Implementation Effect Of Equity Incentive In Siyuan Electric

The enterprise system is constantly changing and improving in the development of The Times.The separation of ownership and management rights appears in the corporate governance system,which leads to the principal-agent problem.The initial motivation of equity incentive is to distribute part of the company’s stock to managers,so that the interests of managers and owners are bound,so as to solve the principal-agent problem caused by the separation of the two rights,better promote the development of enterprises and protect the owners’ equity.The characteristics of equity incentive also make it more and more concerned and favored by domestic companies.Over the years,the relevant laws and regulations have been issued one after another,and the system design of equity incentive scheme elements has been constantly adjusted and standardized.However,under the addition of the theory,domestic companies in equity incentive practice exposed problems still present diversification: Some companies have to terminate the equity incentive program in advance,because of the unreasonable design of their own program elements,or the company’s internal governance is not in place,resulting in the program can not continue;Although some companies implement equity incentive successfully,they get negative incentive effect which is not conducive to enterprise development.Therefore,this paper takes the implementation of Siyuan Electric’s stock option incentive plan in 2012 and 2019 as a case study,hoping to provide some reference directions for the implementation of equity incentive in large private enterprises or enterprises in the power transmission and transformation industry.Firstly,this paper introduces Siyuan Electric’s two equity incentive schemes by case analysis method.On this basis,from three dimensions of financial effect,non-financial effect and capital market reaction,this paper uses comparative analysis method to conduct in-depth research on the implementation effect and overall effect evaluation.Considering that the second phase equity incentive plan of the case enterprise is in the process of execution,this paper focuses on the first phase equity incentive plan of the case enterprise and takes the financial data of the company in recent ten years as the benchmark.In terms of financial effect,the average value of the industry is compared,and it is found that the two-stage equity incentive of Siyuan Electric helps the solvency return to the reasonable range of the industry,accelerates the turnover rate of accounts receivable,the short-term positive incentive effect of development ability and profitability is very significant.By longitudinal comparison of non-financial effects and capital market responses with the indicators of its own development,it is found that the two periods of equity incentive of Siyuan Electric can help reduce agency costs,increase R&D output,increase the number of highly educated staff in the team,and continue to expand the scale of technical staff.The capital market also plays a certain role of support and incentive for stock price changes.Finally,the paper summarizes and analyzes the successful experience of Siyuan Electric in implementing equity incentive,and finds that the key to its success lies in choosing the stock option incentive mode that meets its own development needs,the wide coverage of the incentive target positions,the comprehensive double-layer assessment mechanism of the company and individuals,and the reasonable arrangement of the exercise ratio according to the balanced distribution method.It also provides some inspirations for the industry in the selection and reasonable design of equity incentive schemes,corporate internal governance,training of professional managers,and also provides some inspirations for the supervision and management of relevant national departments.