Midea Group Equity Incentive Case Study

Due to the generation of principal-agent problems and the introduction of human capital theory,the company launched an equity incentive plan,which aims to conditionally give incentives to employees' partial equity,so that they have the initiative of the owner,share benefits with the company,and share risks.China's equity incentives have been gradually standardized since 2006,but at present,China's equity incentive theory research and practice still face many problems such as insufficient scientific design,motivation for self-interested executives,and ineffective implementation.Based on this,this paper takes the implementation of equity incentives as diverse and comprehensive,as the industry leader and has broad representativeness,and the implementation of equity incentives is more prominent in the case of the case study,focusing on its program design and implementation effects,and Suggest improvements to the problems that exist.After summarizing the basic theories related to equity incentives,this paper analyzes the three modes of the Midea Group's three models,including the incentive elements,incentive models and exercise conditions;and then the company's financial indicators and employee turnover.Indicators,agency efficiency changes,corporate value and other indicators test the implementation effect,analyze the shortcomings of the US group and its possible causes;finally put forward corresponding recommendations for the shortcomings.Through research,this paper finds that the equity incentives of Midea Group have indeedproduced incentive effects,solved the problem of principal-agents to a certain extent,reduced agency costs,improved agency efficiency,retained core employees,and enhanced corporate value.However,for the long-term development of the future,there are still some problems in the design and implementation of the equity incentive plan,including the core short-term incentives for the senior management,insufficient incentives for the middle and core employees,too simple performance evaluation indicators,and the degree of matching in the incentive model selection.Lower,equity incentives have hidden risks and risks of excessive incentives.This paper proposes targeted improvements,including moderately extending the incentive period for core executives,strengthening incentives for middle and high-level and key employees,improving the matching of incentive models,and developing systematic and long-term equity incentive plans to create Incentive value,improve the internal supervision and management of managers and improve the degree of marketization of the external environment.This paper has certain positive significance for the improvement of the equity incentive supervision system and the improvement of the effect of the listed company's equity incentive practice.