The Influence Of Executives’ Self-interest Behavior Under The "50% Discount" Employee Stock Ownership Plan

Since the China Securities Regulatory Commission issued the guidance on the pilot implementation of ESOP by Listed Companies in 2014,the number of ESOP by listed companies in China is increasing,and the implementation scale of ESOP is also expanding.The employee stock ownership plan should be a benefit-sharing mechanism that is carried out in accordance with laws and regulations.However,during the practice of the employee stock ownership plan,the company’s top management may use their power to influence the design and implementation of the employee stock ownership plan,making it a tool for management arbitrage.In order to explore the possible selfinterested behaviors in the employee stock ownership plan and the role of executive power in it,this article takes the "50% off" employee stock ownership plan released by Gree Electric on June 20,2021 as an example to study the self-interested behavior of senior executives of Gree Electric Appliances during the employee stock ownership plan process,which provides new ideas for the impact research of the employee stock ownership plan and the improvement of the system.This paper firstly sorts out the domestic and foreign literatures on executives’ selfinterest behavior and employee stock ownership plan,and lays the theoretical foundation of this paper.Secondly,this paper elaborates and analyzes the employee stock ownership plan in detail,focusing on the differences between the employee stock ownership plan and the equity incentive plan,and further explains the motivation for Gree Electric to adopt the employee stock ownership plan to realize the self-interest behavior of senior executives.Next,this paper analyzes the "50% off" employee stock ownership plan issued by Gree on June 20,2021,describes in detail the basic situation of Gree and the content of the employee stock ownership plan,and expounds the possible self-interest behavior in the "50% off" employee stock ownership plan from the two aspects of executive self-interest tendency and executive rights.Finally,this paper analyzes the subsequent impact of the "50% discount" ESOP,compares Gree with Midea Group and Haier Zhijia stock incentive plan,and analyzes the economic consequences of executive self-interest in the ESOP from two aspects of market response and performance.Through the case analysis of Gree Electric’s "50% off" employee stock ownership plan,this paper draws the following conclusions:(1)Compared with equity incentive plans,employee stock ownership plans are more likely to become tools for executives’ self-interest;(2)Gree Electric’s executives’ self-interest tendencies and higher executive power make executives’ self-interest behaviors exist in the "50% discount" employee stock ownership plan;(3)The emergence of executive self-interested behaviors will reduce the incentive effect of employee stock ownership plan.After the announcement of the "50% off" employee stock ownership plan,Gree Electric’s market response showed a downward trend,and its performance was also affected.Through the research on the self-interest behavior of executives in Gree’s employee stock ownership plan,this paper provides a reference scheme for how to improve the internal and external supervision system of the employee stock ownership plan,and provide a reference for listed companies to make more efficient use of the employee stock ownership plan and improve the corporate governance structure.