Research On The Implemention Effect Of Fiber Home's Equity Incentive

Since the 1900 s,China has made a lot exploration on Equity Incentive,which is now widely used in our country.Equity Incentive,as a long-term incentive mechanism,is to make managers to make decisions about the company's internal strategies and undertake the correspondent risks by granting them a certain amount of the stocks of the company,thus promoting them to work harder.Then how to design the Equity Incentive Plan and carry out it efficiently becomes the focus.Fiber Home is a state-owned company which established at 1999.In 2009 and 2014,it carries out two Equity Incentive Plans by using two different model of stock options and restricted stock.This thesis mainly studies the rationality and the effects of the Equity Incentive Plan by using two different models,and how to optimize the Equity Incentive Plan to realize its incentive purpose.The thesis consists of six chapters.The first part is about the backgrounds,the meaning of the study and the research methods used during the study.The second chapter is to introduce some concepts about Equity Incentive and the difference of restricted stocks and stock option,incentive theory,principal-agent theory and human capital theory,and literature review about the correlation between the Equity Incentive and company's performance.The third chapter will introduce the basic information about Fiber Home and industry background first,then analyze the reason of using different models in two Equity Incentive Plan,and the contents of the Plans.The forth chapter will firstly introduce the completion of the two Equity Incentive Plan,analyze the effects of the Equity Incentive Plan to the company's performance from the perspective of finance,employees' performance and market,then figure out the problems in the Plans.The fifth chapter provides the optimized suggestions about the plan and the implement of the plan.The last chapter is the conclusion,contribution and drawbacks of the thesis.By the study of the thesis,we find that all the performance indicators have been achieved until 31 th December,2017.From the perspective of long-term financial performance,profitability has steady development during the first Equity Incentive and remained stable in the second Equity Incentive.The growth ability has improved much but most of it should be contributed to the development of Communication Manufacturing industry.The operating ability has seldom improved during the first Equity Incentive,but makes some progress in the second Equity Incentive.In the first period of Equity Incentive,the financial leverage was not made full use of,but the it was made more use of in the second one.In addition,ROE was probably manipulated to reach the targets during the first Equity Incentive Plan.From the perspective of innovating,Fiber Home has devoted much money and technicians to enhance its innovative ability,and got corresponding good results compared to its investment.From the perspective of employees' performance,the number of employees leaving the company was reducing and most of employees achieved the high levels of performance targets.From the perspective short market performance,2014's Equity Incentive is better than the 2009's one.Overall,two Equity Incentive get good results and have optimistic effects on the company's performance.However,there are still some problems in the plan that needs to be solved to make the Equity Incentive stimulate the managers and employees better and make sure the Equity Incentive Plan can progress well and effectively.