Research On The Influence Of ZTE's Equity Incentive On Financial Performance

Due to the emergence of the principal-agent problem and the theory of human capital,the enterprise launched the equity incentive plan,aiming to conditionally give part of the equity to employees,so as to encourage them to have the initiative consciousness of owners,share interests and risks with the enterprise.Since the issuance of the administrative measures for equity incentive of listed companies(Trial)in 2005,the equity incentive plan has been gradually standardized,but there are still many problems,such as unscientific scheme design,the tendency to choose the opportunity,and the implementation effect is not obvious.Based on this,this paper takes ZTE,a successful and representative company in the industry,as the research object,and adopts the research method of case analysis and normative research to study the financial performance change brought by the implementation of equity incentive plan,analyze its successful experience and enlightenment,study its existing problems and propose corresponding improvements It is suggested to provide reference for other listed companies in China to implement equity incentive schemes.This paper expounds the relevant concepts and theoretical basis,and summarizes the three phases of equity incentive schemes implemented by ZTE in 2007,2013 and 2017.This paper focuses on ZTE's profitability,development ability,operation ability,debt structure and other financial indicators,and makes a comparative analysis of the changes before and after the implementation of its equity incentive plan.At the same time,select some non-financial indicators as the supplementary content of analysis and comparison.Considering the promotion of equity incentive plan to the development of the company,this paper analyzes the changes of market share price caused by the issuance of equity incentive plan by ZTE company,and then has a positive impact on the future financial performance.Finally,this paper forms the research conclusion,and puts forward the improvement suggestions for the problems in ZTE's equity incentive plan.This paper holds that the implementation of ZTE's equity incentive plan has been successful and has produced incentive effect.To a certain extent,it has solved the principal-agent problem,reduced the agency cost,improved the agency efficiency,played a positive role in promoting the financial performance,retained the core staff,and improved the enterprise value.At the same time,the issuance of equity incentive scheme has been recognized by investors.However,from the perspective of long-term development of the enterprise,the design and implementation of its equity incentive plan still has the problems of single performance appraisal indicators and short-term incentives.This article believes that ZTE's equity incentive plan should include the evaluation of non-financial indicators and appropriately extend the validity period of the incentive to further optimize the equity incentive plan.