Discussion On The Employee Stock Ownership Plan Of Suning

With the internationalization and diversification of the economic system,the market environment has placed higher demands on the development of enterprises.If an enterprise wants to be in an invincible position in the future,it should first improve its internal governance mechanism.In order to reduce business risks,modern enterprises gradually separate ownership from management rights,resulting in conflicts of interest between the principal and the agent.Enterprises have been exploring effective measures to reduce agency costs and optimize governance mechanisms.As a long-term incentive mechanism,the Employee Stock Ownership Program has always played an active role in attracting and retaining employees and increasing employee motivation.And through the bundle of interests,employees can participate in corporate governance as shareholders,to a certain extent,to meet the needs of employees self-realization.In the period of rapid growth of corporate performance,this part of the staff can also choose to share the profit increase of the company and obtain additional income.Rational core employees will choose to stay in the company and achieve organizational goals.The early employee stock ownership plan originated in the United States and aims to enhance corporate value by mitigating agency problems.The main incentives are senior management.As an effective internal incentive mechanism,the employee stock ownership plan quickly formed a system in foreign markets and achieved relatively stable development.China's employee stock ownership plan has developed late and has been at the stage of exploration.However,due to the lack of policy norms,many problems have arisen in the process of implementation,such as "loss of state-owned assets","free-riding","big pot rice" and conflicts of interest distribution between employees and management,resulting in the final incentive effect.There is a large deviation from the expected target,and even once triggered the industry's "distribution dispute" about the employee stock ownership plan.In order to further strengthen policy norms,in June 2014,the China Securities Regulatory Commission promulgated the "Guiding Opinions on the Implementation of the Employee Stock Ownership Plan for Listed Companies"(The CSRC promulgated the "Guiding Opinions on the Pilot Implementation of the Employee Stock Ownership Plan for Listed Companies" in 2014,Hereinafter referred to as "Guidance Opinions".The ESOP's funding sources,management models,information disclosure and other issues are regulated.).And with the development and innovation of various emerging industries,incentives for executives alone may not be able to help companies achieve the desired goals of building a stable workforce and enhancing corporate value.In order to stabilize the talent team,emerging companies represented by the Internet often need to implement incentives for a wider range of stakeholders.However,from a practical point of view,most companies have not achieved the expected goal of value improvement,and even some have fallen below the cost of holding shares and were forced to suspend.In this context,Suning has continuously launched two employee stock ownership plans and achieved relatively high results.This performance is not easy in the turbulent A-share market.The reason is that this has nothing to do with the design of employee stock ownership plan of Suning.It is worth noting that program design is a key issue to consider when implementing incentives.It determines the success of the incentive system to some extent.At this stage,the academic community has carried out a lot of useful explorations on the employee stock ownership plan,focusing on the theoretical development and implementation effects of the employee stock ownership plan,and the research on its program design is lacking.Therefore,this paper starts with the design of Suning employee stock ownership plan,in order to provide research ideas for listed companies to choose and implement employee stock ownership plan.This paper first introduces the research background and significance of the employee stock ownership plan(ESOP).After reviewing the related research in the academic and practical circles,the concept,classification and theoretical basis of employee stock ownership are introduced.This paper combines Suning's shareholding case,conducts motivation analysis,and compares the business performance,employee situation and innovation before and after the implementation of ESOP,and finds that through the implementation of employee stock ownership plan,Suning reversed the decline in performance.The trend has stabilized the talent team and enhanced the ability to innovate.On this basis,this paper deeply studies the design of the terms and conditions of Suning's shareholding scheme in the determination of incentive targets,the establishment of funding sources and stock sources,the choice of management mode,the locking period and the duration of the formulation.In its evaluation,it was found that in the determined level of incentive targets,the two-phase employee stock ownership plan continued to extend the scope of incentives,focusing on motivating talents and actively implementing the talent strategy of the company;in terms of funding sources and stock sources,whether Differentiated stock sources,or the sources of funds that combine the two models,reflect the characteristics of the close relationship between the design of the program and the staged development of the enterprise;in the selection of the management model,the program constantly highlights the duality of the employee's role,by setting "Management Committee" and "Holders' Meeting" manage matters related to shareholding,strengthen supervision and increase employee participation;strengthen the standard control and control within the scope of the law,and extend the scope of the lock-up period and duration The duration is to protect the interests of employees to avoid legal risks.Finally,this paper is based on the analysis and evaluation of the shareholding scheme design of the case enterprises,and summarizes the experience and concerns of Suning employees' shareholding scheme.Closely integrated with the company's development strategy,taking into account the broad interests and the development characteristics in line with the transition period is Suning's experience in successfully implementing the employee stock ownership plan.However,it should be noted that the design of the program should strengthen the attention of new employees,further refine the classification criteria based on the design of existing clauses,and at the same time strengthen the information disclosure level and better improve the internal governance system.