The Listed Company Equity Incentive Element Analysis And Optimization Research

According to the proof from equity incentives implemented by the United States,Britain and other countries with mature capital markets, equity incentive is a long-termincentive, which plays an extremely important role in reducing agency costs andmobilizing the enthusiasm of the long-term work of employees, as well as raising thelong-term performance improvement of companies. China Securities and ExchangeCommission issued “Management Methods for Equity Incentive of ListedCompanies”(Trial) on January4th,2006and would implement formally, which marked theequity incentive system construction of China’s listed companies would be guided to enteran actually Standard operational phase with a clear policy guidelines. But whether theimplementation of equity incentive plan can really achieve the incentive effects of thelisted companies’ expectation mainly depends on the rationality of the equity incentiveplan’s elements.From January2008to December2010, the listed companies of A-share are up to126which announced the draft equity incentive plan officially. After combed the theoreticalbasis of equity incentive and some researches on equity incentive by domestic and foreignscholars, the thesis makes data of126sample companies, and analyzes nine essentialelements of the equity incentive plan, which include the incentive model, the incentiveobject, the source of stock, the scale of award, validity period, the exercise arrangement,the exercise (grant) price, the source of funding and performance assessment indicators,and proposes some optimization recommendations to improve the design of the five keyelements, including the incentive object, the scale of award, the exercise (grant) price,validity period and performance assessment indicators.According to the research on equity incentive plan of the sample companies, the thesisanalyses some common problems which are found in the design of essential elementsexisting the equity incentive plan of China’s listed companies, mainly including: thevalidity period and waiting(banning)period of the equity incentive plan is too short to reachthe long-term incentive effect; the setting of time enactment of exercise (grant) price isunreasonable, and a lower exercise (grant) price; the performance evaluation index is toosimple, paying attention to the assessment of the indicators of profitability anddevelopment capacity, ignoring the indicators of operational capacity and solvency, andassessment of non-financial indicators. The same time, the thesis through analysis of thedesign for essential elements of SouthGlass’ the equity incentive program, found that thereasonable design for essential elements of equity incentive plays a vital role in achievingthe purpose of enhance the company’s long-term operational performance. Therefore, thisthesis provides some optimization proposal for the existing unreasonable design of theessential elements of China’s listed companies in the equity incentive program.Finally, based on the conclusions of this paper, the thesis puts forward some policyrecommendations to optimize the listed company equity incentive program.