Research On ZTE's 2017 Stock Option Incentive Plan

The positive effect of equity incentive in motivating employees,improving corporate governance,improving corporate performance and promoting the long-term sustainable development of the company has been confirmed in the theoretical circle.However,in the actual application process,equity incentive is difficult to achieve the expected effect,or even the phenomenon of "reverse incentive".The reason is that there are many factors influencing the effect of equity incentive,and the mechanism is complex.How to grasp the influencing factors of equity incentive effect and maximize the utility of equity incentive is an urgent problem to be solved.This paper focuses on the micro-influencing factor of equity incentive effect--contract element design,and analyzes with typical cases,hoping to improve the equity incentive effect of relevant enterprises with certain practical value.ZTE is the largest listed company in China's communication equipment manufacturing industry and a representative high-tech enterprise in China.Its company scale,R&D investment and technological innovation are all outstanding in China's communication field.However,the development of ZTE has been declining in recent years,especially in 2016.It has been an eventful year for ZTE,with both internal and external worries.Outside have the United States excuse to suppress,each big communication equipment business covets covetously.Under such a background,ZTE launched the third equity incentive plan in 2017,aiming to activate enterprises from within to cope with the current complex internal and external environment and rebuild enterprise development advantages.Whether equity incentive can give full play to its due effect largely depends on whether the incentive scheme design is reasonable and whether it matches the current situation of enterprises.Based on this,this paper analyzes ZTE's 2017 stock option incentive plan,looks for deficiencies in the plan and tries to provide Suggestions for improvement.Based on relevant literature review and theoretical research,as well as the basic situation of the company and the introduction of 2017 stock option incentive plan,this paper analyzes ZTE's 2017 stock option incentive plan from the perspective of market reaction and scheme design.Firstly,the market response to the equity incentive was analyzed with the event research method,and the results showed that the announcement of the equity incentive plan had a certain promoting effect on ZTE's stock price and brought about a relatively positive market performance for ZTE.Next,combining with the characteristics of industry and enterprise itself,and with the aid of horizontal and vertical comparative analysis method,this paper focus on the incentive stock option incentive scheme in object allocation,motivation mode selection,the exercise price,exercise conditions set,key elements of contract valid arrangement carries on the deep analysis,found that ZTE 2017 stock options,there are some weak links in the design of incentive plans: incentive object downlink power cost is too high concentration,current mode;The index system of exercise right is not perfect.On the basis of summarizing the deficiencies of ZTE's 2017 stock option incentive plan and combining with the advanced experience in theory and practice,this paper puts forward corresponding optimization Suggestions for the design of ZTE's equity incentive plan,hoping to provide some reference for the optimization of enterprise's equity incentive plan.