theoretical analysis emphasizes on illustrating and deep-analyzing the theories such as: Supported theories of Share Incentive Theory; Entrepreneur Theory; Human Resource Capital Theory; X Effect Theory. By conclusion, the Chinese enterprise does not possess the fundamental conditions to conduct Stock Incentive System implied in those theories in aspects of social structure, labor market, achievement standard etc. Due to the big gap in the development of Chinese enterprises, it is no the right time to conduct Stock Incentive System in all the enterprises in China. The feasible plan is make experiment in the qualified enterprises which meets most of the theoretical conditions to conduct Stock Incentive System.In the argument and analysis part, it analyzes the evolution process of MBO (management buy-out) and then the current status of decision-making mechanism, control mechanism, restriction mechanism of listed company in Chinese stock market. Via the foregoing information, I found out that there are many serious problems and vices existing in management mechanism of listed companies in China. The integrated management mechanism and restriction mechanism from outside are theprerequisites and necessary conditions to conduct Stock Incentive System. The thesis also concludes the seven incentive modes in Stock Incentive System and analyzes the advantages and disadvantages in aspect of economic effect.According to the analysis above, eventually, the thesis establishes an incentive mode from four parts: management structure, recruitment mechanism, performance assessment and achievement mechanism and also analyzes legal obstacles of Stock Incentive System.