Research On The Implementation Effect Of Equity Incentive Of R Company

Equity incentive has been widely used in modern enterprises to alleviate the problem of entrusting agency,prevent the lost of talent and improve company performance effectively.Considering that China’s equity incentive system developed relatively late,and the relevant laws and regulations are not comprehensive,the effect of equity incentives on some enterprises is not very satisfactory.Therefore,studying the implementation effect is of great significance to the development of equity incentives in China.This paper takes R company as researching object of case study.R company is at the forefront in the development of the domestic pharmaceutical industry.The pharmaceutical industry possesses the characteristics of rapid development,strong dependence on talents and tight relationship to national economy and people’s livelihood.Therefore,the implementation of equity incentives has become a necessary approach to improve the level of development.The status quo,implementation motivation and program content of R company equity incentives are discussed in detail,based on the combination of literature reading and theoretical research,and R Company’s own business situation is studied from two aspects:market reaction and business performance.Through the event research method,reaction of the capital market is analyzed when equity incentive is launched.Change of the business performance after the implementation of the equity incentive is studied through the factor analysis method to determine whether the implementation of the equity incentive has achieved the expected effect.Further improvement measures for the equity incentive plan is presented.Inspiration of equity incentive plan on other listed companies is summarized,which enriches the case study related to equity incentives.The study found that in terms of market reaction,R company announced that the equity incentive plan has leaded to higher share price,received positive feedback from capital market,and brought short-term wealth effects to shareholders.In terms of operating results,Since R company implemented equity incentives,its profitability,operational capability,growth capability and overall operating performance have been promoted.Although solvency of company is not improved,the equity incentive has brought positive effects to R company overall.Still,there is room for improvement.It is possible to appropriately increase the number of shares granted,extend the incentive period,lower the exercise price,formulate the unlocking ratio and diversify the performance evaluation indicators,strengthen supervision and management in the implementation process to further exert the positive effects of equity incentives and achieve the purpose of improving company performance.