A Case Study On The Equity Incentive Of Kelun Pharmaceutical Co.,ltd

In 2006,the China Securities Regulatory Commission promulgated the Measures for the Administration of Equity Incentives of Listed Companies(Trial),allowing listed companies to obtain stocks required for equity incentives in the form of stock repurchases.In 2015,China’s stock market irrational fell sharply.The China Securities Regulatory Commission explicitly encouraged listed companies to formulate plans for companies to buy back shares to stabilize market stability.The equity incentives can improve the company’s human capital system and encourage employees to create company value.Therefore,more and more listed companies take the initiative to combine equity incentives with stock repurchases as an important means to cope with the downturn and stimulate performance.In recent years,the policy of “limited resistance” and “limited infusion” has become stricter,demand growth has been limited,leading enterprises have competed for market share,and domestic pharmaceutical approval reform has deepened.The infusion industry has reshuffled,and they have attached great importance to research and development of high-end new drugs and optimized product structure.The battle for talent.The market downturn contains opportunities and challenges.The company has increased its investment in the R&D system and sales system,condensed and absorbed core talents,and built lean management to help achieve value creation.Based on this,Kelun Pharmaceuticals chose to repurchase shares to pass on the performance confidence,and combined with the implementation of equity incentives to support steady growth in performance.Based on human capital theory,incentive theory and principal-agent theory,this paper uses literature research,event research and comparative analysis to conduct a case study on the behavior of Kelun Pharmaceutical’s implementation of the repurchase-type restricted stock incentive plan.Firstly,it introduces the history and development status of Kelun Pharmaceutical,describes the background and process of implementing equity incentives in Kelun Pharmaceutical.Secondly,it explores the motivation of implementing equity incentives and analyzes the key contract terms of its equity incentive scheme.Judging its rationality and feasibility,and then evaluating the market performance and financial performance of equity incentives separately;The conclusions of this paper are:(1)The implementation of equity incentives by Kelun Pharmaceutical is to ensure core competitiveness and achieve the company’s development strategy;(2)Scientific and reasonable equity incentive plan to ensure the smooth development of equity incentives of Kelun Pharmaceutical;(3)Kelun Pharmaceutical obtained positive market performance before and after the announcement of the incentive plan,and also exposed the possibility of leaking information in advance;(4)The smooth implementation of equity incentives will help Kelun Pharmaceutical to achieve lean operation and promote overall performance development.The case inspiration summarized in this paper is:(1)Listed companies can seize market opportunities,timely stock repurchase,and reduce the implementation cost of late equity incentives;(2)When setting up the equity incentive plan,we should consider rolling the implementation of equity incentives,establish a sound long-term incentive and restraint mechanism,and bring more efficient and lasting returns to shareholders;(3)Sinking the incentive center to the core employees in technology and business positions,reducing their incentive costs through capital investment,which is conducive to condensing core talents and promoting the company’s operational development;(4)Setting the stock unlocking condition based on the multi-level performance appraisal system,indicating the performance target for the incentive object,helps to fully mobilize its initiative and creativity,and improve the probability of the company completing the expected growth.