Equity Incentive Research, Impact On The Interests Of Shareholders

The current management system in China which is preferred by shareholders and management, meant to follow the modern corporate Western model, has been established as a system of equity incentives. Many people thought that this model in local corporations will be able to motivate management to increase the performance and to achieve the goal to maximizing the benefits of shareholders.Nevertheless, it will be failure that fulfills the same Western management model in local companies. The equity incentives system necessary to be suitable with the local environment which includes macroeconomic and microeconomic that will be successful operation in China market otherwise will be failure.In this assignment, to study the object of YiLi Group based on the theories of principal agent and stakeholder had fuller and deeper research of the YiLi Group' s equity incentive schemes which operated several times. In this assignment, based on the background information, the studies indicated that the ownership structure and industry background of the YiLi Group prefers to fulfill the equity incentives system on the corporations, the management level of YiLi Group over-incented themselves through strong position but under-constrained resulted in that injurious to the interest the shareholders, especially small and medium-size shareholders.More detail analysis of the case of YiLi Group, the assignment brought some of the more forward-looking recommendations when the Chinese enterprises implemented equity-based incentives to avoid and reduce the negative impact on the interests of shareholders. Meanwhile the equity incentive system and the recommendations explained in this assignment in were the same.Expected on this assignment will be certain referential value for implementation of equity incentive plans and properly deal with the interests of shareholders and management in Chinese enterprises.