The Organizational Structure Split Motivation Research Of The Northeast Expressway Company Ltd

After the economic reformation and the establishment of the socialist market economy structure, the objective of the reform of large and medium sized state-owned enterprises is located in enterprise system, represented by corporate system .The planned economy is rife in large and medium sized state-owned enterprises, without a clear line between the functions of the government and enterprises, and with much more administrative intervention, which has affected the normal production and operation of the domestic enterprises, which, therefore ,cann't adapt the demand of modern market economy. The state-holding publicly listed companies should act at the forefront of the reform。Prior to 1999, the issuing and listing of the stocks are mainly based on the administrative distribution. In the meanwhile, the imitated reform and bond listing has also been popular. But now, many companies face the corporate problems in centralized shareholding. Parts of the tie-in listed companies are confronted with being split.The Northeast Expressway Company Ltd run in the red, unrelated with the company's performance, then to the point of one-year suspension, finally to the point of being split. All of these are attributable to the problems in corporate governance, which is the main motive of splitting this company.(1)The underlying cause of the problems in corporate governance is the irrational ownership structure. After being listed, the tie-in listing led to an unable coordination, because of the trans-regional and cross-sectional interests. And also because the three shareholders,each representing their own interests,scramble for power and wealth. After being listed, all kinds of problems have persisted, such as competition for board seats, for the right to operate, occupying office space,driving business teams, grabbing the official seals, or even using the right to knife people and so on. Splitting helps to reduce the negative synergies between the businesses, helps the company management focus on operations , improve operational performance, and also helps investors explore more values. Being split is inevitable and is the most fundamental motive.(2)The electoral system of the board plays an important role to the entire board in the key. Playing the role of the board relies on the board members to develop and carry out. If the whole election is not fairy and open,or if the board is not on the behalf of the interests of all shareholders, the whole function of the board will be impossible to play its real effect.(3)The board of supervisors is inadequate supervision or even non-existent, which is ubiquitous in the state-owned enterprises. In such expressway companies, just like the Northeast Expressway Company Ltd, the supervisors and the controlling shareholders are from the same unit. 18 expressway listed companies, including the Northeast Expressway Company Ltd, were disclosed in the annual report that the supervisors from the controlling shareholders'units account for 78%, and the senior executives in the listed companies are also mostly appointed in the manner of an administrative order or specify by the controlling shareholders ( usually state-owned shares),so they are inextricably linked. While those workers supervisors, and board directors or senior executives constitute the superior-subordinate relationship,their concentrate monitoring efforts are still open to question. Just under such a background, the board of supervisors is unavoidable to become a "vase".(4)At present, state-owned public companies,the stock-keeping ratio of board directors is low, which would not achieve their proper incentives. This shows that the incentive system in the board of the state-owned public companies is very incomplete. Therefore, while designing the incentive board system, the company should make the short-term incentive system on the basis of the method of remuneration(wages and bonuses), at the same time, the company should also make long-term incentive system on the basis of market values. And the company should set up and complete the supervision system to all the board directors and senior officers.This article also points that splitting the Northeast Expressway Company Ltd gives some enlightenment to the market mechanism, enterprises, investors and intermediary institutions.