Q Company Equity Incentive Scheme Design

As one of the important corporate governance systems, equity incentive is a method of long-term incentives for employees, an important incentive means of enterprises in order to retain core talent, embody enterprises’spirits and inspire staff morale. It is an important measure based on incentive theory and capital market operation. It is the focus of attention in the field of theory and practice of corporate governance. Abroad for several decades of history, equity incentive introduced into China not long, gradually expands the implementation in domestic listed companies until the 1980s, and has made considerable progress. However, due to the reasons of the governance system, ownership structure and equity characteristics and other aspects, purpose and operability of each company’s equity incentive program implementation has its own uniqueness. In addition to equity incentive having incentive effect, part of the company’s equity incentive is the main channel of internal financing. Combining the principal-agent theory, human capital theory, two-factor theory of motivation, team production theory and transaction cost theory, the paper establishes a framework of equity incentive programs. Q Company as a case study, based on the analysis of its ownership structure and compensation system, the equity incentive target is set up according to the influence of the competition in the same industry and the demand of the company’s development. By applying Shareholding platform to build, incentive target to choose, incentives to select, equity allocation, vesting conditions and exercise price to determine, incentive period to select, share resources, exit mechanism and other factors as the starting point, a set of equity incentive programs is designed personally for Q company, and security conditions of the program implementation required are analyzed.