A Study On The Effect Of ZY Company's Equity Incentive Scheme

At the same time as the establishment of modern companies,the contradiction caused by the separation of ownership and management rights has always been a difficult problem.Because of the information asymmetry,the operator are motivated to make decisions that infringe on the owner's interest but are beneficial to their own income.The principal-agent problem also arise.As an effective mean to solve the problem,the development of equity incentive in China is much later than in Western countries.However,since the implementation of reform of non-tradable shares and relevant policies,the course of equity incentive in China has entered a period of rapid development and gradually matured.At the meantime,China's domestic economic growth slowed due to the continued global economic downturn in 2012.In order to ensure the company's core competitiveness and coordinate with the company's management structure adjustment,the high-tech enterprise ZY,which is mainly engaged in intelligent manufacturing,launched the restricted stock incentive plan for the first time in 2013.Stocks are mainly awarded to the company's senior management and core technology(business)backbone.The plan can be unlocked in three phases after passing the company's annual performance assessment from 2014 to 2016.However,with the development of the market and the company,three unlocking periods of ZY company's equity incentive plan failed to unlock.The company completed the final share repurchase and cancellation in June 2017.Based on the carding of development background and related literature of equity incentive,and based on the definition of basic concepts and main types of equity incentive and related theories,this paper analyzes and evaluates the implementation effects of ZY company's equity incentive scheme from two aspects: financial performance and non-financial performance.After research,it is found that the main reasons for the failure of ZY's equity incentive plan are the inappropriate selection of incentive pattern,single set of exercise conditions,low requirements for unlocking,and short incentive periods.In response to these failure factors,this paper proposes relevantimprovements.It is recommended that ZY choose a compound equity incentive model or a dynamic model.The exercise conditions enrich non-financial indicators and individual indicators.The performance indicators of equity incentive are mainly reset with the company's performance appraisal system.And the incentive period is recommended to be extended to more than five years.I hope that this paper can provide help for ZY company's equity incentive plan design,and provide some reference for other listed companies to implement their equity incentives.