A Case Study On The Failure Of ZLZK's Equity Incentive

In the 1950 s,the United States Pfizer listed company issued the first draft of its employee stock ownership plan for the first time,which opened a new chapter in the management system of modern enterprises.With the gradual improvement of relevant laws,equity incentives allow employees to hold a share of the company's shares.As a corporate governance approach to the problem of entrusted agency,it has been widely used in European and American mature capital markets,and has become the longest trial for western European and American countries.The effective incentive mechanism was once hailed as the “golden handcuffs” for corporate incentives.But in China,since2005,after the equity division reform,the real start to promote the implementation of equity incentive plans has been began.The number of equity incentives for listed companies in China presents a trend of blowouts.With the increase in the number of equity incentives implemented,the ensuing problems have gradually increased.Under this background,this article mainly selected ZLZK as a case study object.Based on the design and implementation process of the company's draft stock incentive plan issued on March 26,2013,how was the progress made and why it was finally concluding.Failed to carry out case analysis,and conducted in-depth analysis of the causes of the problems in the case,combined with the theory of principal-agent theory,incentive theory and other equity incentives to analyze,and put forward the causes of the above cases and also list some specific suggestions for other listed companies in the future,to increase the scientificity and feasibility of their own design in the drafting of the equity incentive plan.The framework of this paper is roughly as follows: This article combines the methods of case analysis and is divided into three parts.The first part mainly describes the case.Firstly,we introduce the background of ZLZK's company,and the status after the implementation of the equity incentive plan.ZLZK's company will be briefly described in the form of three specific case descriptions in the equity incentive process.The second part is to analyze the causes of the depth of the situation described in the above case.Combining with related theories such as human capital theory and incentive theory,this paper analyzes the reasons for the failure of the company's stock incentive plan.The third part is mainly revelations and suggestions,integrating the aboveprocess and analysis of reasons,from the improvement of the index assessment system,the development of scientific exercise conditions,to the clear implementation of the company's incentive purposes,and so on,the issues that may arise in the process of equity incentive design Reasonable suggestions are expected to help the listed company in formulating the equity incentive plan later.Based on the motivation theory such as human capital theory,principal-agent theory,and incentive theory,this article explores the issues that a given listed company should consider when instituting a draft incentive plan,which may lead to incentive failures,so that how to avoided when we design our plans.This kind of problem has a strong theoretical guidance and practical significance.The specific practical measures proposed provide strong reference and reference value for other domestic listed companies.