Research On China's Equity Incentive

With recent salary reform of state-owned enterprises accelerating, equity incentive as the long-term mechanism, which has been widely used in western countries, arouses heated debates again. Equity incentive is capable of directly connecting the profits of incentive objects with their performance and share price of company. Among the motivation of obtaining more income, employees will try their utmost to improve the company's performance. Now equity incentive has been generally recognized that it has notably advantageous effect on motivating employees' working enthusiasm, stabling company's talents and boosting company's operating performance.Bright Dairy & Food, as the forerunner of equity incentive reform among local state-owned enterprises in Shanghai, its equity incentive scheme has highly notable meaning, which serves as a good reference for the subsequent incentive plans. Shanghai Ma Ling is the local state-owned enterprise that introduces equity incentive scheme recently in Shanghai. Nevertheless its equity incentive plan has not been paid off by the capital market, on the contrary it is voted by feet, which reflects flaws in the design and implement of the plan, which indicates the disadvantages in the process of carrying out equity incentive by state-owned enterprises recently. BesTV is also the state-owned enterprise which carries out the equity incentive scheme at present. Contrary to Shanghai Ma Ling, BesTV's incentive scheme has quite advanced meaning, which innovatively establishes the medium and long-term incentive fund and exerts beneficial effects on improving performance as well as the long-term progress of the enterprise.This paper adopts the reform of case study and chooses examples of three outstanding local state-owned companies Bright Dairy & Food, Shanghai MaLing and BesTV among the reformed state-owned companies in China. This paper gives detailed descriptions of some disadvantages existing in the equity incentive mechanism in China and provides some suggestions to improve the equity incentive theory system in salary reform of Chinese state-owned enterprises.