Research On The Influence Of TOREAD’s Equity Incentive On Financial Performance

With the rapid development of the economy and the improvement of the capital market,in the process of the company’s increasing scale,the conflict of interest between the operator and the owner caused by the problem of entrusted agency becomes more and more obvious.In order to reduce the cost of entrusting agency and solve this contradiction,modern enterprises gradually prefer to use the long-term incentive mechanism of equity incentives.The equity incentive system is to give some shareholder equity to the operator through conditions,so that their identity changes,and the interests and The interests of the company are bound together in disguise,which in turn promotes the interests of the two to continue to converge,and finally to the same.This can not only effectively resolve the contradictions arising from the principal-agent problem,but also improve the enthusiasm of the operator’s work and loyalty to the company,allowing the operator to share risks with the company,advance and retreat together,and under the influence of the equity incentive system,Enterprises can also continuously improve performance,optimize internal management,and achieve steady development.The case object studied in this article is TOREAD,which mainly studies the impact of its implementation of equity incentive plans on financial performance.After introducing the research background,research purpose and significance of this article,the literature research method is used to sort out,classify and summarize the relevant domestic and foreign research literature and theories about equity incentives and financial performance;further use a combination of theoretical analysis and case analysis The method described the basic situation of TOREAD company and the specific plan and implementation process of its three equity incentives.Since TOREAD successfully listed on GEM,it has issued three equity incentive plans.In2010,TOREAD implemented the first-phase stock option model incentive plan;in2012,TOREAD summarized experience from the first-phase incentive plan,designed and implemented the second-phase equity incentive plan,compared with the first-phase equity incentive plan,The second phase of the incentive plan uses a combination of restricted stock and stock option models,which is more abundant and more targeted;the third equity incentive plan was released in 2015,which is different from the equity incentive plans successfully implemented in the previous two phases.The third incentive plan was not successfully implemented due to factors such as improper launch timing and unreasonable design of the plan;combined with thecomparative analysis method,the differences between the three equity incentive plan plans of TOREAD Company were compared,and the financial index analysis method was used.Compare with the financial analysis method of DuPont financial analysis before and after the pathfinder company’s equity incentive to prove the impact of equity incentive on the financial performance of the company.Finally,it draws inspiration from the case,sums up experience based on the analysis results,and makes reasonable suggestions for other companies intending to provide equity incentives to improve financial performance..