The Analysis Of The SOP Of Management In Vanke Group

Equity incentive is a form of incentive method that through transferring shares give business operators some economic rights,enabling them to participate business decision-making,share remaining profits and risk as shareholders,so they can service for the company's long-term development seriously.As a kind of equity incentive,the stock option plan(SOP)of management introduced to China from foreign countries,after years of practice,has gradually become an important way for enterprises of our country that incentive management for long-term.It is regarded as a powerful tool to solve the principal-agent problem and is widely implemented in enterprises.A good stock option plan of management can fully mobilize the enthusiasm and creativity of the operators,combine the interests of shareholders,company and operators together.So as to reduce the short-sighted behavior of operators,let them pay more attention to the long-term development of the enterprise.In western countries,equity incentive has gradually become a complete system after decades of development,it is a good medicine to solve the incentive and constraint problem of management,and it is an effective incentive mechanism.However,the equity incentive of Chinese enterprises is still in the initial stage,the construction of the capital market is hard to meet the perfect,so there are many problems in design of the stock option plan of management system and governance structure of enterprises,some stock option plan of management did not achieve the desired good results,it will not only reduce the effectiveness of incentive,but also damage the interests of investors and shareholders of the company.Therefore,these problems reflected in our country stock option plan of management need to be studied and discussed immediately.This paper uses the combined method of theoretical analysis and case analysis,starting from the principal-agent theory,incentive theory and human capital theory,to analyze the situation of the Vanke Group's stock option plan of management.Vanke Group,as leader of China's real estate enterprises,implement many times equity incentive plan,especially the 2010 stock option plan of management,is a typical case of equity incentive of Chinese Listed Companies.However,the execution of incentive plan has brought many negative effects.This stock option plan should have incented the performance of the company long-term growth,stabled management of the company.But Vanke Group performance growth in abnormal fluctuation and a large number of management personnel loss after the plan executed.These phenomena reflect some problems exist in the stock option plan: the performance evaluation index can't objectively evaluate the contribution of managers but leaves the space of earnings management to management;incentive plan has high exercise cost but its income uncertainty;in this plan,management also strengthen their own control of suspicion.These problems have led to the stock option plan of management failed to achieve the desired incentive effect.This paper has analyzed this stock option plan of management carefully and found some reasons.In the formulation of vesting conditions,performance indicators focus on comparing with the base period too much and do not consider the influence of external factors;in the exercise way choice,this plan didn't consider the gap between high exercise cost of stock option and the actual salary income of management;associate incentive income with unstable capital market,which lead to the uncontrollable return;and for Vanke Group,whose equity dispersed so much,the use of directional add-issuance make the ownership structure inclined to management.Aiming at the existing problems and deep-seated reasons in stock option plan of management,this paper puts forward some enlightenment and improvement suggestion from three aspects of the project design,corporate governance and external environment.Firstly,design a scientific and reasonable incentive project,set diversification assessment index,let exercise multiplier into the right of exercise,to quantitative the contribution degree of the management effectively;extend the validity 0f exercise,and setting up dynamic exercise price,to strengthen the incentive effect.Secondly,improve the internal governance of company,strengthen the supervision and restraint for the management,strengthen the supervision of independent directors,establish a strict information disclosure mechanism,to strengthen the implementation of internal control.Thirdly,build a good external environment,improve the relevant laws and regulations of equity incentives,establish a standardized and efficient capital market and the manager market,to ensure the external environment of incentive programs.Through the research on the Vanke Group's stock option incentive of the management,this paper provides some suggestions for the improvement of the following stock option incentive,and references to other enterprises.