Research On The Implementation Effect Of Midea Group’s Compound Equity Incentive

With the development of China’s economy and the improvement of relevant policies and regulations,equity incentive mechanism plays an increasingly important role in alleviating the principal-agent problem and improving the core competitiveness of enterprises.According to the data,from 2013 to 2018,the number of listed companies implementing equity incentive increased significantly.By 2018,2,221 listed companies had announced equity incentive plans.In this context,the single equity incentive model can no longer meet the needs of various listed companies,and listed companies have more diversified demands for equity incentive model.In the process of practice,equity incentive model continues to innovate,resulting in the emergence of the composite equity incentive model.The hybrid equity incentive model integrates the advantages of the single equity incentive model and provides more space for all kinds of listed companies to choose equity incentive model.In 2014 and 2017,Midea Group announced the equity incentive plan for the first time to implement stock options and restricted stock,striving to balance the synergistic effect of these two incentive modes.Taking Midea Group as an example,this paper discusses the effect of compound equity incentive on enterprises.Firstly,relevant literature on equity incentive model,effect and effectiveness is reviewed,and the characteristics,development status and rising motivation of the compound equity incentive model are summarized.Secondly,taking Midea Group’s compound equity incentive scheme as the research object,this paper explores the motivation of Midea Group’s implementation of equity incentive,and analyzes and evaluates the completion of the compound equity incentive.Thirdly,the paper studies the effect of Midea Group’s compound equity incentive from three aspects:financial performance,non-financial performance and market reaction,and makes a comprehensive comparative evaluation of Midea Group’s financial performance with that of other companies in the same industry.Finally,this paper summarizes the advantages and disadvantages of Midea Group’s implementation of compound equity incentive,and puts forward improvement suggestions to improve the compound equity incentive according to the shortcomings of this case.Based on the case study,this paper draws the following conclusions:(1)It is reasonable for Midea Group to choose the compound equity incentive model.First of all,based on the company’s development status and management characteristics,the model combines the advantages of the two incentive models,and strengthens the effectiveness and constraint of the incentive.Second,multiple performance appraisal mechanisms make the exercise(unlocking)target both feasible and challenging;Finally,the appropriate exercise time can create more profit space for the incentive object.(2)After the implementation of the compound equity incentive,the business performance of Midea Group increased significantly,with obvious incentive effect,outstanding enterprise innovation results,improved comprehensive quality and stability of talents,and the market also gave a positive response to the compound equity incentive plan of Midea Group.This paper hopes to provide reference and reference for listed companies to implement compound equity incentive plan in our country,and also provide reference basis for listed companies to analyze and evaluate the enterprise management situation through the study of compound equity incentive plan of beautiful group.