Research On The Design And Implementation Effect Of CHINT's Equity Incentive Plan

Recently,equity incentive has become the main means for company to reduce the agency costs and motivate their core employees.More and more companies have introduced their equity incentive plans.However,not all plans are effective.Due to the superior design and obvious effect of CHINT's equity incentive plan,it is meaningful to analyze the advantages of the plan.Based on the relevant literature review,this paper analyzed key elements of the equity incentive plan,and did research of the implementation effect after the incentive.The equity incentive plan of CHINT,which we found,granted reasonable options,had longer term and tougher exercise condition.After the implementation of equity incentive,CHINT shared the wealth with the employees covered by the plan.Equity incentive also brought a positive market reaction.Meanwhile,compared with companies who were in the same industry but never implemented equity incentive from 2007 to 2016,financial performance related to the exercise conditions have been significantly improved,which conforms to the logic of equity incentive.In the end,the suggestions for design and implementation may help companies to optimize the design of their equity incentive plan and provide a valuable case for reference.