The Case Studies Of Weixing's Equity Incentive Plan Implementation

As a long-term incentive mechanism,equity incentive is widely used in domestic listed companies.In the eyes of scholars,equity incentive is the effective medicine to solve the agency problem of company and a good way to stay talents.In the United States,most listed companies have adopted stock option incentive plan.In China,the listed companies are generally implemented equity incentive.Since the split share structure reform,the internal governance structure of listed companies in China began to regulate.In order to regulate the equity incentive plan of listed companies,establish the long-term incentive system,and further improve the corporate governance structure of company,the Commission allowed companies completed the split share structure reform to have equity incentive plan in December 31,2005.Beginning in 2006,listed companies in China have implemented equity incentives.However,there are some manipulative behaviors in the implementation of equity incentive plans of listed companies.Many listed companies even suddenly terminate the equity incentive plan.For these problems,many scholars at home and abroad doubt the effect of equity incentive.Could the equity incentives solve the problems of corporate governance? This paper will analyze these issues by the case of the three equity incentive plans of Weixing.This paper uses comparative analysis and event study to analyze 2006,2011 and 2013 stock option incentive plan of Weixing.This article is organized as follows: Chapter 1 is an introduction;Chapter 2 is the introduction of the case;Chapter 3 analyzes the implementation of the equity incentive plan of Weixing;Chapter 4 analyzes the market reaction of equity incentive;Chapter 5 introduces the problems of listed companies' equity incentive in China and offers some relevant suggestions.By analyzing Chapters 3 and 4,the paper argues,the three equity incentive plan of Weixing are welfare.In the process of the implementation of equity incentive plans,there is an artificial market manipulation to make the incentive objects get great benefits.In order to achieve the vesting conditions,it is likely to short-term behavior.Equity incentive has become executives' selfish tools.The problems of Weixing's equity incentive plan are also the current problems of listed companies in China.At present,there are three outstanding issues in China listed companies: only using single non-market conditions in vesting conditions,the incentive effect will be weakened with the extension of incentive period,the company will stop the plan if it can't achieve the vesting conditions.This paper thinks that the external environment and internal control systems are not mature causes these problems.Therefore,regulators should establish a sound regulatory system and improve the internal management mechanism,and strengthen the supervision to listed companies equity incentive,increase penalties to the illegal market manipulation.