A Study On The Equity Incentive Of H Co.,Ltd

Equity incentive is an institutional arrangement to solve the inconsistent interest between the ownership and management in modern enterprise. Equity incentive is based on the Principal-agent theory and Human capital theory. Equity incentive has developed rapidly and it has been widely used in developed countries, such as the United States of America since it came into being, and its’incentive effect has been more widely recognized. In China, equity incentive system has developed rapidly after the issue and implementation of’Equity Incentive Management Measures’and other normative documents. Currently, there are a number of listed companies which have announced and implemented the equity incentive plan.In this paper, the long-term incentive program is designed on the basis of full analysis and "diagnosis" of H corporation. Then we will try to evaluate the impact and implementation effect of the equity incentive. Finally, we discuss the implementation procedures and safeguard measures briefly.There are six parts in this paper. The following is the main content of each part.The first part makes out research background, significance, research method and analytical framework, and also reviews and comments the equity incentive literature.The second part introduces the definition and the theoretical basis of equity incentive. The key elements of equity incentive, the practice and development of equity incentive in China are also outlined in this section.The third part mainly analyzes H corporation’s equity incentive background, including company profile, industry environment and competitive strategy, status of long-term incentive and problems. Then the necessity and feasibility of the equity incentive is demonstrated.The forth part discusses the design of H corporation’s equity incentive program. After determining the purpose and design principle, we discuss the eight elements of equity incentive and design the equity incentive plan according to the current laws and regulations, also combined with the actual situation of the enterprise. Then the impact of implementation is analyzed from the perspective of the accounting. The advantages and the incentive effects of the program are outlined at last.The fifth part mainly introduces the implementation procedures and safeguard measures of equity incentive.The last part summarizes the paper, points out the limitations of this paper and puts forward the questions for further research.The equity incentive program designed in this paper can solve the problem of the lack of H corporation’s long-term incentive and also has a certain reference to other companies.