Research On The Effect Of Weining Health's Equity Incentive

The purpose of the equity incentive is to solve the principal-agent problem under the separation of ownership and management.By granting managements a certain number of shares,the interests of the managements and the owners can be unified,so the managements are able to serve the company and the owners better.In addition,the equity incentive is believed to be able to attract and retain talents,release people's subjective initiative,and make full use of the human capital.However,many scholars have put forward different views toward the equity incentive,because they believe that the equity incentive gives managers more opportunities to seek personal benefits.At first,through the research of Chinese and English literature,this paper has classified the research status and the existing viewpoints about the equity incentive by now,and expounds the relevant theories of the equity incentive,laying the foundation for the following research.Weining Health is chosen as the research object.Combining with the development conditions of Weining Health itself,the motivation of Weining Health's equity incentive is analyzed and it is an active exploration to adapt to the development trend of the company.Then,this paper analyzes its implementation process and the content of the equity incentive.Weining Health has implemented equity incentive three times,characterized by high frequency,wide coverage and diversified incentive models,which is very representative.This paper focuses on the financial performance and non-financial performance of the equity incentive.The analytical dimensions of financial performance include profitability,solvency,operational capability and growth ability while the analytical dimensions of non-financial performance include R&D investment,human capital and industry status.The results of the analyses show that Weining Health's equity incentive has enhanced the company's growth capability and profitability,attracted and stabilized the talents,and promoted the company's research and development.But industry status doesn't have significant improvement and there are also certain risks reflected in the decline of operational capacity.In view of the above analyses,this paper summarizes the successful experience and shortcomings of Weining Health's equity incentive.Its success lies in the design of the incentive scheme which is in line with the company's development stage and business conditions,and the suitable incentive objects with good encouragement effects.The main shortcoming is that only the profitability and growth ability are used as the basis for the assessment.It ignores the role of the operational capability,solvency and non-financial performance,resulting in the reduction of profit quality and the increase of the operational risk.Moreover,the validity period of the three equity incentive plans are not long,and the executive price is not reasonable enough.Finally,this paper proposes the suggestions that the company should diversify the assessment indicators for different incentive objects,extend the incentive period,and formulate more reasonable executive price to ensure the improvement of the number and the quality of profit.