Case Analysis Of Equity Incentive Of Kunming Pharmaceutical

As social economy develops and enterprise scale increasingly expands, human capital is becoming increasingly important in the enterprise. They play a key role in company’s healthy development in the fierce market competition. Stock ownership incentive has played an important role to realize the sustainable development of the important means. Equity incentive started relatively late and has not been widely used among the listed companies in China, which is not commensurate with the rapid developing of China’s stock market.Though more and more listed companies have carried on the implementation of equity incentive plan in recent years, regulations governing stock option incentive are far from complete and mature. Effects of the implementation of equity incentive is difficult to play, or even halfway in China’s listed companies. It is necessary to study the issue about executive equity-based incentive of listed companies through combining cases, so as to provide strategies for the improvement of equity-based incentive system in China.This paper aims to introduce the theory related to equity incentive, summarize the history of the practice of equity incentive in our country and the resent situation of equity incentive in abroad while analyzing equity incentive through the case from foreign companies. We choose the quoted company, Kunming Pharmaceutical as our example, to study the effectiveness of its stock incentive plan. In this paper, empirical research on equity incentive program announcement illustrates the short-term effect on stock price, using the event study method, selecting abnormal return as the marker. The results show that obvious positive price effect is existed in Kunming Pharmaceutical of implementing equity incentives before and after the event announcement. Finally, the article puts forward specific suggestions and solutions according to the study results.