Research On Stock Option Incentive’s Design Of Listed Company

As an effective tool to solve the principal-agent problem, stock option incentiveis the long-term incentive way to stabilize the leadership team and key technical staffs.However, there’s still disputes in industry about stock option’s effectiveness in publiccompanies of China. At the same time, the phenomenon that executives quit after thestock option incentive puts into effect in Chinese listed companies attracts the socialwide attentions. In2years after Vanke launched the option incentive plan in October2010, there have been4executive vice-presidents and3vice-presidents quit one afteranother, which were4/8and3/7of the number of the position in2010, which is called“the unusual shake of human affairs earth” during Vanke’s30years development.Vanke’s CEO Yuliang said,“It turned out that stock option incentive is not almighty, itneed to be adjusted.”This paper used the case study method to find the answer why managers leaveafter the incentive. By vertically analyzing the differences of Vanke’s2010and2006-2008incentive plans, following the trails of left senior managements,horizontally analyzing the constitution of the managements’ payment and comparingVanke’s plan with other companies’ plans, analyzing from different perspectives likemacro-economy, intermediate-industry, enterprise and managements personnally, thispaper find the deficiencies of the vesting conditions, exercise price, incentive ratio ofthe plan and make recommendations to the element designing, point out that the planstill need to be adjusted to improve it’s effectiveness. These suggestions could also beused in other companies.