Research On The Impact Of Midea Group's Equity Incentives On Company Performance

As a long-term incentive mechanism,equity incentives have been widely favored by Western developed countries since they were born in the United States in the 1950s because of their great role in mobilizing employees' enthusiasm,attracting and retaining talents,and constraining the short-term behavior of business operators.Equity incentives have been applied late in China.Before the split share structure reform in 2006,there were still few companies that implemented equity incentives in listed companies in China.However,with the promulgation of the " Measures for the Administration of Equity Incentives for Listed Companies(Trial)" issued by the Securities Regulatory Commission on September 30,2005 and the subsequent series of policies and regulations,the institutional environment for the implementation of equity incentives by listed companies has been continuously improved and more and more listed.The company chooses equity incentives.However,in practice,the implementation of corporate equity incentives has been mixed,and some companies have even suspended the implementation of equity incentive plans.Therefore,the implementation effect of equity incentives has not only received more and more attention from the practical circles,but also become a hot issue of academic concern.Based on this background,this paper selects the equity incentive system of the home appliance giant,Midea Group,and hopes to play a reference role in the development and improvement of China's equity incentives.Based on the theory of principal-agent theory,human capital theory,incentive theory and model administration theory,this paper applies the literature review method,quantitative analysis method and event research method from financial performance and non-finance to the implementation of three different equity incentive models of Midea Group.Various dimensions such as performance,vertical and horizontal,short-term market and long-term response were studied.The study found that in terms of financial performance,the performance of the company after the implementation of the equity incentive plan has fluctuated,but the overall trend is a steady upward trend.In terms of non-financial performance,the number of scientific research personnel in equity incentives has increased significantly,and the proportion of R&D personnel has been significant.The number of patents has always ranked first in the home appliance industry,indicating that the innovation capability of Midea Group is constantly improving,thus increasing the company's performance.In terms of market reaction,the short-term market reaction of Midea Group's implementation of equity incentive plan is not significant enough.This may be related to equity incentives being a long-term incentive mechanism;but in the long run,incentive plans convey good information to external investors.As a result,the stock price has risen steadily,which has increased the value of shareholders and has long-term effects.However,the fact that Midea Group's equity incentives are low,performance conditions are loose,and the shortage of funds for incentives to purchase equity is a shortcoming in its program.Therefore,this paper believes that the company should reasonably adjust the proportion of equity incentives according to its own situation,appropriately improve the performance evaluation standards,and at the same time fully consider the issue of funds for incentives to exercise rights,so as to promote the smooth implementation of the program,so as to give full play to equity incentives.