Research on the Effect of Vesting Conditions on Incentive Stock Option Plan
|School||Dongbei University of Finance|
|Keywords||stock option plan the exercise conditions incentive effect|
Stock option system is the important mechanism of corporate governance that can alleviate effectively the problem of interests between managers and shareholder s by sharing profits and risks. With "the listed company to the stock ownership incentive management procedures" and "the state-owned holding listed companies (domestic) to the implementation of equity incentive try out method " and a series of related laws and regulations with the promulgation of the amendment, together with equity division reform completed, the number of stock option plan that the listed companies in China adopted is in the growth of the blowout type. However, compared with the international practice, the formulation and implementation of China incentive stock option plan still exist problems, especially that vesting conditions are too inflexible, performance evaluation index is single, standards of performance evaluation index is in low transparency. These all make the incentive effect of the incentive stock option system hard to play. Based on this, the paper choose the listed companies which released stock option draft plan between January 1,2007 and December 31,2010 as a sample, investigate the influence between vesting conditions and stock options plan.In normative analysis part, the research results in the incentive effect of executive stock option and the vesting conditions both at home and abroad are summarized, and find that the conclusions about incentive effect of stock option are not the same, and the factors that may influence of stock option plan excitation effect, especially the influence between stock options plan and vesting condition less attention.In statistical analysis part, this paper analysis the vesting conditions of the listed company’s stock option plan, based on an analysis found that the Company’s main line right conditions Of stock option plan of the listed company are inflexible, most of them copy files; Performance evaluation index of a single, mainly adopt accounting profit quota such as net profit growth and net assets returns,less adopt comprehensive evaluation index, it is difficult to reflect the company management goal, comprehensive reflect the development direction of the shareholders’ interests, and easily be controlled by managers; Performance evaluation criteria values determine relatively rough and the transparency is low.The empirical analysis part, the paper adopt the market reactions of a listed company published stock option plan draft that window period of the excess stock market yields to measure the excitation intensity of the listed company’s stock option plan. In addition, this article measures the vesting conditions from the financial index and financial indicators. The financial index selection whether to use executive performance evaluation index, financial indicators qualified from performance of assessment index quality, performance evaluation indexes and the nature of the performance evaluation index of the standard to measure. Through empirical analysis, this paper found that the exercise conditions and the incentive effect of stock option plan are significant positive correlation, the performance of the exercise conditions of assessment index quality and performance of assessment index are key factors of stock option plan; the nature of the performance evaluation index and executive performance assessment qualified index and stock option incentive plan is relevant, but not significant.In view of the above the empirical results, this paper suggests the listed company incentive stock option plan in the design of the exercise conditions should used comprehensive index of the incentive system, the index system by multi-level requirements constraint the act of executives; Performance evaluation index of vesting conditions should select certain benchmark value that can work out the targeted vesting conditions, strengthening the binding of company; And according to their own industry,the listed company should adopt non-financial indicators.