The Case Analysis Of Midea Group Equity Incentive Plan

Equity incentive is a long-term incentive mechanism that widely used in corporate governance.The implementation method of equity incentive is by granting a certain number of stock options or restricted shares,managers' personal income and business profit conditions are directly related,owing to the sensitive relevance that possess reward and punishment,equity incentive has been regarded as a good way to solve the principal-agent problem and promote the enterprise performance growth.Since the implementation of equity incentives by Midea Group,the senior management's decisions have become more scientific and rational,and research and development capabilities and market share of products have also been greatly improved,in comparison with they were not implemented.Midea Group is a typical case of implementing equity incentive,it is hoped that through the analysis of this article,we can summarize the countermeasures and suggestions for the entire household electrical appliance industry.There are six parts of this paper.The first part is the introduction.It introduced the research background and significance of the research,literature research related to equity incentives at home and abroad.The second part introduced the concept of equity incentive,the types of stock incentives,the main theory of stock incentives and the evaluation method of stock incentive effects.The third part is the basic situation of Midea's equity incentives,it analyzed the reasons for the implementation of equity incentives,it specifically listed the content of the Midea Group's three-stage stock option plan.The fourth part is the core chapter of this paper,in the analysis of changes in the performance of the Midea Groupequity incentive plan before and after,comprehensively using financial indicators and non-financial indicators,horizontal and vertical analysis to evaluate the effect of equity incentives,summarized the advantages of stock incentive design,and pointed out the problems of equity incentive plans.The fifth part is the suggested countermeasures against these issues of Midea Group.From the perspectives of strengthening incentives for performance indicators,increasing the proportion of stock options granted,and diversifing assessments etc.The sixth part is the conclusion and outlook.It is hoped that by carefully analyzing the advantages and disadvantages of the three-stage equity incentive plan,we could obtain the general recommendations for the entire household appliance industry.