Analysis Of Wen's Equity Incentive Based On Managerial Power

The separation of ownership and managerial authority of modern enterprises has created a principal-agent relationship.Managers pursue the maximization of personal wealth.Owners pursue the maximization of enterprise value.The conflicts of interests between them lead to the principal-agent problem.In order to alleviate this contradiction,the equity incentive came into being.Stock option motivation mechanism is designed to grant managers a share of the shares to link the interests between the managers and owners,encouraging managers to consider the long-term development of enterprises,maximizing the shareholder value.However,the managerial power theory holds that equity incentive can not be an effective means to motivate managers.Managers will manipulate their equity incentive programs through their own power,making incentives a welfare.After China Securities Regulatory Commission(CSRC)promulgated<Equity incentive management of listed companies>in 2006,the number of enterprises implementing equity incentive is increasing rapidly with the negative effects of many equity incentives.The exposure of more and more "sky high" executive pay is making the issue of managerial power widely concerned by people from all walks of life.Studying the influence of managerial power on equity incentive is more and more important.This paper takes The Wens as the research object,analyzing the influence of managerial power on the implementation of Wens' stock ownership incentive.First,analyze Wen's managerial power and management characteristics.Second,analyze the content of equity incentive and the difficulty of exercising rights.Last,analyze whether there is any timing optional behavior of Wen's equity incentive including choosing the favorable time to grant authorization and controlling the time of information disclosure.The article thinks the exercise conditions of Wen's equity incentive can easily be reached and management has self interest behavior in the implementation of equity incentive.How to avoid opportunistic behavior of managers,formulating effective program.This article gets three enlightenment.First,strengthen the management of the supervision and management.Second,Strengthen supervision of external capital markets.Third,improve company's information disclosure level.