Research On The Equity Incentive Problem Of HD Company

Since the establishment of modern corporate system,inconsistent interests between principal and agent resulting from the separation of company ownership and management rights has been a research hotspot in the economic field.Recently,China is carrying out informatization construction.The software and information technology service industry has received much support and advocacy,presenting a state of full competition with hundreds of contentions.As a high-tech enterprise,if software and information technology enterprises want to have a place,they must firmly graspe the core competitiveness of talents.So,various companies have launched the implementation of equity incentive.They want to reduce the short-term behavior of managers and avoid brain drain in this way.Therefore,how to formulate a scientifical and rational plan and finding out whether equity incentives effectively achieve the purpose is of great significance.As the first listed company in China's information industry,HD company fell into the bottom after a golden period of development.The crisis was not resolved until the company completed a major asset reorganization in 2012.In order to further stimulate the company's potential and seek development,HD launched an equity incentive plan in 2014.This paper selects the first listed company in China's information industry-HD company as the research subject.Based on the principal agent theory,human capital theory and so on.Firstly,this paper introduces the stock option incentive plan launched by HD in 2014,explaining its implementation motivation,plan and specific progress in detail.Secondly,it analyze the effects of equity incentives in terms of financial and non-financial aspects.The financial aspects contain financial profitability,solvency operating capacity and development capability.The non-financial aspects contain executive on-the-job consumption,human resource efficiency and stability,market share,innovation capabilities,and capital market response.We find that the implementation of the HD company's equity incentive plan has improved the company's profitability,and promoted the executive to pay more attention to company's long-term development.But this plan can not avoid core brain drain and attract institutional investors.Through in-depth research,we find that HD has problems in program design and guarantee system.The design of equity incentive plan has the problems of single incentive mode,one-sided performance evaluation index,unreasonable exercise conditions.In terms of the guarantee system,we find that the company's internal governance and externalsupervision have problems.Finally,according to the questions this paper makes suggestions to enhance the effect of equity incentives.In terms of optimizing equity incentive plan,it is recommended to choose a compound incentive model,set scientific assessment indicators,and reasonably set exercise conditions.In terms of formulating an effective security system,it is recommended to improve the company's internal governance and strengthen external supervision.