Zoomlion Equity Incentive Failure Case Analysis

With the continuous development of modern corporate management system,the ownership and management of the company are gradually separated.Companies around the world in order to encourage the management of the company,have introduced a variety of innovative incentives,in which the use of equity incentive is the most widely used.As an important means to improve the management level of the company,and gradually became popular in China in recent years.In recent years,the equity incentive plan of Listed Companies in China is developing rapidly,However,many enterprises blindly use the equity incentive plan which is not suitable for the development of the company.How to make the means of equity incentives can be effective in the development of the company,is a question worth considering.Zoomlion is a global enterprise engaged in R &D and manufacturing of high and new technology equipment needed for the construction of infrastructure projects.2013 overcapacity in the industry,the company wants to reverse the decline,motivate executives to complete the performance objectives.In addition,in November 2012 Zoomlion 's rival Sany announced equity incentive plan,in this case,the same year in February 2013,Zoomlion launched equity incentive plan.But the year after the implementation of the plan,the main business income,the main business profit,net profit,total assets and other financial indicators are significantly lower than before the implementation of the implementation,and did not meet the requirements of the plan to unlock conditions.In March 2014,Zoomlion announced the failure of the incentive plan and revocation.The cause of the failure is various,the implementation of equity incentive plan before Zoomlion,the construction machinery industry by the impact of the macroeconomic environment,industry overcapacity,when the introduction of incentive schemes to improve performance,the effect is not ideal.Secondly,blindly pursue competition with Sany,without considering the actual situation of the market and the enterprise itself.Based on this,this article has carried on the redesign for the Zoomlion incentive plan.In the scheme,the stock options and restricted stock incentive model are still used,but the ratio is adjusted to 1.5:1.Combined with the research results of the scientific research and the equity incentive,appropriately expand the incentive ratio.Exercise price to abandon the original plan the absolute price of the stock,the use of the whole industry and the stock price level linked to the dynamic price.In addition,the original scheme only net profit index,reflect the company's overall operating performance is difficult to establish the index system,a new design scheme,the profitability of the business,business performance return on Investment Enterprises Index added to the reaction system.This paper hopes that the new design scheme has practical value for the implementation of the Zoomlion equity incentive plan.