Discussion About The Motivation And Performance Of Implementation Of The Equity Incentive Plan Of FiberHome

Equity incentive is a long-term incentive system,which reduces or eliminates short-term behavior,and promote the sustainable development of the company at the same time the motivate objects in the pursuit of maximizing their own interests by granting the motivate objects the right to receive a company's stock or a gain associated with the stock.The theoretical basis of equity incentive comes from the asymmetry of information between the principal and the agent,the existence of the principal agent requires an incentive to the management.Granting a certain stake in management can mitigate the conflict of interest between management and shareholders,Thereby reducing agency costs.The equity incentive program works by promoting the incentive object to work hard,enhancing the company's performance,and thus promote the stock price rise,so that the incentive object can get greater benefits from the incentive plan.In 1953,the United States Pfizer first opened the stock option incentive plan for all employees of the enterprise,Subsequently developed countries have equity incentive system based on national realities,equity incentive system has been fully developed in the Western markets.Equity incentive play a significant role in the reform of state-owned enterprises,It is important in deepening the reform of state-owned enterprises,improving the performance of state-owned enterprises,and realizing the preservation and appreciation of state-owned assets.But there are many obstacles to the implementation of equity incentives in state-owned enterprises,Including governance structure factors,legal and regulatory factors,capital market factors,improper performance indicators and so on.Fiberhome is the central enterprises which is in the early implementation of equity incentive business,in 2009,the company determine the initial equity incentive plan,a total of 147 objects received 234 million stock options.Fiberhome equity incentive plan to attract,retain and encourage the excellent managers and key employees,to enhance the performance of enterprises,it is a recent stage of China's more successful equity incentive plan.Therefore,this paper chooses the flames for the case to analyze the motivations and performance of the implementation of equity incentive,sums up the experience of implementing the equity incentive and puts forward some reasonable suggestions.This paper uses the principal-agent theory,information asymmetry theory and human capital theory,Using normative research method,comparative analysis,theoretical analysis and case analysis combined with qualitative analysis and quantitative analysis combined method,on the basis of reviewing the research literature system at home and abroad,selecting the flames of communication as a case,this paper studies the motivations and effects of equity incentive of listed companies,research shows the main reason for the implementation of equity incentive are:(1)Make up for the defect of ownership structure:(2)Perfect the enterprise incentive mechanism:(3)To attract and stabilize talent;(4)Improve enterprise value.Judging from the implementation effect,the implementation of equity incentive has significantly improved the solvency of warfare,operating capacity and profitability,the market has also made a positive response to this,and has a positive impact on improving public governance and attracting and retaining talent.By analysis the case of the implementation of equity incentive of FiberHome,This paper argues that,;(1)The listed company implement equity incentive plan is helpful to improve corporate performance;(2)Grant of appropriate scale contributes to the incentive effect of equity incentive plan;(3)The incentive model of the stock option plan is more conducive to building a talent team;(4)Diversification of performance evaluation indicators is conducive to promoting enterprise develop.This article makes recommendations :(1)Enterprises should choose the appropriate incentive model according to the characteristics of the company;(2)To improve the corporate governance structure makes the equity incentive to play a good incentive effect;(3)To improve the effectiveness of the securities market,to promote the stock more fully reflect the company's performance.Choosing a significantly adaptive incentive model according to their own characteristics is critical to ensuring the success of incentives.