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Chinese listed company equity incentive

Author: WangXu From: www.yourpaper.net Posted: 2010-03-11 10:11:49 Read:
[Abstract] equity incentive more and more attention in the country, as a system of long-term incentive arrangements, equity incentive ultimately implement growth for the company. This paper motivate the existing problems in the implementation of China's listed companies analysis, pointed out that the incentive program, the overall design is sound enough; manager market is not complete and other issues and to elaborate measures to improve our equity incentive.
[Keywords] listed company equity incentive

One, the existing problems in the implementation of China's listed companies equity incentive analysis

1 overall design of the incentive programs are not sound enough
Launch equity incentive programs listed companies, stock options are prevalent mode favored excessive number of incentive stock of the company directors and executives, incentive costs low phenomenon. Makers did not take into account the market downturn, stock options may fail, and cause the value assigned to the subsidiary's directors and executives excessive number of incentive imbalance and weaken the incentive to lower incentive costs, the number of listed companies, the exercise price The effect of issues such as these will have a direct impact on the implementation of the incentive effect.
2. Manager market is not complete
The experience of developed countries shows that the professional manager market can provide a good market selection mechanism. The effect of competition and elimination mechanism, managers selected by the market, the value of the managers is determined by the market, the formation of a contract contractual relationship. For repeated consideration of the transaction, the managers in the course of business will pay more attention to their reputation, and to refrain from such acts of speculation, lazy managers artificially improve their worth will do everything possible to work hard. This is an important constraint condition, and also the equity incentive to play the role of one of the preconditions. However, manager market is still relatively backward and slow development, the selection of the existing corporate enterprises rely on market competition mechanism managers very small proportion of China's state-owned listed companies, the vast majority of operators by the government The department appointed.
Individual existence using equity incentives to stimulate excessive
In the enterprise, some senior managers, based on the current employment system "can not be under the" avoid high decision-making errors to bring their own risks and loss of power to forge ahead, to be satisfied with the status quo, and the loss of many opportunities for enterprise development. Stimulate excessive will also weaken the ultimate effect of the incentives that stimulate excessive harm business interests in the name of corporate senior management taking advantage of his right to inspire, to enrich themselves at their own.
4. Evaluation index system is not perfect
Our existing financial index system of performance evaluation system is not comprehensive, detailed, and involves fewer non-financial indicators, not comprehensive, objective and scientifically reflect the results of operations and management effort, to some extent weakened equity incentive effectiveness. In yet a versatile, highly authoritative, and can be used as the evaluation norms and standards of the unity of all walks reference. Wide range of enterprise performance evaluation system indicators uneven. Some enterprises have tried to use the performance evaluation system issued by the Ministry of Finance, but because of this evaluation system is more complex design, control and operability difference, and the relationship between multiple indicators is not enough clarity, even contradiction between indicators and targets, the implementation of The effect is not very satisfactory. The lack of a uniform standard, the problem of how to quantify the value of human capital operators and there is no good solution. The Equity Incentive lack an effective operating platform, and its feasibility is unconvincing.
Equity incentive in binding was significantly less than
Managers contrary to the interests of the principal objectives, its most important condition is that both information asymmetry. That managers understand the information is accurate and complete than the principal. Way out to avoid the "moral hazard" and "adverse selection" is the principal access to more accurate information, constraints on managers. But there are many state-owned listed companies directly to the owner of the state-owned asset management company or the competent department, its own rather ambiguous relationship between property rights and responsibilities, constraints and management of state-owned listed companies indirectly through its objective will inevitably lead to the "owner The Absence "even cause the collusion serious consequences.

Second, measures to improve our equity incentive

1 with the actual business, to develop practical equity incentive program
Fine design is the necessary condition to ensure the effectiveness of incentive stock options, stock option incentive scheme is reasonable design is critical. Listed companies should not contrary to the relevant provisions of the State on the basis of equity incentive programs to develop practical, to avoid the embarrassment and contrary to the provisions of the Securities will be halted. Stimulate excessive, it may affect the enthusiasm of executives and staff, are inert, without efforts easy to get, but the development of the company's. At the same time will cause the market and shareholders questioned. Excitation threshold is too high, through the efforts and hard work can not achieve the goal, only to be prohibitive, the same can not mobilize the enthusiasm of executives and staff. What the exercise price to the implementation of equity incentive? The Rights Incentive scope and measures how? Can do it right to them what day? Must consider when developing force case. Focus on corporate governance structure, strengthen the role of internal control
The key to the structure of corporate governance is to solve the internal control problems. The force absolutely Company operators or day-to-day managers "both the referee and when the athletes," the phenomenon. Equity incentive related to changes in the company's capital structure and the interests of the public shareholders, and the general remuneration package, it needs to be more rigorous consideration and decision-making mechanisms, the independent directors, the Remuneration Committee which should play a more active role. Option Scheme of the listed companies in addition to the approval of the special resolution of the shareholders' meeting, the company's outside lawyers, independent financial adviser and advisory body of the views or recommendations should be fully utilized and valued. Recommended the establishment of corporate insiders, shareholder investor the option theory expert tripartite Option Incentive the scientific governance mechanisms. The internal options beneficiary shareholders options investor decision-makers, the theory experts are options assessment or design. Second, improve the corporate governance of external mechanisms. Government can set up a regulatory agency. External mechanisms of corporate governance, an effective government regulatory agencies is very important, especially in the early stages of development of the emerging market economies. Government policy-making level, the efficiency of the regulatory process, the integrity of the institution, is crucial to the formation of the corporate governance system.
3 owners and managers to establish common goals
Specific behavioral objectives of principal and agent are inconsistent. Causing agent of moral hazard and adverse selection. However, the enterprise value maximization is the ultimate goal of the client, the agent should get paid by the operation of the enterprise, and the two sides do not want to face bleak prospects, which provided an opportunity for both target coordination. Established under the premise of the principal-agent contract, the agent's compensation should be relatively fixed, the principal appropriate transferring part of the incremental value in the agent, so that enterprises can share incremental value. This largely established the common goal of the principal-agent, to produce win-win results. In reality, the principal-agent between the two sides to establish a flexible contract is more feasible.

4. Emphasis on the effectiveness of the capital market, and to play the role of financial derivatives
Equity incentive system for its stock sources, the exercise price and the capital markets are closely linked, and therefore the effectiveness of the capital markets has had a tremendous impact on the effect of the implementation of equity incentive system. Therefore, to improve the capital market, to stabilize the stock market, is the primary task of governments and relevant departments. The first is to solve the problem of the size of the non. Recommended "size of the non-the" lifted deadline design should be extended, set 10 years or longer to the lifting of the ban is completed, only lifted part of a year can be considered. In this way, not interested in the stock market caused by too much pressure; the size of non-lifting of the ban after the transaction, the size of the central enterprises to non-lifting of the ban should be a clear timetable, the market will take some time to absorb the pressure of shares to change the size of non-lifting of the ban. Secondly, the introduction of short-selling mechanism. "Short selling" transactions to investors at high prices to sell stock they do not own, then up into the same amount of stock on at a low price, so as to obtain Spread income trading behavior. In the case of "short selling" mechanism, if the shareholders of the company's reorganization also expectations that they can continue to hold the company's stock, but through the operating practices of the "short selling", on the one hand, reduce losses, and the other also passed to the directors and managers of a signal of dissatisfaction. Addition will encourage all investors, concerned about the negative news about the enterprise, they can "short" mechanism for trading in the shares lower profit. Short mechanism in place, when prices deviate from value happens, a lot can choose short, you can force the price back to value, and thus play the role of stabilizing the market.
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