Research On Design Problems And Countermeasures Of The Equity Incentive Scheme Of WK Corporation

Equity incentive,as a long-term incentive model,can not only solve the agency problem of the company and improve the performance of the company,but also retain the talent and stable management team,so it is favored by listed companies.However,its effectiveness has always been controversial.In particular,after the introduction of the equity incentive model in China,the phenomenon of the large number of executives leaving the company after multiple attempts has been highly anticipated.Focusing from WK company,this thesis aims to explore the development of the equity incentive in our country,and focuses on the issue of the turnover of senior executives during the implementation of equity incentive.In this paper,by using the combination of case study,literature analysis and comparative study and combining the various theories proposed by previous scholars on the equity incentive,this paper took the two equity incentive plans of WK company in 2006 and 2010 as the discussion scope and innovatively focused on the equity incentive plan that emerged during the implementation period in 2010 to discussed the differences and similarities between the two incentive plans in 2006 and 2010.What's more,we followed the departure of the senior executives in order to explore the relationship between the departure and the equity incentive plan.Then,the paper analyzed the problems existing in the WK company equity incentive schemes from four aspects:the right conditions,power price,capital source and line power way,allocation proportion and found the cause of these problems to puts forward corresponding Suggestions on its causes.For perfecting the evaluation indexes,we suggest to set diversified evaluation indicators,join the industry comparison,use incremental incentive and cooperate with the company diversification strategic way.Next,we introduce some methods for adjusting prices,including the index floating method,BETA coefficient method and the present value of adverse method.Moreover,we advised to adopt diversified forms of equity incentive,extend the option period and determine appropriate incentive object and allocation proportion.In the same time,to solve the problem of frequent turnover of senior executives in the right period,we put forward four countermeasures:the incentive object of dynamic adjustment,no entry into the same or similar industries after demission the disposal of option or stock after demission,establishment of margin system.We hope these suggestions can improve the equity incentive plan of WK company and reached its purpose of retain talent incentive.We also wish the conclusion of this paper will be of some help to other companies in China which want to implement of equity incentive plan.Finally,based on the above analysis,this paper puts forward the conclusion and prospects for the future development of equity incentive in China.