Research On Dynamic Equity Incentive Performance Of Midea Group

As a long-term incentive method,equity incentive can alleviate the principal-agent problem in enterprises,so it is widely used in corporate governance.In 2005,China carried out the reform of non-tradable shares,and the introduction and improvement of relevant laws and regulations indicate that the equity incentive system has been continuously improved and developed in China,which makes the number of listed companies adopting equity incentive gradually increase.Midea Group is a leading enterprise in China's home appliance industry.Since its establishment,Midea Group has been providing consumers with rich products and excellent services in the home appliance market.Therefore,this paper selects Midea Group as a case company to study the impact of its implementation of Dynamic Equity Incentive on performance.Midea Group's dynamic equity incentive plan,although implemented late,has rich contents and various forms.Since 2014,it has implemented six stock options,three restricted stocks and five core management team shareholding plans.In the company,the equity structure,incentive and restraint mechanism with the same interests of senior managers,core employees and all shareholders shall be established.This paper consists of five chapters.The first chapter is the introduction,which describes the research background and significance of equity incentive.The second chapter is the theoretical basis part,sorting out the theory involved in this paper.The third chapter introduces the motivation and content of Midea Group's equity incentive in detail.The fourth chapter is the core of this paper,which evaluates the equity incentive effect of Midea Group,including financial performance evaluation,market response analysis and non-financial performance evaluation.The fifth chapter is the conclusion,from the above analysis,the advantages and disadvantages of Midea Group's implementation of Dynamic Equity Incentive and suggestions for improvement.After analysis,this paper believes that Midea Group's implementation ofmultiple rounds of dynamic equity incentive plan has played a positive role in corporate performance.From the perspective of financial performance,the overall financial performance is improving,in which the weighted average return on net assets is higher than 20%,the profitability of Midea Group is relatively stable,and its development ability is improved.From the analysis of market reaction,the first five periods of equity incentive of Midea Group have no significant effect on the company's excess rate of return and cumulative rate of return,but in the sixth period,the market reaction to Midea Group's implementation of equity incentive plan is good.From other non-financial performance analysis,dynamic equity incentive in the implementation of enterprises to promote the realization of strategic objectives,improve the stability of management,while the company more effectively attract and retain high-quality talents.Midea Group has strengthened its core competitiveness by developing dynamic equity incentive,but there are still some problems in its implementation,such as single performance evaluation index design,low exercise price setting and lack of effective supervision.Therefore,Midea Group should improve and enrich its financial performance evaluation standards,formulate perfect and reasonable exercise conditions,and regularly adjust its equity incentive plan in combination with the actual situation,and strengthen the Supervision of equity incentive.Therefore,through this study,the advantages and disadvantages of Midea Group in the implementation of dynamic equity incentive are obtained,and then targeted suggestions are put forward to provide reference for enterprises in the same industry.