The Research On Executive Equity Incentive Of China Listed Companies

As social economy develops and enterprise scale increasingly expands, the ownership and management right of enterprise are gradually separated, and thus, corporate system, a main organizational form of modern enterprises, emerges. As core managerial force of companies, corporate executives hold management right, playing a key role in company’s healthy development in the fierce market competition. However, the interest of corporate executives is always inconsistent with that of corporate owners, and meanwhile, the unbalanced interests and conflicts between them will lead to phenomena that damage corporate interests, such as, the rise of operator’s agency cost, more duty consumptions and ethical risks. Therefore, it is imperative for all companies to reduce the principal-agent cost of corporate owners for the sake of maximally coordinating and unifying the behaviors of corporate executives and owners on the one hand, and on the other hand for the sake of retaining the core managerial force.Thus, it turns out to be very urgent to set up an effective mechanism that can encourage and monitor the behaviors of executives. And now, as an incentive mechanism that can effectively lower the agent cost and retain talents, equity-based incentive becomes popular among listed companies in China. After the China primarily stipulated laws and regulations related to equity-based incentive in2006, a golden age when equity-based incentive was popularized by listed companies in China was appearing. Thus, it is necessary to study the issue about executive equity-based incentive of listed companies through combining cases, so as to provide strategies for the improvement of equity-based incentive system in China.Through sorting out the theoretical results of equity-based incentive, analyzing domestic and overseas equity-based incentive systems, and comparing the two equity-based incentive plans in2006and2011carried out by Shenzhen Vanke Co., Ltd (hereinafter referred to as Vanke), this paper hopes to find out its referential successes and shortcomings, as well as provide some ideas and methods for the improvement of equity-based incentive mechanism of listed companies. This paper comprises7Parts. Part I is introduction, which describes the study background, significance, and methods, as well as the frame diagram of this paper. Part II is literature review, which theoretically and empirically sorts out the domestic and overseas research achievements related to equity-based incentive in detail; in spite that the scholars have not come to a conclusion about empirical research results, most research results prove that the equity-based incentive creates a positive effect. Part Ⅲ expounds the theoretical basis of executive equity-based incentive of listed companies, mainly including principal-agent theory, incentive theory, property right theory, and human capital theory, and besides, it introduces their emergence and development as well as their relationship with equity-based incentive. Party Ⅳ makes a comparative study on executive equity-based incentive systems of domestic and overseas listed companies. Meanwhile, it discusses the implementation status of equity-based incentive in China and gets inspirations accordingly through comparatively analyzing equity-based incentive systems in western countries such as the United States, UK, and Japan. Party Ⅴ is a case study on executives equity-based incentive of listed companies in China-Vanke-based analysis. This part introduces Vanke profile and corporate governance structure, as well as dissects the causes why Vanke implemented equity-based incentive plans in2006and2011, the main contents of equity-based incentive plans, and the so-far implementation results. Part Ⅵ comes up with strategies and suggestions for improving the executive equity-based incentive mechanisms of listed companies in China. It offers corresponding strategies and suggestions from the aspects of external environment and internal governance of implementing equity-based incentive. Part Ⅶ draws a conclusion, summarizing the analyses and studies in previous6Parts.