Case Study Of Equity Incentives In Smart Retail Industry

Under the modern company system,because property ownership and management power are separated,and the information asymmetry leads to the principal-agent problem,therefore the equity incentive comes into being.The earliest equity incentives were born in the United States Pfizer in 1953,and later developed countries such as countries in west Europe and Japan have also begun to explore the equity incentives,and gradually improve the equity incentive system in the their market environment.China started late in the exploration of equity incentives,and the system is not sound enough.In 2006,the CSRC issued the “Administration of Equity Incentives for Listed Companies”,which provided institutional guidance for the implementation of equity incentives for listed companies in China.In 2014,the CSRC again issued the “Guiding Opinions on the Implementation of Employee Stock Ownership Plans for Listed Companies”,which opened a new chapter in China's equity incentive model.With the continuous improvement of national policies and management systems,listed companies gradually try and explore equity incentives to solve the problem of principal-agent issue and achieve long-term incentives.With the rapid development of the Internet and technology,the traditional retail industry is facing a huge challenge,as "Future retail is smart retail." Smart retail is the product of advanced technology and traditional retailers' chemical reactions in the Internet era.How to adapt to the characteristics of its own industry is particularly important as well as the smooth transformation to smart retail.In this context,implementing an equity incentive plan will can achieve more with less efforts.As a representative enterprise in the smart retail industry,Suning Tesco Group Co.,Ltd.has announced six equity incentive plans in 2007,2008,2010,2014,2015 and 2018,and has issued several announcements to terminate and restart.The analysis of Suning's equity incentives can provide some reference for traditional retail enterprises transforming to the smart retail industry,so as to find an equity incentive model suitable for the development of smart retail industry.After the introduction and analysis of its six equity incentive plans,it is believed that Suning's motivation for implementing equity incentives may be to reduce the cost of principal-agent and the rate of talent loss,and thus to promote enterprise transformation.Then,from the financial and non-financial aspects,the results of the implementation are analyzed.It is discovered that: firstly,the effect of equity incentives in Suning's previous three stock option models is not satisfactory: Except for market expansion and R&D capabilities,four other financial indicators show no improvement.And did not effectively prevent the loss of outstanding talents;In 2010,the expired rights and interest caused by resignation was as high as one-fifth of the plan.Secondly,the subsequent three equity incentive show some improvement in terms of effect.operational capacity has gradually recovered,the solvency has been stable,the efficiency and quality of market development have been improved,and the research and development capabilities have been greatly enhanced.However,there are also ineffective aspects such as unstable development capability,doubtful quality of earnings,and loss of executives.On this basis,it is concluded that Suning's stock option model has problems such as high executive price and lack of pertinence,flexibility,scientific conditions for exercise.This paper accordingly proposes optimization suggestions.executive prices should be set according to macro environment,diversified and flexible exercise conditions should be established,etc.the employee stock ownership plan model has problems such as neglecting the worker at the production line and new recruits,and the inadequate selection of the asset management institutions.This paper also proposes corresponding optimization suggestions.This paper analyzes the equity incentive schemes of different models of Suning Tesco in order to enrich the content of stock equity and employee stock ownership plans in the industry and case studies,and expects to provide perspective for China's smart retail industry or the implementation of equity incentives for retail enterprises seeking Internet transformation has certain reference significance.