Launching of the stock option plan, experts say, is a long overdue undertaking.

    "Introduction of the (stock option) plan should have been done long before as it has existed since the 1970s in public companies in the US and other countries," said Professor Liu. "Compared with other incentive schemes such as the annual bonus system, which increases companies' operating costs, the stock option plan is a better choice."

    Introducing a similar plan in domestically-listed SOEs is expected to happen within this year, Wang said.

    "SASAC is likely to introduce stock option plans in domestically-listed SOEs this year , probably in the latter half of this year," Wang said.

    The introduction of the management stock option plan, which has been in discussion for many years, is the latest move in the government's efforts to reform SOEs.

    Last month, SASAC relaxed a ban on management buyouts in large-scale SOEs, allowing executives in those companies to purchase limited shares of the company in which they work.

    The government's decision to introduce a stock option plan in overseas-listed SOEs is just the latest move to reform the SOEs and also a sign that SOE reform is accelerating.

    It comes at the heels of a relaxation last month of a nine-month-old ban on management buyouts (MBO) in large-scale SOEs.

    Following then widespread public concern that MBO were causing State asset losses, authorities issued a rule last April freezing the MBO in large-scale SOEs.

    State-owned Assets Supervision and Administration Commission (SASAC), the country's State company watchdog, relaxed the ban on January 22, allowing limited purchases of shares by SOE executives.

    In a bid to alleviate public worries that some SOE managers may make use of the new regulation to their own gain and thus result in losses of state assets, SASAC issued detailed guidelines on how those shares buyout activities could be carried out.

    The new rule, for example, requires that executives should provide certificates that can prove the validity of their capital sources for their share purchase.

(Source: China Daily)