The Implementation Differences And Genetic Analysis Of Equity Incentive

Equity, as the ideal compromise between the owners/stakeholders and the managers of the big Corps., has not only solved the interest conflicts of the former two by binding them together but also developed new paths of long-term prospect. Recent years, the issues of Equity's installations, actual impacts on business level and the key effecting elements have became both the central case of the international economists and one of the most disputant hot topic around the world. This paper was designed to analysis above-mentioned issues through real life case studies and actual data, and evaluate some critical resolutions.The methods of comparative analysis and case study will be used as research approaches in the following contents. On the basis of the Equity application cases of Inner Mongolia Yili Industrial Group Co,. Ltd-Yili Groupand Shanghai Jiahwa Corporation-Jiahwa Corp, the comparative analysis of the two cases will focus on the level of implementation effects, which have been divided into companyperformance and stock market performance. The difference of the Equity applicational outcomes, in this respect, shows in practice even the methods with positive effects on motivating employee and achieving company goals will also inevitably causing problems. Firstly, the target range of the Equity plans are limited, to be more specific the benefit's sharing systems have not been designed proportionally and instead of motivating employee it has been mainly used to profiteered the managers; secondly, the standards without reference are hard to determined. In actual operations, the stringent standards would easily demotivate employees with unachievable goals, while the low standards could producing passive work slowdown and wasting the Equity sharing; thirdly, the effectiveness of the Equity could be massively shorten due to the unreasonable period right schedule,immature setting of the period right schedule cannot and will not provide an sustaintial environment for the Equity stimulation; finally, centralization on accounting level could excess the budgets during the period, causing financial losses, disappointing the investors and most importantly might cracking down the company performance by prolonging the amortization period of option fee.To conclude, on the level of profitability, growth ability and stock market performance, the Equity application of Yili Group was failed on expectation while the Jiahwa Corp has made notable progress on desired effect. Hence the result of the general study shows though has been applied in practice, in order to bring out the most positive effections, the Equity methods would still require the business individual to adopting and adjusting their own specific situations in to the practice while applying the theory.In addition, some optimized suggestions on the Equity applying has been evaluated: First,Extend the range of the Equity targets more positively; Second, Set the most suitable performance references and period right schedule case-by-case; Third, The specific modes of the Equity, especially on accounting level, should be selected more scientifically; Fourth,Improve the internal supervising functions of the business individuals.