The Research On Structure And Effects Of Equity Incentive Contracts For Chinese Listed Companies

Stock option is a kind of means to coordinate conflicting objectives interests between the owners and operators, which is respected by the western developed countries, mainly because it allows operators to enjoy the enterprises' growth benefits and it can make a win-win between owners and operators. Stock option's implementation cost is low, and its long-term incentive effect is good, so it is the most popular in the international arena, but the history of equity incentive implemented in China's listed companies is not long. Since 2005, China reformed the share structure of listed companies, made the original non-tradable shares into tradable gradually, prepared the way for the equity incentives, in order to improve company performance, stock options become a fashion to incentive the executives of listed companies. In order to improve and perfect the stock incentive system, in 2006 the Commission promulgated the "Equity Incentive Management of Listed Companies (Trial) ", until the September 2010 there were 169 listed companies try to have the equity incentive. In this paper, let the split share structure reform as background, comprehensive study the status, contract structure and implementation results of the listed company's overall equity incentive plans.In the second chapter, first defined the concept and content of equity incentive contract structure,and this paper examine the relevance between these structural variables and corporate performance. Secondly, analysis the company's Incentive Stock Option and the implementation of results theoretically, and assumptions as the basis for future research. Finally, review domestic and foreign paper on operators equity incentive effect of the implementation, through the existing theoretical framework and literature review of empirical evidence, we recognize that direct study the relationship between the equity incentive and corporate performance is not deep enough, lease structure variables as a bridge, through the choice of equity incentive programs, the development, implementation and other aspects, more detailed analysis of the implementation of equity incentive effect at the micro level, which is the innovation of this paper. In the third chapter introduces the evolution of listed companies and the status of implementation of incentive policies. From analysis the status of listed companies in China, we can see little significantly difference in China's listed company's equity incentive system. Relatively simple design of incentive programs result from the company did not fully consider the actual situation of their own. Chapter IV based on the special background of China and status of implementation of listed companies, this paper mainly analysis the correlation of equity incentive contract structure and Performance. The empirical results show that there is positive relationship between secretary ratio and stock performance, but the correlation is weak; incentive period has a positive role in promoting company's operating performance; incentive number of conditions negatively correlated with corporate performance, there is no incentive effect. Based on the above results this paper analyzes the reasons,and makes strategic suggestion accordingly.The results of the study supplement the theoretical framework of structure and effects of equity incentive contracts. Besides, we provide the data support for the design of our country's equity incentive system. The results can help the related policy surveillance department and listed companies to draw up the incentive system which is suitable for the development of the listed company as well as provide the theoretical reference for the department which is responsible for the policy making. Meanwhile, the results are helpful in perfecting the stock option system of listed company in China.