A Comparative Study Of Yili's Two Equity Incentive Plans On The Implementation Effect

In order to stimulate innovation,the domestic and foreign companies create an operator equity incentive plan.Connecting the interests of the management to the interests of the owners,solves the principal-agent problems between managers and owners and helps the company retain the company's core talent at the same time attract foreign talent,so that it causes a positive wealth effect to the company.This paper made a systematic analysis of the implementation of the two equity incentive plans of Yili Group in 2006 and 2016.Starting from the implementation status of the overall equity incentive plans of listed companies,it sorted out and analyzed the nine incentive elements of the two plans and the matched degree of the overall incentive elements design of listed companies.Through longitudinal comparative analysis and horizontal comparative analysis of the same industry aimed at financial indicators and non-financial indicators of two equity incentive plans that have implemented,we came to the conclusion that the implementation of equity incentive plan for the first time in 2006 is barely satisfactory,especially in the 2007 and 2008 had potential losses of billions of dollars,however,the implementation of equity incentive plan for the second time in 2016 had achieved satisfactory results.After comprehensive comparison of the two equity incentive plans,this paper believes that there are the following problems in the implementation of the first equity incentive plan in 2006,(1)There are some problems in the design mechanism of the draft equity incentive plan,and The Remuneration and Assessment Committee has not maintained its due independence;(2)The incentive is too excessive,and the proportion of the total number of shares involved in the equity incentive is close to the upper limit,while the individual shareholding has also exceeded the upper limit;(3)The exercise conditions are too low,the performance evaluation criteria are unreasonable,and the relatively loose exercise conditions are difficult to achieve the effect of equity incentive;(4)The exercise price is too low,it may be artificially manipulated to reduce the exercise cost and damage the interests of minority shareholders;(5)The assessment period is too short,and the amortization amount of share payment cost directly affects the amount of net profit.This paper puts forward some suggestions on optimizing the equity incentive scheme in view of a series of problems existing in the equity incentive scheme in 2006.(1)Improve the operational mechanism of The remuneration and assessment committee and strengthen its independence;(2)Set reasonable incentive elements according to the actual situation of the company,especially the performance evaluation indicators;(3)Improve the management mechanism of The Board of Directors and The board of Supervisors,adopt the avoidance mechanism for the incentive objects,and enhance the supervision;(4)To increase the participation of small and medium-sized stockholders in the implementation of the equity incentive plan,so as to avoid the occurrence of the situation that the operator damages the interests of shareholders in order to meet their own interests.