Research On The Incentive Effect Of Multi-level Performance Evaluation Standards In Equity Incentives

The implementation of equity incentives based on performance appraisal in China is the most important factor in the design of equity incentive plans.The Measures for the Administration of Equity Incentives for Listed Companies,implemented in August 2016,relaxed the requirements for authorization conditions and exercise conditions such as performance appraisal indicators,which greatly increased the flexibility of the performance appraisal of listed companies.Many companies have changed from the conventional single performance appraisal standard to the multi-level performance appraisal standard in the performance appraisal standard of the incentive plan,so that the number of equity instruments that can be granted by the company-level incentive object is closely linked with the actual performance level.This paper studies the incentive effect of this new type of performance evaluation standard setting method,which is of great significance for the listed company to improve the design of equity incentive plan and promote the role of equity incentive.Based on the combing and summarization of the domestic and foreign equity incentive performance evaluation standards and economic consequences,this paper firstly establishes a theoretical analysis framework based on principal-agent theory,human capital theory and the theory of fairness,goal setting theory and expectation theory in incentive theory.From the theoretical level,demonstrate the effectiveness of multi-level performance appraisal standards in listed companies' equity incentive plans.Secondly,Dinglong Co.,Ltd.is used as a case study object to analyze the rationality and action path of the multi-level performance appraisal standard in Dinglong's restricted stock incentive plan,and verify its incentive effect from two aspects: short-term market reaction and long-term financial performance..The conclusions of this paper are as follows: From the perspective of goal setting,the multi-level performance appraisal standard reflects the incentive income and performance relevance,the target difficulty appropriateness and incentive persistence,which is more reasonable than the conventional single performance appraisal standard;The assessment criteria play an incentive role by inhibiting the short-sighted management,reducing agency costs,and increasing per capita value.The multi-level performance assessment criteria have better incentive effects in terms of short-term market response and long-term financial performance,indicating that the equity incentive scheme Setting a reasonable multi-level performance appraisal standard can more fully exert the incentive effect.Finally,based on the conclusions obtained,the corresponding recommendations are made to the regulatory agencies and listed companies.The contribution of this paper is to provide a reference for listed companies to design scientific and reasonable performance assessment conditions in the equity incentive plan.This paper affirms the positive role of multi-level performance appraisal standards,and provides reference for listed companies to develop reasonable incentive plans based on their own situation.In order to promote the contribution of equity incentives,this paper has enriched the case study in the field of equity incentive performance assessment conditions.The shortcoming of this paper is that the analysis of the incentive effect of the multi-level performance appraisal criteria in the case cannot exclude other factors in the incentive draft and the possible impact of the employee stock ownership plan.