Research On The Optimization Of Equity Incentive Plan Of SJ Company

The original intention of equity incentives is to improve the consistency of the interests of the incentive object and the company by giving equity to the incentive object,thereby reducing agency costs and increasing the motivation of the incentive object to protect the company’s long-term interests and stable development.However,in the process of implementing equity incentives,due to the irrational design of equity incentive programs,it not only failed to reduce agency costs,but also induced earnings management behavior of the incentive objects,so that equity incentives could only guarantee the company’s short-term performance improvement.,And cannot support the long-term development of company performance.Therefore,improving the company’s equity incentive plan and alleviating the company’s earnings management issues under equity incentives is very important for the company’s long-term value improvement.This paper selects SJ high tech company as the research object,uses comparative analysis method to analyze the financial and non-financial data of SJ company in 2010-2018,evaluates the implementation effect of equity incentive of SJ company,and whether there is earnings management behavior of the incentive object behind it;then uses comprehensive analysis method to analyze the existing equity incentive by combining the contractual elements of equity incentive of SJ company Which elements of the plan have problems in design,which induces the earnings management behavior of the incentive objects;then,according to the above problems and combining with the company’s own attributes and characteristics,the paper puts forward the Optimization Countermeasures for each element of SJ company’s equity incentive plan;finally,it puts forward corresponding safeguard measures to ensure the smooth formulation and effective implementation of the company’s equity incentive optimization plan.The main conclusions of the study are as follows:(1)SJ’s equity incentive plan did not play a role in alleviating the company’s agency problem.The implementation of the SJ company’s equity incentive plan not only did not promote the company’s long-term performance improvement,but also induced the earnings management behavior of the incentive objects.In order to maximize the personal benefits under the equity incentive,the incentive objects paid more attention to the company’s short-term during the equity incentive period.The promotion of interests,while ignoring the company’s long-term interest creation,ultimately harmed the company’s long-term interests.(2)The unreasonable design of each contract element of the equity incentive plan has induced the earnings management behavior of the incentive objects.The occurrence of earnings management behavior of the incentive object under the equity incentive is mainly affected by the difficulty,earnings and risk of earnings management.Among them,the single setting of equity incentive performance conditions makes it difficult for the incentive object to implement earnings management;the unreasonable exercise/unlocking arrangement of the equity incentive causes the incentive object to obtain greater profits in the early period,which increases the short-term profit-seeking of the incentive object.Psychology enhances the motivation of the incentive object’s earnings management;while the shorter effective period of the incentive reduces the risk of being discovered by the incentive object to manipulate the company’s performance through earnings management during the equity incentive period.These defects induced the self-interested earnings management behavior of the incentive objects during the company’s equity incentive period and ignored the development of the company’s long-term interests.(3)By improving the elements of equity incentive contract,we can reduce the self-interest earnings management behavior of the incentive objects.In order to alleviate the problem of earnings management of the incentive object under the equity incentive,this paper puts forward the optimization suggestions of the equity incentive scheme from the perspective of improving the difficulty of earnings management of the incentive object,improving the time allocation of the income acquisition of the incentive object,and improving the risk of earnings management.In order to reduce the motivation and ability of earnings management,we should improve the performance evaluation index system,set up the exercise/unlock arrangement reasonably,and extend the validity of the incentive.(4)Finally,this article starts from the two aspects of corporate governance,and proposes to increase the awareness of controlling shareholders and institutional investors,improve the staff structure of the company’s board of directors and the board of supervisors,in order to give full play to the role of shareholders,and improve the board of directors and the board of supervisors’ decisions and daily operations The ability to supervise activities provides guarantee for the optimization and effective implementation of equity incentive plans.The research of this paper can provide theoretical support for the improvement of SJ company’s equity incentive program,especially the analysis of the income time allocation of the incentive objects under the equity incentive of SJ company and the research of the improvement countermeasures,and also can bring certain reference significance for the formulation and optimization of other companies’ equity incentive programs.