Research On The Motivations And Program Of Equity Incentives Of Baijiu Enterprises

With the continuous improvement of market economy,the scale of modern companies is expanding and their structure is more complex,which makes the problem of principal-agent more and more serious.Equity incentive is a commonly used incentive model in modern corporate governance.By building a community of interests between the enterprise as a whole and individual employees it can effectively alleviate the agency problem caused by the inconsistency of interest goals,and at the same time stimulate the enthusiasm of employees,thus promoting the development of the enterprise.This thesis focuses on equity incentives in Baijiu industry.At present,China’s liquor market is undergoing structural changes.The number of liquor companies above designated size is decreasing year by year,and the industry’s profits are further concentrated to leading companies,and the Matthew effect is prominent.Moreover,the growth rate of the mid-range and high-end market is accelerating,the phenomenon of consumption upgrading is obvious,and the market competition is intensifying.As a common means to solve the agency problem of modern companies,equity incentive has become a hot topic among Baijiu companies because it fits well with the characteristics of liquor industry.Since Laobaigan launched the equity incentive program in 2014,Baijiu companies have followed suit,choosing to implement equity incentives to improve the corporate governance system and promote the development of the company.In recent years,the equity incentives of Baijiu companies have accelerated the trend of intensive implementation.This thesis takes the Employee Stock Option Program(ESOP)released by Swellfun Co.in 2021 as the main research object,analyzes its equity incentive motivation,program design and implementation effect through case studies,literature research and comparative analysis,and concludes advantages and disadvantages of the program design of the ESOP.On this basis,this thesis summarizes the improvement suggestions that can be referred to by other Baijiu companies when implementing equity incentives.This thesis believes that Swellfun’s launch of the 2021 ESOP is mainly out of two perspectives:improving performance and corporate governance.From the perspective of improving performance,after experiencing the impact of COVID-19 in 2020,Swellfun’s performance has fallen severely,and an incentive method is urgently needed to stimulate performance recovery.After Laobai Gan implemented ESOP in 2014 with remarkable results,ESOP has become one of the popular means used by liquor companies to promote performance development.In 2021 Swellfun carried out a marketing strategy reform.ESOP can help the implementation of this marketing strategy by motivating the core sales team.From the perspective of corporate governance,Swellfun has frequently changed managers in the past ten years,which has seriously affected the internal stability of the company and the market’s investment confidence in Swellfun.Through ESOP,the company’s management can be stabilized,and a positive signal of Swellfun’s internal stability can be sent to the outside world.In addition,the assessment indicators and system brought by ESOP can help improve the corporate governance system,optimize the cost management system of Swellfun,increase innovation and research,and ensure the long-term stable development of the enterprise.After a comparative study of the 2021 ESOP and the 2019 restricted stock incentive plan launched by Swellfun,this thesis believes that Swellfun’s ESOP is better and more reasonable in terms of program design,but there is still room for optimization.First of all,in terms of incentive objects,this ESOP will include more middle-level and grass-roots key employees in the scope of incentives,and more employees will be motivated to work.The incentive is differentiated for the senior management of different positions,highlighting the role of general manager position.In the setting of assessment indicators,Moutai is no longer used as a benchmark enterprise,which makes the target setting of Swellfun more scientific and its positioning clearer.At the same time,the overall average value of benchmark companies has been changed to individual comparison,which makes the market ranking of Swellfun clearer and the comparison of indicators is more practical.However,the calculation method of several annual averages makes it possible to achieve the assessment indicator even the performance is poor after over-achieving the task in some years,thus causing the problem that the ESOP may have insufficient incentive after-effects.In terms of the incentive period,the setting of phased unlocking better balances the short-term incentive strength and long-term incentive effect,enabling employees to obtain benefits in a short period to improve their enthusiasm,meanwhile it sets long-term goals and corresponding benefits for employees to ensure long-term incentive effects and avoid short-sighted behavior.This thesis examines Swellfun’s ESOP from four aspects:corporate governance effectiveness,profitability,operational capacity and development capacity.Through the analysis of key indicators,this thesis concludes that Swellfun’s ESOP fits the company’s marketing and innovation development strategy,strengthens internal communication and improves management efficiency,so it has the effect of improving the corporate governance system.At the same time,the plan has improved the enthusiasm of employees and helped the recovery of performance.However,due to factors such as the COVID-19 and the shrinking market,the incentive effect in terms of performance growth is not significant.Moreover,it may cause the subsequent slackness of employees due to the problem of assessment indicator setting,making the incentive insufficient for long time,so the long-term incentive effect is doubtful.Based on the whole analysis,this thesis summarizes four reference suggestions for the design of equity incentive program of Baijiu enterprises:choosing the appropriate incentive mode according to the characteristics and requirements of the enterprise;setting a reasonable incentive period,which can be unlocked in phases to balance the long-term and short-term problems;setting reasonable assessment indicators to ensure the long-term incentive effect;conducting differentiated incentive,reflecting the differences of roles and work performance to improve the incentive efficiency.