The Design Of Companies’ Equity Incentive

Equity incentive originated in the USA in50’s of last century, cause it can solvethe agency problem between the shareholders and operators well, it’s very popular inthe early seventy and eighty’s in the west. But in our country, the equityincentive started very late, It is still in the implementation stage, although withrelated laws and regulations promulgated, more and more corporation started to payattention to and implement the equity incentive, but there are still many problemsnow in the course of the actual operation in our country.The research object of this paper, YiLi——the best Chinese dairy industry,behind the attractive glories, its equity incentive has been controversial. In2008, dueto the implementation of equity incentive plan YiLi losses which wasunexpected, while the object of this equity incentive can get billions of dollars ofwealth according to the prevailing price. This can cause for reflection, as "goldenhandcuffs ", the equity incentive should have tied the executives and shareholders interests together, but why the equity incentive of Yili here was becoming theexecutive welfare tool for themselves?By using the method of case analysis, this paper analyses theequity incentive plan design of Yili, review its background, and the result ofthe equity incentive, put emphasis on the discussion of why the equity incentiveplan failure, which leads to the innovation of this paper research how to design moreeffective equity incentive plan from the incentive scheme design program equity pointof view, the design model of equity incentive based on the internationalcomparison of learning.