| On the one hand the emergence of the joint-stock company promotes the optimal allocation of resources, on the other hand the company is gaining through the production with the capital scattered together from individual. As the company continued to expand, professional managers were developed, professionals do not own the company which he is in charge of, then those would bring the cost of agency.1953Pfizer introduced its first stock option, followed by the firms in Japan, France and other developed countries, leading to sufficient development of equity incentives in Western mature markets. In China, with the pace of reform and opening policy, lots of companies have implemented the option incentive. Vanke is the first one which implement stock option incentive on1990’s. And the Measures for Management of Equity Incentive of Listing Corporation finally issued in2006.Equity incentive is a system of long-term incentive, by giving the incentive object the right to obtain the shares or equity when certain conditions turn true. As pursuit of maximizing their own interests, the incentive objects will promote the development of the company either. An effective plan of equity incentive can make managers and employees work hard and develop their skills actively. The remuneration of the managers and labor affect the company’s performance, then it reflect through the stock price in the capital market. Because the stock price is directly related to the incentive object’s earnings from the incentive plan. Under the certain conditions, if the incentive of stock option plan influence more powerful, the incentive objects will work harder for the company’s development. Then their efforts will be able to enhance the company’s performance greatly, promoting the share price, so the incentive objects can gain greater benefits from the incentive plan.This paper adopts case analysis as the research method and focuses on the change of corporate performance before. After the implementation of equity incentive plan, the companies as comparing objects are divided into two groups, one of which group didn’t implement equity incentive, and are engaged in biopharmaceutical manufacturing as same as S.L. company. The companies in other group have not only implement equity incentive,but also are listing corporation of pharmaceutical manufacturing industry. Index analysis method and the Du Pont financial analysis system are used in this paper for vertical comparison, and the efficacy coefficient method and economic value added method for horizontal analysis. Conclusion is that the stock incentive was conducive to the improvement of S.L. company’s performance, and it has played a positive role in development of the company. Secondly, compare the incentive plan of S.L. company with others on incentive amount, period of validity, conditions and performance index, in order to putting forward suggestions related.This paper is divided into seven chapters as followed.The first chapter is the introduction. This chapter mainly introduces the research background and significance, research ideas, the framework, research methods and expected contributions.The second chapter is the literature summary from the equity incentive effect on the performance of the company and summarizes key factor of designing equity incentive plan.The third part discusses the theory that the stock incentive is based on and the method of evaluating the companies’performance.The fourth part introduces the current situation of equity incentive in China. In this chapter, based on the development of equity incentive system of our country, the implementation of equity incentive of listed Corporation since2006were summarized and analyzed.The fifth chapter is about background of the case. It’s a description of S.L. company and summary of the company’s equity incentive plan.The sixth chapter is about analysis of the implement effect and comparison of the situation of S.L. company with others to find out the disadvantages and advantages.The last chapter is conclusions and recommendations.The main contribution of this paper is mainly the analysis of corporate performance which is influenced by incentive or not. And the design elements of S.L. company’s equity incentive schemes are compared and analyzed, in order to show the scheme design which is worth learning, providing reference for other companies to design and the implementation of equity incentive plan. So it can lead to a better utilization of the equity incentive by other companies, and enrich the research on cases of stock option incentives at the same time.The research results of this article is limited by using the method of case analysis. Because every company has its own characteristics, so does S.L. company. With the stock options system improvement continuously, more and more companies will choose and implement the equity incentive plan. It can enrich the existing research results, and the research results are significant guidance in the implementation of equity incentive. |
