Discussion On The Existing Problems Of Equity Incentive In Listed Companies On Gem

After the separation of management rights and ownership of the company,the gap between the interests of the owners and the operators became more and more obvious.At the same time,their mastery of the relevant information of the company also had a big gap.The problem of commissioning agency was inevitable.In order to maximize the value of the company and reduce the commission cost,companies need to establish a different incentive mechanism from the traditional one.The traditional salary model is mainly composed of wages and bonuses.The drawback of this model is that it easily leads to short-term behavior of the operators.Equity incentives are established and developed on the basis of overcoming such defects.They are widely used as a mechanism for effective resolution of principal-agent issues.The equity incentive for China in 2005 was an important turning point.Prior to 2005,China's equity incentives greatly limited the prospects for its prosperity due to external environment and implementation experience.After 2005,the effective implementation of the equity division reform provided the precondition for the implementation of the incentive plan.At the same time,the promulgation of laws and regulations that are complementary to it,and the experience and lessons learned from the implementation of equity incentives by some listed companies were all the development of equity incentives in China.Provides an effective foundation.On October 23,2009,China's GEM was officially opened,attracting attention for a period of time.GEM is mostly composed of SMEs with high development potential.As high-tech companies account for a relatively large proportion,professional talents are the main factor in ensuring the long-term development of GEM listed companies.In order to continue to attract new talent resources and retain existing talents while at the same time stimulating their potential capabilities to continuously create value,many companies chose to implement incentives shortly after their listing.What kind of problems will arise when equity incentives are combined with the Growth Enterprise Market? What are the deep reasons behind these problems?How should the equity incentive plan be designed so that it can better meet the specific needs of China's Growth Enterprise Market? This article is with these issues,to explore the equity incentive of China's GEM.The article consists of five parts:In the first part,the research background and practical and theoretical significance of the dissertation are first introduced.At the same time,domestic and foreign researches on the design and incentive effects of equity incentive programs are summarized.In the second part,the concepts,elements and main modes of GEM and equity incentives are described.The third part is followed by the actual situation of China's GEM listed companies,taking the first batch of companies listed on GEM's Hiconics Eco-energy as an example to analyze the motivation,process and results of the implementation of the company's equity incentive plan.Hiconics Eco-energy's equity incentives were divided into four phases: the first phase of which was successfully exercised,the second phase was unsuccessful since it did not meet the performance conditions,and the third and fourth phase equity incentives were cancelled due to changes in the external macro environment.This result of the equity incentive of Hiconics Eco-energy reflects that it has some problems in the design and implementation of the incentive plan.In the fourth part of this article,we discuss the problems of equity incentives.During the process of exploration,we found that the problems in the equity incentives of Hiconics Eco-energy are mainly manifested in four aspects:(1)There are problems in the design of the incentive plan:(2)the management has moral hazard;(3)The incentive effect is not significant;(4)leads to the loss of the company's talent and constrains the company's development.In the meantime,it analyzes and discusses the causes of these problems in Hiconics Eco-energy.In the fifth part,it mainly proposes some recommendations for the formulation and implementation of incentive plans for Hiconics Eco-energy and GEM listed companies.In the final part of this article,we mainly draw the following inspirations:First,when implementing the incentive plan,the company should select the appropriate incentive model based on the advantages and disadvantages of each incentive model,combining the validity of the capital market,the industry in which the company is located,and the development needs of the company at the current stage;Second,in the selection of incentive plan timing,incentives should be implemented as close as possible to the actual value of the company's stock.Do not choose to implement an incentive plan when the market price is far from the company's value;Finally,external oversight has an effect on equity incentives.It needs to increase the intensity of information disclosure and penalties for non-compliance benefits.At the same time,companies need to recover illegal profits.The main limitation of this paper is that the case company only implemented the incentive plan for the first two periods,which lasted for a short period of time.Therefore,it can only be assumed that the case company has implemented the entire incentive plan to analyze the incentive effect.The author's knowledge and capability are limited,and there may be problems with incomplete research and unclear expression.