The Impact Of Equity Incentives On Corporate Performance In Xiaomi

The equity incentive system was introduced to China in the early 1990 s and Vanke took the lead in trying out the equity incentive scheme,which set a precedent for later exploration of equity incentives by enterprises.In 2006,the Securities Regulatory Commission issued the Measures for the Administration of Equity Incentives for Listed Companies,which regulated the content of equity incentives for listed companies and provided policy guidance for the implementation of equity incentives for listed companies.As an important long-term incentive mechanism,the equity incentive system of enterprises has become an important means to optimize the corporate governance structure and promote the healthy development of the capital market in China.From the 1990 s to the present,the number of the implementation plans of equity incentive for listed companies in China has increased year by year,and the equity incentive system has successfully transitioned from the exploration stage to the period of rapid development.In particular,with the transformation and upgrading of China’s economic structure,China’s Securities Regulatory Commission has paid more attention to the implementation of equity incentives before the listing of companies.Therefore,it is of great practical significance to study the impact of the equity incentive system on the performance of enterprises to build a more perfect equity incentive mechanism for Chinese enterprises.This paper uses Xiaomi Group as a case study to analyse the impact of equity incentives on corporate performance.Based on the evaluation of financial performance indicators,the evaluation of non-financial performance indicators and the grey correlation analysis of the impact of equity incentives on corporate performance,the effect of equity incentives implemented by Xiaomi Group before and after its listing is analysed.Firstly,from the perspective of financial performance indicators,a horizontal and vertical comparison of Xiaomi Group’s solvency,operating capacity,profitability and development capacity was conducted to analyse the impact of equity incentives on the company’s performance;secondly,from the perspective of non-financial performance indicators,Xiaomi Group’s human resources changes,market share,R&D expenditure and output of R&D results were analysed to determine whether the implementation of equity incentives had Secondly,from the perspective of non-financial performance indicators,we analyse the strength of the association between equity incentives and corporate performance to determine whether the implementation of equity incentives has the effect of attracting and securing talents,increasing market share and helping the company to improve its innovation.Finally,this paper concludes that there is a strong correlation between Xiaomi Group’s equity incentives and corporate performance,positively contributing to the improvement of the company’s performance.The pre-IPO equity incentive implementation of Xiaomi Group was very successful,which enabled Xiaomi to attract a large number of outstanding talents in the early stage of its establishment and greatly enhanced the company’s market competitiveness and innovation ability.Based on the successful implementation of the pre-IPO equity incentives,Xiaomi’s employees were more willing to accept the company’s equity incentives,which further enhanced their motivation and thus improved the company’s performance.However,after the IPO,the market economy reached a certain level of saturation and the impact of equity incentives on the company’s innovation capability was not significant,suggesting that Xiaomi Group needs to precisely incentivise the company’s executives and R&D staff to ensure efficient output of R&D results.Based on the above findings,several suggestions are made to further optimise the Xiaomi Group’s equity incentive programme.These include taking into account the improvement of management level while improving the economic efficiency of the company;secondly,the equity incentive mechanism of the company’s executives should be improved to ensure the stability of the management;the precise target of equity incentive to achieve the optimal incentive effect with limited resources in order to improve the innovative R&D of the company;and the continuous deepening of the incentive implementation to ensure the long-term development of the company.