Case Study Of Equity Incentive From The Perspective Of Life Cycle

With the gradual improvement of capital market,the issue of principal-agent has become the core issue of modern corporate governance.The practice of western capital market has proved that equity incentive can promote the convergence of the interests of employees,managers and owners,alleviate the problem of principal-agent,and promote the long-term development of enterprises.In 2006,China promulgated the "management measures for equity incentive of listed companies(Trial)”.Subsequently,the relevant laws and regulations on equity incentive have been issued continuously,and more and more enterprises begin to try equity incentive.Due to the short development time of equity incentive in China,the relevant theoretical research is still not perfect,and the guidance of equity incentive in practice is not strong.The Life cycle plays an important role in the decision-making of enterprises.Some scholars have proposed that listed companies should choose the right type of equity incentive in different life cycle according to the nature of enterprises.However,the existing research on equity incentive is mostly limited to the specific scheme design of corporate equity incentives,few scholars have studied the impact of the life cycle on the specific programs and subsequent performance of equity incentives.How should enterprises in different life cycle choose the right equity incentive plan? What are the different effects of equity incentive schemes implemented in different life cycle stages on their performance?Based on the above background,this paper first divides the life cycle of Haida Group,and takes the two equity incentive schemes and follow-up performances of Haida Group in 2011 and 2014 as the research object,and studies the incentive model of stock option in growth period and the model of restricted stock plus stock option in maturity period.In order to analyze whether the design of two different life cycle equity incentive schemes of Haida Group is appropriate,this paper evaluates the implementation effect of the two equity incentive schemes from three aspects: short-term stock price fluctuation effect,long-term business performance and the impact of equity incentive on agency cost.Among them,financial and non-financial indicators are introduced into the long-term business performance to comprehensively evaluate the implementation effect of equity incentive.It is found that the two equity incentive schemes of Haida Group have brought a series of positive effects to the enterprises,but the second one is obviously better than the first one in terms of duration and effect.At the same time,the two equity incentive schemes have some unreasonable factors.But on the whole,the equity incentive model of Haida Group matches its life cycle stage,which has a positive impact on the enterprise.This paper takes Haida Group as the main body of the case and studies the impact of different life cycles on the design and implementation effect of equity incentive plan.The enlightenment is as follows: first,the enterprise should choose the appropriate equity incentive plan according to the life cycle stage,and the equity incentive plan should match the life cycle stage of the enterprise;second,the growth rate of stocks in the growth period is relatively large,the form of stock options should be given priority,while the market share of mature enterprises is stable,and restricted stocks will become a better form of choice;Third,in order to achieve better incentive effect,enterprises should pay attention to the incentive effect of reserved shares,comprehensively consider the incentive purpose and development status of enterprises,formulate reasonable exercise conditions,and pay attention to the impact of equity incentive on agency cost.