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

The principal-agent problem caused by the separation of ownership and managerial authority has long been the focus of corporate governance. As a kind of long-term incentive mechanism, the equity incentive can partly reduce the principal-agent cost by bounding up the interests of principal and agent. The Growth Enterprise Market of China is now filled with growing and innovative high-tech small and medium-sized enterprises, which pay high dependence on the key talents of technology. Therefore, the equity incentive is extremely popular among the growth enterprises. However, under the current circumstance, the implementation of the equity incentive is not going well in the Growth Enterprise Market. In some enterprises, the equity incentive becomes invalid because of the inversion phenomenon between the exercise price and the stock price. In other cases, the planned vesting condition of the equity incentive is too low or too high that may cause the problems of welfare or failure of incentive. Even in the enterprises which have implemented the equity incentive mechanism, the brain drain is still hard to keep in control.This thesis focused on analysing the current implementation and problems of the equity incentive in the Growth Enterprise Market of China. Based on optimizing the equity incentive plan, improving the company internal governance system and external market environment, the current thesis aimed at providing certain policy suggestions in order to ameliorate the implementation of equity incentive in the Growth Enterprise Market of China. In the end, by studying the case of the Pathfinder Limited Company, the thesis found out the merits and shortcomings of planning and implementing the equity incentive as well as some solutions to the problems in the case study.