Study On The Design And Effect Of Equity Incentive Plan Of"repurchase + Cumulative Reward"

In recent years,the implementation of equity incentive is more and more popular around the listed company.But not all of them can achieve the desired incentive effect.For the design of the equity incentive plan itself,the scientific and reasonable design is an important guarantee to realize the incentive effect.At present,most of the design of equity incentive plans are using the way of private placement of shares.This incentive plan is simple to design,its conditions are single,the incentive elements of the design are lack of flexibility,and rarely take the company’s long-term benefits into account.And a small number of enterprises are using the way to buy back the stock.This way is difficult to design but it is dynamic.Not only thinking about the dynamic performance of enterprise performance,but also joining the multiple assessment conditions,focusing on the long-term effects of incentives.This paper aims to study this kind of equity incentive plan,analyze the elements of the design of the program,evaluate its incentive effect,and then give other companies that want to achieve long-term benefits through the implementation of equity incentives some recommendation and inspiration.This paper takes the equity incentive plan of Jianmin Group as the research object.Its stock source is repurchasing from the secondary stock market.In the extraction of incentive funds,the plan adopts the form of cumulative reward and joins the adjustment mechanism.The number of shares repurchased is determined by the incentive fund and the expected share price.The overall design extends the incentive period and sets multiple conditions.In general,the design of its equity incentive plan is innovative.Firstly,this article introduces the basic situation of Jianmin Group and analyzes the implementation process of its equity incentive plan.Secondly,summing up its equity incentive plan’s innovation in the design on the basis of the analysis of the elements of its equity incentive plan design.Thirdly,verify the implementation effect of the equity incentive plan by three aspects:relative performance evaluation,market reaction and innovation analysis.Through the case study of Jianmin Group,the following conclusions are obtained:(1)Jianmin Group’s equity incentive plan improves its financial performance.Its solvency and profitability are improved.Although its growth and operational capabilities are not be improved,in summary,its overall financial performance has improved.(2)Jianmin Group’s equity incentive plan improves its non-financial performance.It not only gets positive response from the market,but also improves its own innovative ability.(3)The effect of the equity incentive plan of Jianmin Group has been verified,it’s design is scientific and reasonable.Through the analysis of this article we get the following enlightenments about the innovation of incentive model that listed companies should pay attention to:(1)Linking the number of shares to relative performance to increase flexibility.(2)Linking the conditions of granting stock and business performance together.And setting up multiple performance assessment mechanism.(3)Extending the incentive period to ensure the incentive effect.