A Research On Equity Incentive Plans Of Everyday Network

Along with the development of the modern company here comes agency problems.One related solution to the problem is the equity incentive or stock option incentive which begun from 1950 s and rapidly grown in 1980 s among companies of America.Equity incentives,aiming to reduce and get out of agency costs come from the information asymmetry between company owners and managers,are believed to be able to unify targets and objectives of different characters in a company.From the Trail Regulation of Listed Company's Stock Option Incentive in 2006 to the formal one came out a decade later,equity incentives are becoming more and more riper and popular.Following the Guidance of Listed Company's Stock Ownership Plan in Pilot Schemes from China Securities Regulatory Commission in 2014,over 40 companies including the case of this paper,Everyday House Co.,published their stock ownership plans.The case company's equity incentive plans,not only the model of trying to replace the formal stock ownership plan with the stock ownership plan but also the form of substantially giving by the strong stock holder both make this case very special among equity incentive plans of small and medium-size listed companies of china,which also make Everyday House Co.a typically case of discovering managers incentive by the small and medium-size listed company of China.The purpose of this paper forming a case study is trying to answer the following two questions.One is that how to solve the Entrenchment Effect Problem between strong and weak stock holders of a listed company which is going to launch incentive plans by designing plans properly.The other is that how is the practicability and related effect of using the stock ownership plan which is relatively easier to be launched by listed companies instead of other formal stock incentive plans.The conclusion of this paper is that potential informal bonus in incentive plans may do harm to the weak stock owners and acute the distribution between strong and weak stock owners and eventually break up the whole plan.The stock ownership plan,compared with stock options incentive,has certain advantages.At the end this paper gives some advice based on the analysis before.