Research On Equity Incentive Of Non-listed SMEs

Plenty of private SMEs (small and medium-sized enterprise) groups of China, compare with Large state-owned enterprises, usually be troubled by A variety of problems like "How to attract Outstanding executives and technical personnel";"How to make them more activity and creativity";"How to retain talents" etc. The entrepreneurs of SMEs have trying to solve the problems include lacking of talents and Staff motivation by Housing allocation, more salary, offering job to staff’s spouse since a decade ago. But the result is not satisfactory by the experiences from the practice.In the1980s, the equity incentive began be favored by many Chinese listed company, and made some achievements. As a long-term mechanism of management, it combine the interests of key technical staffs, Backbone business staffs and shareholders, give the surplus value claims to them essentially, make them more care about the further development. As a matter of fact, most of the non-listed SMEs are still not sure about the feasibility of it, in addition, there is less research achievement of it. Thus the non-listed SMEs still doubt of it.Recently, the different ways to do equity incentive can be classified in two major parts——equity incentives and stock option incentive which mainly depend on the principal-agent theory, motivation theory, human capital theory, etc.This essay depends on the experience of RG Group and research about equity incentive from the perspective of non-listed SMEs.RG group as non-listed SMEs, mainly focus on the production of auto-parts of cars and also refer to project investment and real estate development. Equity incentive is effective in the preventing of the damage of the company by the management of the subordinate company and reduces the management cost. It’s also useful in keeping core team stable and attracting more talents. By the effective performance appraisal way, it promotes the healthy competitions in the core team to benefit the development and researching.