Research On The Reasons And Countermeasures Of The Management's Interest Encroachment Under The Background Of Equity Incentive

As an incentive means to motivate employees,equity incentive is often used in modern enterprises.The ultimate goal is to encourage employees to participate actively as shareholders in the company's decision-making,and to share the profits while also taking corresponding risks.However,due to the imperfect internal governance structure of listed companies,immature external market environment and unreasonable design scheme of equity incentive,in some companies,equity incentives have turned out to be a tool of management for personal gain.Prior to this,the research on equity incentive mainly focused on the consequences of the incentive and the design of the scheme,for the management of the use of equity incentive to the company's interests of the hidden invasion of research analysis less.After a thorough study and analysis of the cases of Equity Incentive implemented by listed enterprises in China in recent years,we find that there are a large number of cases called equity incentive but actually the management of the interests of embezzlement,such equity incentives not only restrict the sustainable development of enterprises,but also damage the rights and interests of shareholders.Therefore,this paper will take the research on the reasons and countermeasures of the management's interest encroachment under the background of Equity Incentive as the research topic of this paper,this paper studies how the management of the enterprise uses the stock right incentive to encroach on the interests of the enterprise covertly,and puts forward corresponding restrictive countermeasures,and puts forward corresponding suggestions according to the basic national conditions of China,so as to protect the interests of the shareholders,to promote the steady and rapid development of enterprises.This paper takes Wanfang of Jiaozuo as the research object.Wanfang of Jiaozuo has been a typical state-owned holding company from its listing to the month before the implementation of the Equity Incentive plan,its insider control is serious,the Management has absolute authority.This paper first expounds the company background of Wanfang in Jiaozuo,the implementation motivation of the Equity Incentive Scheme and the implementation background of Equity Incentive Scheme.Then,it introduces the Equity Incentive Scheme and the implementation process of Jiaozuo Wanfang.Then,in the context of equity incentive,the behavior of the management's interest expropriation in Jiaozuo is taken as a breakthrough point,and it is found that the behavior of interest expropriation does exist,including:(1)exercise price: through the low value of the stock price when the release of the program to make the initial exercise price as low as possible.(2)Exercise Right Assessment: through the company's accounts receivable,related party transactions and accounts received in advance of the earnings management so that the company's performance to exercise the right standard,can successfully exercise the right.This kind of behavior will not only damage the interests of shareholders,but also do harm to the long-term development of enterprises.(3)dividend policy: through the dividend policy of high dividends to increase the total number of stocks,the exercise price will be lowered,forming price illusion and transmitting the good development of the company to the market,the subsequent company's share price will rise,and the management will be able to earn excess profits and maximize their own profits.Finally,the paper analyzes the reasons why the expropriation of management interests can take place in Jiaozuo under the background of Equity Incentive from the three aspects of pressure,opportunity and excuse,and then puts forward the corresponding countermeasures.The author found that managers' own greed and their own psychological imbalance is the main source of pressure for their interests;The immature external environment of the company's internal governance structure and the unreasonable equity incentive scheme are the main opportunities for the company to encroach on its interests The false belief that the usurped benefits are due to them,and the false Crowd psychology are excuses for their self-rationalization.Then the author puts forward the corresponding suggestions: to guide the Social Trend,correct the social value evaluation,and strengthen the ideological and moral education to relieve the pressure of the management;Improve the company's internal governance structure,the company's External Market Environment and Equity Incentive program to reduce the opportunities for management interests;Create a good corporate culture and guide management to the wrong Crowd psychology to eliminate excuses for management misappropriation.In order to strengthen the corporate governance of the listed companies,safeguard the interests of the shareholders and give full play to the incentive function of the equity incentive plan in the future,instead of being a tool for the managers to seek their own interests.