Research On The Effect Of Midea Group’s Equity Incentive

Equity incentive,known as option incentive,is a long-term incentive mechanism for enterprises to motivate and retain core talents,and is currently one of the most commonly used methods to motivate employees.Equity incentive is mainly through giving employees some shareholders’ rights and interests,giving them a sense of ownership,forming interest communities with enterprises,and promoting the growth of enterprises and employees together.As a more commonly used incentive mechanism in modern enterprises,equity incentive is an important part of corporate governance.In 1952,in order to avoid tax,Pfizer designed the world’s first stock option plan,which has achieved good results.By the mid and late 1980 s,the equity incentive of the listed companies in the United States has gradually become a common phenomenon.The equity incentive in China started late,but it has developed rapidly.Since the split share reform in 2005,China has introduced a series of relevant laws and regulations,and more and more enterprises carry out equity incentive.By the end of 2017,1154 companies have announced equity incentive schemes.From the view of enterprise practice,not all enterprise equity incentive has effect.Based on this,this paper uses the American group as a case to analyze the effect of equity incentive.In this case the choice is the leading enterprise in home appliance industry,the group of the United States,the four enterprises to implement the stock option incentive plan,a period of restricted stock incentive plan,the three core management stock ownership plan,although late,but its equity incentive is rich in content and forms.The methods of literature research,financial index,efficiency coefficient and event study are used in this paper.Aiming at the cumulative effect of the four equity incentive and the effect of each equity incentive,the paper studies its financial performance,innovation capability and core management stability when evaluating the cumulative effect.In evaluating the single effect,the paper studies the volatility of stock price and the change of EVA.This study finds that equity incentive has a positive effect on the long-term operating performance of the American group,but the short-term stock price changes are not obvious.The stock share price has risen in a short period of time after the implementation of the equity incentive scheme,and there is no significant change in the long term.Through ranking the efficiency coefficient method,we can find that after the implementation of equity incentive,the ranking ranks first in the US group,and the long-term performance is better than the industry level and the equity incentive level is not implemented.In terms of core management stability and innovation capability,Midea Group can attract talents and retain talents through equity incentive,making company performance rise.Finally,this paper puts forward corresponding suggestions for the equity incentive of Midea Group,so that enterprises can think about and improve the problems in implementation,and also have reference significance for enterprises outside the group.