The Contract Structure Design And Application Effect Evaluation Of The Compound Equity Incentive

With the development of China's equity incentive policies and regulations,more and more listed companies choose equity incentive mechanism to improve the enterprise's own incentive system.The key to the effectiveness of the equity incentive is the rationality of the design of the equity incentive's contract structure,and the equity incentive model is the core element in the design of the equity incentive's contract structure.Nowadays,the requirement of equity incentive model is becoming more and more diversified,the single equity incentive model can't meet the needs of all kinds of listed companies.Therefore,the model of equity incentive continues to emerge in practice,a new model is developed:compound equity incentive model.The compound equity incentive model can play the advantages of various types of single equity incentive tools,it provides greater choice for listed companies to design the equity incentive's contract structure.Dr.Peng Technology launched a compound equity incentive program in 2013,which uses the same proportion of stock options and restricted stock,and strive to balance the role of stock options and restricted stock.First of all,the literature and theory of equity incentive contract,equity incentive model and equity incentive effect at home and abroad are summarized,and summarizes the characteristics and motivations of compound equity incentive model.Then it takes Dr.Peng Technology's compound equity incentive plan as the research object.Based on the analysis of the industry background and motivation of the implementation of equity incentive mechanism,it evaluates the rationality of the design of the compound equity incentive's contract structure,and the effect of equity incentive contract is further analyzed through four aspects:market effect,business performance,talent stability and enterprise innovation.After the case study,the following conclusions are drawn:(1)Dr.Peng Technology's equity incentive's contract structure is reasonable and rigorous in design.Firstly,it chooses a compound equity incentive model suitable for its own operation characteristics,and combines the advantages of stock option and restrictive stock to strengthen the incentive and binding;Then the incentive object is vertical distribution,which is conducive to the in-depth play effect of equity incentive;Furthermore,its incremental type of exercise arrangements take into account the long-term and short-term interests of enterprises;Additionally,it sets up a multi-performance exercise(unlock)assessment mechanism,and adds a cash income indicator with great characteristics of the enterprise,the goal of the exercise(unlock)is both challenging and feasible;Finally,it is reasonable to choose the right time to exercise,to provide greater space for the future benefit of the incentive object.(2)the compound equity incentive effect is significant.After the implementation of the compound equity incentive program,Dr.Peng Technology showed a significant positive effect of equity incentives in four aspects:market reaction,business performance,talent stability and enterprise innovation.Especially in the aspect of business performance,the implementation of the compound equity incentive program significantly improved the profitability,development capability,solvency and operating capacity of Dr.Peng Technology,and the business performance level was significantly higher than the industry average,while higher than the same industry in the implementation of a single equity incentive model's enterprise average.In this paper,through the research on the contract structure's design and the incentive effect of Dr.Peng Technology's compound equity incentive contract,it is expected to provide reference for the listed companies in our country to choose the compound equity incentive model and the corresponding incentive contract structure design.At the same time,it can also provide a reference for the evaluation of the stockholder incentive effect by the stakeholders of listed companies.