Research On The Terminational Reasons And Economic Consequences About Equity Incentive

The measures for the management of equity incentive in listed companies,which was formally implemented in 2006,unveiled the prelude to the implementation of the wave of equity incentive plan in China.Until 2016,the number of listed companies carrying out equity incentive plans is 1198,but many companies have terminated the equity incentive plan.In recently years,many scholars have begun to focus on the case of enterprise termination of equity incentive,but the related research on this topic is still less than the other aspects of equity incentive.So,the analysis of MYHOME about its three equity incentive plan has certain significance to listed companies in China.This thesis by reviewing domestic and foreign literatures,found that both domestic and foreign scholars believe that termination of equity incentive will have negative effects on enterprises.By gathering bulletin and quering data,I found that our country listed company is turning to restricted stock,and the termination of equity incentive is not passive.There are many factors that lead to termination which are becoming compounding and correlating.Except macro environment changing and the enterprise performance not meetting the conditions of the right conditions,more companies have been the initiative to end the equity incentive in recent years.When the equity incentive plan shall not apply to the enterprises in the current environment and can’t achieve the desired effect,enterprises choose to terminate the equity incentive and redesign a new current industry.Mainly due to the impact of the 2008 financial crisis,the first equity incentive plan of MYHOME didn’t implement to failed,affecting the company less.After the first failure,MYHOME launched a second equity incentive plan to try to save the share price decline,but the incentive plan was launched in the period of high domestic policies to curb real estate prices.The company’s performance could not reach vesting conditions eventually.The third equity incentive plan let investors lost confidence about MYHOME.Many executives left the company.The first two equity incentive failure cause the third equity incentive to failure.The execution conditions of the three equity incentives is unreasonable.With the performance decline,the conditions of the exercise rights are becoming more strict.Therefore,I puts forward some suggestions from the aspects of enterprise’s own strategy,design and implementation of equity incentive stage,and termination of equity incentive stage.We hope to effectively reduce the possibility of termination of equity incentive in listed companies.