Case Study On Huawei's Equity Incentive

With the development of the shareholding system reform,the separation of ownership and management rights has become a common phenomenon in modern enterprises.Equity incentive is an important means to resolve the conflict of interests between shareholders and management.Equity incentive allows management to enjoy part of the company's residual value,mobilize the enthusiasm of shareholders and management,and make them become a community of interests.At the same time,equity incentive,as a long-term incentive,promotes the future development of the company and attracts and retains a large number of core talents.At present,more and more companies are beginning to implement equity incentive.The research on equity incentive at home and abroad is mainly for the empirical research done by listed companies.There are relatively few studies on non-listed companies,especially in case studies.Therefore,the case study of equity incentive for non-listed companies is very necessary and has reference value.The equity incentive system of Huawei is a typical successful paragon.Huawei has implemented equity incentive for more than 20 years,and equity incentive has played a crucial role in its different development stages.Firstly,this paper combs and evaluates the present research at home and abroad,introduces the main research methods used in the paper,and expounds three related theories of equity incentive: principal-agent theory,human capital theory and incentive theory.Secondly,this paper introduces Huawei and its equity structure,and generalizes its five development processes: the start-up period,the economic bubble period,the SARS period,the economic crisis period and the maturity period,and summarizes the main characteristics of Huawei's equity incentive.Finally,this paper analyzes the motivation of Huawei's implementation of equity incentive,and combined with the financial data of Huawei and the same industry over the past decade,the implementation effect of Huawei's equity incentive is analyzed from four aspects: the perspectives of financial performance,innovation ability,consumer market response and industry status,and obtains the enlightenment.Through in-depth analysis of the implementation of equity incentive system in Huawei,this paper hopes to provide new ideas for the reform of China's non-listed companies in equity incentive.