Research On Equity Incentive Of Huadazhibao

Along with rapid economic growth, China has invested more and more on innovative property right and technical innovation. For the sake of promoting business development, it is inadvisable for Chinese hi-tech companies to rely solely on the conventional remuneration system to attract the core management, technical and other professional talents. Furthermore, considering that remuneration system of a majority of Chinese companies is inferior to that of the foreign-funded counterparts, the equity incentive, a long-term incentive system, has been gradually recognized and adopted by Chinese companies. Today, the competent national authorities in China also take initiative to improve the environment for the implementation of equity incentive, and encourage and assist eligible companies to engage in the pilot operation of equity incentive.This article intends to, by researching the regulations and status quo of domestic and overseas equity incentive systems, and analyzing the equity structure, remuneration system, and incentive system of Beijing Huadazhibao Electronic System Co., Ltd. (hereinafter referred to as "Huadazhibao" or the "Company"), a hi-tech company, propose a new improvement plan aiming at solving the problems existing in the original equity incentive system of the company and exploring the feasibility of enhancing its equity incentive system in future. The research focuses on:1) Adopt BSC (balance scorecard performance assessment system) to assess the incentive objects, combine the assessment result with equity incentive, provide all-sided basis for defining the scope of incentive objects and determining the distribution of equity, and reduce the negative impact of inaccurate subjective assessment on the effect of equity incentive; 2) Based on the characteristics of the Huadazhibao as a typical hi-tech company, develop an appropriate mode of equity incentive, put forward the mode that integrates the incentive of shares and option, and design an equity incentive plan for the company, and; 3) Because Huadazhibao is a state-owned holding company, the characteristics of state-owned enterprise shall be taken into consideration in determining the source and acquisition method of equity incentive. Moreover, because the equities for incentive purpose are mainly acquired by reducing the state-owned shares, it is recommended that the equity incentive be acquired via cash payment, so as to evade the sensitive issues.As a typical unlisted hi-tech company, Huadazhibao has been on the rise in terms of operating performance, corporate assets, income and profit over five years since its establishment. At present, with regard to management mode, core products, key technologies, and economic indicators, Huadazhibao has complied with relevant national requirements for the pilot operation of equity incentive. Therefore, the improvement plan for equity incentive proposed in this article is representative and can be recommended as valuable reference for similar companies.