Research On The Design And Effect Of Equity Incentives In Private Enterprise

Private enterprises are a backbone force in promoting China's economic development.After continuous development,China's private enterprises have gradually embarked on the road of specialization and standardization by standardizing the company's management system,improving the corporate governance structure,and hiring professional management talents.However,inevitably,the separation of ownership and management rights will bring about the principal-agent problem,and the incentive system is one of the most effective means to solve the principal-agent problem.Equity incentives are part of the company's incentive system.Since the China Securities Regulatory Commission promulgated the Measures for the Administration of Equity Incentives for Listed Companies(Trial)in 2006,the equity incentive plan has gradually evolved from the “luxury jewelry” of private enterprises to “necessities”,and more enterprises have benefited from it,which encourages more companies to try to implement equity incentive plans.However,in recent years,many companies that have issued equity incentive plans have to terminate their plans for various reasons.This phenomenon is caused not only by the instability of China's securities market but also because many companies do not use scientific methods or the plans are not based on the actual situation of the company.Instead of suitable plans,many companies just copy other companies' successful experiences,which leads to the failure of the equity incentive plan.Therefore,how to design the equity incentive plan scientifically and reasonably is the problem that needs to be solved in this paper.Based on sorting out the previous literature and related concepts of equity incentives,this paper analyzes the necessity of designing a scientific equity incentive plan for private enterprises from three aspects: the status quo,existing problems and significance of equity incentives for private enterprise,and discusses specific steps and requirements for the design.This paper chooses Zhejiang Zhengtai Electric Co.,Ltd.as the research object.Zhengtai Electric has implemented two equity incentive plans.This paper compares and analyzes the background and specific provisions of the two programs,and evaluates the effects from three aspects: market response,financial performance,and R&D innovation capabilities.Finally,it is concluded that the differences in program design will lead to differences in the final effects.Enterprises can improve the incentive effects by improving the equity incentive plan.At the end of this paper,suggestions for perfecting the equity incentive plan of Zhengtai Electric are put forward,which has certain reference significance for the design of other enterprises.