Research On The Impact Of Equity Incentives Policies Of X Company

Under the modern enterprise system,the separate of enterprise's ownership and management right has caused inevitable agency cost which may damage the interests of shareholders.Equity incentive is one of the most effective ways to solve principal-agent problem and reduce agency cost.By transferring small amount shares to the management,company can unify the interest of both shareholders and managers and incentive the latter working hard to promote long-term development of enterprises.With the deepening of China's marketization in recent years,increasingly Chinese listed companies have adopted equity incentive policies to strengthen company supervision and reduce agency costs.Meanwhile,impacts of equity incentive policies caused a lot of attention by researchers.Morever,impacts of equity incentive policies could vary according to different industry characteristics.More specifically,it could be more dificult to set applicable equity incentive policy for pharmaceutical enterprises for its high requirements on quality and creativity.Based on literature reviews and summarize on former studies,this paper investigates X company,which is an A-share listed company,on its newly equity incentive plans.More specifically,we conclude details of the enforcement during this plan period,and analysis its impact on the corporate performance from three different perspectives,i.e.profitability,developing ability and service performance.Moreover,this paper provides an optimum proposal for X company under a framework.The results show that,though the equity incentive plans couldn't help company personnel to get more stocks in the end,it still accelerates the ability growth in profitability,development and service performance.One thing need pointing is that,X company need to take more consideration on its develop strategy and policy orientation when drawing up the equity incentive plans.In details,X company should revise its incentive plans on incentive object,vesting conditions and vesting period for a long-time arousal effect.