Study Case On The Failure Of KN Implement Stock Option Incentive

Incentive Stock options (ISO) is a typical long run incentive system by means ofempowering the managers the option by the expire dates and both sharing the personal benefitsalong with the corporate development,more importantly, it drives the company s performance tobe improved to their desired objective. Therefore,this incentive system effectively decreases theagency risk, releases the principal and agent relationship, enabling and maintaining the companyto be long term and stably growing.Subsequent to KN s success in listing on NASDAQ, in order to maintain the, retain thehuman capital resources, commenced to implement stock options incentive plan after theresolution of general meeting of shareholder. However, the performance which leads tothe failure of the option plan. To begin with, this paper introduces the research results regardingstock options both domestically and internationally,outlines the fundamental theoreticalunderpinnings of stock option incentive. Afterwards, specific circumstances and option plans ofKN New Energy Automobile Co., Ltd.’s s were illustrated,also the reasons failing to exercise theoptions. KN s failure concerning this options has been analyzed through three respectsencompassing consistency of the Management interest,rationality of the vesting condition as wellas the Eventually, several concerned suggestions have been advised and proposed based on thefinancial indicators characterized of NK in this paper. Furthermore, it contributes to theexperience and the practice to support the stock option incentive plan to be implemented.Because of many reasons, KN didn t implement the plan of stock option, the case study ofKN s failure is able to provide experimental implication and underpinnings for listed companiesin China in terms of implementation of the stock options incentive plans. Accordingly, It leads toensure development to the right track and also make full use of the foreign advanced anddeveloped management and incentive systems to construct China s own development.