Research On The Equity Incentive Application In The New Third Board

The new third board is an important cornerstone in constructing multi-level capital market in China. In recent years, under the guidance of the state policies, the new third board is booming and the listed enterprises are increasing rapidly in numbers. By the end of 2015, the new third board listed companies have reached 5,129, surpassing 2,827 of the domestic listed companies (A, B shares). Meanwhile, more and more of the listed companies begin to realize that the implementation of equity incentives can help the company and the incentive objects achieve the binding interests, establish the long-term win-win cooperation incentive mechanism, and provide endogenous power for the sustained, rapid and steady development of the company.This paper begins by expounding the research background of the equity incentive and its corresponding content and then it goes on to introduce the basic theory related to equity incentive and the current research status on equity incentive at home and abroad. This paper makes an explanation of the new third board from its development course, function positioning and its significance to the business development and other aspects. It also makes an analysis on the typical characteristics of the enterprises listed on the NEEQ and the current application status of equity incentives in the new third board enterprises. Due to the short practice of the equity incentive application in the new third board and the recognized degree gaps between the equity incentives and mainboard and the growth enterprise board, this paper makes a special analysis on the necessity and feasibility of the equity incentive application in the third board.This paper studies the application of equity incentive by taking the typical case of Linkage Software Co., Ltd. in Suzhoulndustrial Park (hereinafter referred to as "Linkage Software"). As a high-tech software company, Linkage Software needs to implement matched human resources strategy to support business transformation and development. As a result, the company implemented equity incentives in 2014 and 2015 respectively. Based on the above analysis, this paper makes a summarized and comprehensive study to the equity incentive application of the new third board in Chapter Five. There are some obvious differences between the external regulatory environment of the equity incentives of the new third board and the listed companies, which mainly reflect in the market-oriented equity incentives in the current new third board. In the application of equity incentives, some application links and factors play a key role to the application results, such as the time window choice of the equity incentives, the scope and number of the incentive objects, and the determination of exercise price, which the company should carefully design and decide with prudence. In the specific application of the equity incentives, the optional incentive modes for the new third board enterprise mainly include new share introduction, stock option, restricted stock and incentive fund and so on. Each of the incentive modes has different features and enterprises should make flexible choices based on their own situation.This paper concludes upon research that there are promising application prospects of the equity incentives in the new third board, especially with the expectant implementation of marketing stratification, public offering, and share transfer channel in 2016. The equity incentive application is to shine brightly in the capital stage of the new third board and is to create better or even great companies.