Title: A Study of the Equity Incentive Beneficial to Companies – A Case of Yili Group
Author: Li Lijun
Advisor: ดร.จิดาภา ชลธารรัตนพงศ์ – Dr. Jidapa Chollathanrattanapong
Degree: Master of Business Administration
Major: International Business Management
Faculty: บัณฑิตวิทยาลัย (Graduate School)
Academic year: 2567 (2024)
The 16th National and International Academic Conference 2023 “Digital Transformation and Sustainable Innovation: Strategies for a Sustainable Future” 31 Oct. – 1 Nov. 2023, pp.698-708 Click PDF
Abstract
Equity incentive is an enterprise management system that aims to encourage employees to fully utilize their abilities and wisdom by offering them stocks, options, and other forms of equity. This system plays a crucial role in promoting the development of enterprises. However, the implementation of equity incentive has experienced a slow development process in China. Fortunately, with the introduction of national policies, equity incentive has gradually gained momentum and moved in the right direction. When properly implemented, equity incentive can effectively motivate management to work diligently and enhance company performance. Conversely, improper implementation may result in a skewed distribution of interests towards management at the expense of shareholders’ rights and benefits, turning it into a tool for executives seeking personal gain.
This paper adopted the quanlitative research methods to explore whether the equity incentive plan implemented by Inner Mongolia Yili Industrial Group Co., LTD (referred to as “Yili Group”) in 2016 is effective for both the enterprise as a whole or solely for senior executives’ self-interests. By referring to relevant literature and applying appropriate theories, this study focuses on analyzing the background context surrounding Yili Group’s implementation of its equity incentive plan in 2016 along with challenges faced by its management team. The research objectives of this study were: 1) To explore the implementation effect of the equity incentive scheme of Yili Group; 2) To examine the effectiveness of the equity incentive design scheme of Yili Group.
Based on the analysis of the equity incentive scheme implemented by Yili Group in 2016, this study found that: 1) The actual outcomes align with expectations regarding program effectiveness; it demonstrates certain incentivizing effects within both capital markets and overall enterprise performance; 2) The design of equity incentive program is effective, which is reflected in the appropriate incentive tools and moderate incentive intensity. However, there are still some problems, such as too low exercise conditions and too short an assessment period. Therefore, this paper puts forward some solutions which include offering flexible choice of equity incentive mode, setting up exercise conditions in various ways, and improving the internal governance structure of the company.
Keywords: equity incentive, Yili Group, company performance
A Study of the Equity Incentive Beneficial to Companies-A Case of Yili Group
6517195807 Li Lijun 2567 (2024) A Study of the Equity Incentive Beneficial to Companies-A Case of Yili Group สารนิพนธ์ (Independent Study), Advisor: ดร.จิดาภา ชลธารรัตนพงศ์ – Dr. Jidapa Chollathanrattanapong, ปริญญาโท (Master’s Degree), บัณฑิตวิทยาลัย (Graduate School), Master of Business Administration, International Business Management, Bangkok: Siam University