A STUDY On LinZhou Heavy Machinery Group CO,.LTD.’S EQUITY INCENTIVE PROGRAM

Along with implementing measures including the shareholding reform and reform of the shareholder structure, a modern enterprise system has been gradually built in China since increasing companies adopt a new type of incentive model-equity incentive to gradually promote their corporate governance structure through improving motivation of employee and putting an end to corruption of management. With the accelerating process of internationalization, as the basic industry of the national economy of mining and metallurgy industry shoulder the social responsibility of economic growing, LinZhou Heavy Machinery Group CO,.LTD as a mining metallurgical machinery equipment manufacturing enterprise, also facing new opportunities and challenges. After LinZhou Heavy Machinery Group CO,.LTD IPO, it implemented equity incentive immediately, hoping to reduce agency costs, to prevent brain drain and improve business performance.This dissertation analyzes the influence of equity incentive plan on operating performance of LinZhou Heavy Machinery Group CO,.LTD, with both normative research and case study methods, theoretical analysis guides case study and case study confirms the theoretical analysis, finally conclude of this article. This dissertation will be divided into five parts:Part Ⅰ is introduction, describes the research background, significance, literature review, research methods and technical route; Part Ⅱ is the theoretical basis of equity incentive, it introduces the concepts, theories, patterns and contractual elements of equity incentive; Part Ⅲ is case description, describes enterprise profile, implementation background, plan content and implementation process of LinZhou Heavy Machinery Group CO,.LTD. equity incentive plan; Part Ⅳ is case study, select LinZhou Heavy Machinery Group CO,.LTD. case analysis, on its implementation of equity incentive, financial data before and after the implementation of the program as well as the effect of rational design analysis; Part Ⅴ is conclusions and recommendations, provides reasonable advice that China’s listed companies how to implement equity incentive plans properly in order to improve business performance.After analysis, LinZhou Heavy Machinery Group CO,.LTD. equity incentive plan because of the simple design, evaluation index set is single, the lack of careful analysis, eventually leading to the failure of its equity incentive plan; while LinZhou Heavy Machinery Group CO,.LTD. lack of information disclosure in its equity incentive plan, locking period and unlocking period set too short, concentrated ownership structure and other factors also affect the effectiveness of their implementation of equity incentive. Therefore, this dissertation provides following recommendations about how listed companies design their equity incentive program:first, targets for evaluating performances diversification; second, improve the level of information disclosure; third, an appropriate extension of the locking period and unlocking period; fourth, optimization shareholder structure.