Case Study On Supor's Equity Incentive Plan

With the improvement of the modern enterprise system,the ownership and management are gradually separated.As a long-term incentive method,equity incentives are considered to be the most effective means to solve the principal-agent problem.Since the Ministry of Finance issued the “Measures for the Administration of Equity Incentives for Listed Companies(Trial)” in 2006,more and more listed companies in China have implemented the equity incentives to mobilize the enthusiasm of key personnel such as management to achieve corporate development goals.How to establish a sound equity incentive system,reduce agency costs,improve corporate performance and maximize value is an important issue that modern enterprises must consider and solve.Supor occupies an important position in the small and medium-sized household appliance industry.The company was acquired by the French SEB Group in 2007 and was transformed from a family-controlled company to a foreigninvestment-controlled company.Supor has implemented an equity incentive plan before and after foreign acquisitions,which is highly representative.This paper mainly uses the literature research method,the case study method and the event research method,and takes Supor as the research object.Based on the four sets of equity incentive schemes implemented before and after the change of Supor's control rights,this paper analysis the motivation of Supor's equity incentives,and the differences between Supor's two-stage equity incentive elements are compared.And then this paper analysis the equity incentive plan implementation's effect.Finally,this paper combines the case analysis to evaluate the equity incentive implemented by Supor.Successful experience and existing problems in the implementation of equity incentive are summarized,and relevant suggestions are put forward in view of the problems.Firstly,combined with the background of the merger and acquisition of SEB and the outflow of management personnel,this paper exercises the vertical comparison of the changes in Supor's equity incentive factors in the two stages of family-controlled and foreign-investment-controlled.It is found that the number of incentive targets for equity incentives is increasing,the scope of incentives is expanding,the incentive model has been changed from stock options to restricted stocks,and the conditions of exercise are gradually stricter.Secondly,according to the characteristics of incentive elements,the differences between the two stages of Supor's equity incentives are analyzed.It is found that Supor's equity incentive in the family holding stage tends to be “welfare”,while the incentive of the foreign investment holding stage are characterized by “incentive” and “welfare”.Finally,the implementations at different stages are evaluated from two aspects: financial performance and non-financial performance.It is found that the implementation of Supor's equity incentives has a positive impact on its profitability both phases,attracting more high-quality employees for the company,and gaining a positive market response.While the latter three equity incentives effectively reduce the agency costs of enterprises.In general,Supor's equity incentives have played a positive incentive role and achieved certain incentive effects.Its success is mainly reflected in the combination of performance appraisal indicators and corporate strategy,flexible choice of equity incentive model,and appropriate expansion of equity incentives.However,there are also problems in which the exercise price setting is too low,the number of equity incentive is set too low,and the performance evaluation index is not comprehensive.Then the relevant suggestion is put forward from the perspective of how to rationally set up the equity incentive plan: formulating a reasonable exercise price,reasonably set the number of Equity incentive and establish a comprehensive performance appraisal system.