Stock Option Incentive System In Our Country Law Studies

The separation of ownership and management could bring the high efficiency to the enterprise and also is becoming a basic feature of modern enterprise, which is internally generated the conflict of interests between the owners and managers of the modern enterprise. That is principal-agent contradiction. Stock option is gradually become an effective method to solve the management problem of agency cost under modern company mode for the reasons of long-term incentive mechanism which is precisely to avoid the tradition short-acting character of system. It also joins the interests of manger and company development driven by management achievement together. It maximizes the incentive and enthusiasm creating wealth by company executives.It provides a platform for mangers who have chances to change into owner someday. After long-term practice of western countries, stock option have been recognized as good way for being able to incent mangers over a long period of time and to improve the competitiveness of companies. This article introduces the development of stock option, analyses the rationality and defect of current legal regulation of the stock option, and provides some legal suggestions about the Perfection of stock option system.In China, some domestic enterprise in Shenzhen, Shanghai, Wuhan and Beijing have start to trial of stock options. But there still has huge distance to implement it strictly that compared with some Western countries. We have to notice that some aspects such as the stock market environment imperfect laws and regulations company operation mechanism, concept of thinking have not been already completely established in current China. This is harmful for the development of stock option. By overviewed the outbreak of series of financial fraud case of US public companies in recent years. Let us come to realize that stock option incentive system is a double-edge sword. We should be rational treated in aspect of deep research. Reasonable improvement focused on the inherent defect through the process of implantation. That would be helpful for us to grasp the essence of stock option system.This paper mainly includes 3 parts:Part1 (charper1) introduced the general conception of stock options.positive and negative value of stock option system was evaluated by introducing the concept characteristic theoretical basis. Principal-agent theory and theory of human capital are fundamental to the stock option system. The key to solve the "internal control" issue is establishing improvement long-term incentives for the operators. On one hand the stock option system as an effective solution to the problem troubled owners about agency. On the other hand it is risky that there is possibility of institutional alienation. We must correctly understand the value of the system and its drawbacks.Part2 (charper2-3) analyzed that interpretation our stock option system in different period showed different character by introduced the trend and emergence in foreign countries, summarized and analyzed the development process and the characteristics and defects of the system in western developed counties, and reorganized the process of building the stocking option system. Then to analyze the China current existing legal provision and system for stock option combined with existing legal environment which is suitable for the effective operation of system.Part3 (charper4-8) suggested more weakness and reasonable regulations in many areas should be analyzed in comparative way based on the relevant advanced foreign legislative experience. And make it clear that there are many legal issues are existed in implementation of the operator China’s stock option system. Though the obstacles appeared in the implementation of stock option system with our country’s legislation and practice, recommendation has to been made external and internal. Our stock option system development has more sophisticated real-titration support so that a comprehensive stock option legal regulation system could be established. Which is further to promote the stock option system in China successfully implement.