The Research Of Equity Incentive Of Listed Companies On GEM In China

As a kind of long-term incentive system which is used widely in the westerncountries, equity incentives can solve the principal-agent problem effectively inmodern corporate enterprises. In china, the development of equity incentive isrelatively slow, because our capital market started late and its development is notperfect enough. Along with the conduction and generally completion of the fullcirculation reform for listed companies, the relative policies were introducedconstantly, which provide good institutional environment for the implementation ofequity incentive.China’s GEM started to trade officially on October30thin2009. It got focusedbecause of its active performance. And many small or medium-sized privatecompanies with high-tech features and high growth have been listed on GEM. Inorder to solve the principal-agent problem effectively and retain the human resourcesin the fierce competition, more and more companies listed on GEM start to implementthe equity incentive, which is good for the long-term and stable development of thecompanies. Then, what is the current situation about the equity incentive of the GEMcompanies? What are the problems they are faced with? And how should we improvethe equity incentive mechanism of the companies listed on GEM? With thesequestions, this paper will research on the equity incentive of the companies listed onGEM.This paper reviews the research on equity incentive of scholars at home andabroad, then define relevant concepts and expound the necessity and importance ofimplementing equity incentive in China’s listed companies firstly. And then, this paperanalyzes the development process and the present situation of equity incentive’simplementation in companies listed on GEM under China’s institutional environment.The purpose of this is to identify the problems which faced by companies during theprocess of implementing equity incentive from the internal and external environmentand the program design of the company. Next, this paper proposes some targeted recommendations to improve the equity incentive of companies listed on GEM. Atlast, this paper takes the equity incentive of SZ Company as an example todemonstrate this research.