The Research On Optimization Of K CORPORATION LIMITED’s Equity Incentive

Equity incentive is a kind of long-term incentive and restraint mechanism. Thismechanism is carried out through granting the operators some of the enterprise sharesso as make them connected to the benefits of shareholders and take the equivalent risks.Therefore, the agent problems resulted from the separation between ownership andmanagement can be mitigated effectively. Since the equity incentive came into being,the state of development of equity incentive is in a fairly sophisticated time. As aneffective incentive mechanism, the results through which created have gained lots ofrecognition. More than90%companies have carried out the equity incentive planamong the companies listed in NASDAQ. In China, there is a compatible view on theimportance of the management equity incentive. Equity Incentive ManagementMethods for Listed Company and Trial Measurements for Implementing EquityIncentive in State-holding Listed Company were published, which indicated that theformal equity incentive system began to be established in China. In recent years, Dueto the gradually matured environment and conditions in capital market, the system ofequity incentive is also developing rapidly in China, and adopted by a lot ofenterprises.In this paper, the fundamental types and characteristics of existing equityincentive are summarized through introducing and analyzing the basic concepts ofequity incentive system. The actual condition of K CORPORATION LIMITED iscombined based on the principal-agent theory, human capital theory and residual claimtheory of the company to analyze the implementation environment of equity incentiveand the performance after implementation, and to design its related optimum project.K is a high and new tech enterprise that is centered on human capital andtechnical capital, which has a particular representativeness. Besides, this company canalso be used for reference on the system of equity incentive to other related companies.