Research On O-film's Employee Stock Ownership Plans And Its Incentive Effect

The implementation of the employee stock ownership plan in China has been started since the 1990s.However,due to the lax regulations and institutional deficiencies,the implementation of the employee stock ownership plan has repeatedly encountered problems,resulting in the final forced to stop the implementation.With the combined effect of continuously improving relevant regulations and increasingly developing market economy,more and more listed companies began to launch employee stock ownership plans,especially after the issuance of the guidance on the implementation of employee stock ownership plan by the CSRC in 2014.Through the case study of O-film Tech Co.,Ltd.,this paper analyzes the design and implementation effect of its employee stock ownership plan,finds out the problems and risks,and puts forward relevant Suggestions,in the hope of optimizing the design of the employee stock ownership system,so that the system can better play the role of employee motivation.This paper analyzes the implementation mode and incentive effect of O-film's employee stock ownership plans.First of all,research the design of O-film's employee stock ownership plans,including the source of funds,stock source,term and lock period and management model,found the characteristics of its stock ownership plans,including the use of leverage information,different assets management institutions to assist operation and employee shareholding normalization,etc.Secondly,this article research the market effect,the effect of financial and the return of the various stakeholders to analyze effect of the implementation of employee stock ownership plan,find that the initial implementation of employee stock ownership plan is incentive,but in the long run frequently launch of employee stock ownership plan will not be a positive impact to the company.Finally,this paper analyzes the problems and risks in the implementation of O-film's employee stock ownership plans.Through further analysis,it is found that even with the highly leveraged implementation of employee stock ownership plan,enterprises still face great pressure on employee financing.The use of leverage has amplified the gains in share prices while also increasing the losses on falling share prices.In addition,the shareholding of employees is actually controlled by major shareholders.Although employees bear the risk of stock price changes,they have no right to participate in decision-making accordingly.Employee stock ownership plans could be a way for executives to extract capital operating returns from the capital markets.Through the case study,the following enlightenment is obtained in this paper:firstly,the listed company shall fully evaluate the risk of the implementation mode of leveraged employee stock ownership in the stock market fluctuation in advance,and use the leverage cautiously.Secondly,listed companies need to develop a more reasonable and effective exit mechanism for their employees.Thirdly,detailed incentive and restraint mechanism should be developed in the employee stock ownership plan to improve the incentive effect.Fourthly,listed companies should promote employees' actual participation in corporate governance and decision-making by implementing employee stock ownership plan.Fifth,regulators need to speed up the construction of relevant legal systems to regulate the implementation of employee stock ownership plan.