Case Study Of Equity Incentives In State-owned Enterprises

With the development of economy,the management rights and ownership of enterprises are separated.The owner of an enterprise alone is not enough to deal with the increasingly complex management problems with its own talents and energy.Therefore,the relationship between the principal and the agent arises.The principal commissioned the company's daily business operations to the agent,but this time because of the different amount of information about the company and their respective goals,the issue of entrusted agency emerged.The owner of the company to promote the agent to stand in the same front with himself and to think in their own perspectives to make decisions,starts using equity incentives,equity incentives is a way for employees to long-term incentive,in order to encourage and retain core talents,a long-term incentive mechanism has been introduced.After extensive use,people have found that equity incentives are conducive to closely link employee interests and company interests to form a benefit community to increase employees' enthusiasm and creativity,so as to achieve the long-term goals of the company,and effectively solve the agency problem in the company,so it is also used in the promotion of state-owned enterprises.This article attempts to study the equity incentive of Guangming Dairy in order to find out some problems that may appear in the actual application of this system,it can provide a reference for other companies,avoid similar deficiencies,and improve the effectiveness of the mechanism in the use of state-owned enterprises.This article selects Guangming Dairy as a research case and mainly considers two factors.Firstly,Guangming Dairy is the first single incentive for Shanghai to implement equity incentives for state-owned enterprises.Second,Guangming Dairy is one of the few state-owned enterprises that have completed the implementation of two-stage equity incentive plan after the share structure reform with rich content.This article describes the development of the relevant policies for equity incentives of state-owned enterprises in the background of the research.The references describe the relationship between equity incentives and corporate performance and related literature that affects the effectiveness of equity incentives.Then it reviews the principal-agent theory,human capital theory,and the demand hierarchy theory.After the theoretical basis,it is mainly the introduction of the company,the introduction of the industry,thebackground introduction of the implementation of equity incentives in Guangming Dairy and the introduction of the two-stage equity incentive plan of Guangming Dairy.The next part is the case analysis section of this article.It mainly includes the presentation of the financial results of the two phases of implementation from the perspective of corporate performance,including four perspectives of profitability,growth ability,operational ability and debt repayment ability,and the rationality and insufficiency of the scheme.Followed by the shortcomings of Guangming Dairy's equity incentives,some suggestions have been given.For example,focusing on reasonable pricing based on stakeholders,establishing a sound performance evaluation system,selecting the right timing for incentives,and improving policies to improve state-owned enterprises' incentives.The last part is the research conclusion and outlook.This article mainly adopts case analysis method and literature research method.Guangming Dairy,as the research subject of this paper,discusses the company's basic situation,the introduction and analysis of the company's equity incentive plan,and the order in which it proposes,and consults a large number of related literature,based on the analysis of the literature,through the entire implementation process.Based on the analysis,the following conclusions have been drawn: First,the low price granted by the first phase of the plan undermines the interests of small and medium shareholders;Second,the first phase of performance indicators is single and higher,aggravating profit manipulation;Third,the second phase of program incentive timing improper,unable to successfully unlock on schedule;Fourth,the lack of incentives in two phases failed to reduce the risk of high pipeline morality.