Case Study On The Equity Incentive Effect Of Tianqi Lithium Industries, Inc.

Equity incentive has been introduced into China for nearly 30 years.Compared with the mature theoretical research in the west,the exploration of equity incentive in China is relatively late,but it is also improving day by day.In the past four stock incentive upsurges,the main objects are mainly concentrated in state-owned enterprises and private enterprises on the second-board market,but the practical research on stock incentive of listed companies on the small and medium-sized board is relatively small.However,existing research shows that equity incentive can play a positive role in the process of corporate governance.Its path is mainly to promote the initiative of employees to work by building a link between the personal interests of employees and the interests of the company,and then promote the long-term development of the company.This paper selects Tianqi lithium Industries,Inc.,a small and medium-sized listed company,as a research case,and studies the design and implementation of equity incentive plan that has been implemented since 2015 through literature analysis,case analysis,comparative analysis and other research methods.The purpose of this paper is to analyze the objectives and contents of the equity incentive plan of Tianqi lithium Industries,Inc.,the impact of the announcement of equity incentive policies on the financial market,as well as the effect on the financial performance in the actual implementation and even non-financial performance,and then to find and summarize the shortcomings in the design and implementation of the equity incentive plan and put forward targeted suggestions.Tianqi lithium Industries,Inc.is a leading new energy material enterprise with lithium as the core in China and even in the world.In 2011,the company was jointly recognized as a high-tech enterprise by the Department of science and technology of Sichuan Province,the Department of finance of Sichuan Province,the State Administration of Taxation of Sichuan Province and the Local Taxation Bureau of Sichuan Province,and passed the recognition review in 2014.In August 2015,Tianqi lithium granted restricted shares to the incentive objects for the first time,and set the incentive plan for four years.At present,the term of restricted stock granted for the first time by the company has expired,and all of them meet the unlocking conditions.This paper analyzes the performance of Tianqi lithium's equity incentive through financial and non-financial indicators,and compares the change trend of each indicator with the mean change trend of the same industry,analyzes the performance change in the four unlocking periods of the equity incentive plan,and summarizes the strengths and shortcomings of Tianqi lithium's plan from design to implementation according to the analysis results.This paper finds that after the implementation of this equity incentive plan,the short-term solvency improvement effect of Tianqi lithium is weaker than that of the long-term solvency improvement effect,while the operation ability of the company has been improved in the first two unlocking periods,and the incentive plan has the most significant impact on the profitability of the enterprise.The R&D investment of Tianqi lithium industry also increased significantly.Based on the analysis of non-financial indicators,this paper also finds that equity incentive can promote the quality of employees,innovation achievements and market share of Tianqi lithium.According to the research results,this paper summarizes three merits of Tianqi lithium equity incentive system.First,the company's performance evaluation index focuses on the investigation of Tianqi lithium's profitability during the unlocking period,effectively promoting the incentive object's attention to profitability.Second,the company can grant senior managers and even core technicians with restricted stock,and the proportion of the company's core technicians in all the granting objects is high,which shows that the enterprise pays much attention to the cultivation of internal staff's R&D ability.Third,the company can also modify the incentive plan timely and effectively according to the actual implementation.At the same time,this paper also summarizes the parts that need to be reflected in the equity incentive plan of Tianqi lithium,such as the validity period is short,the number of incentive objects covered by the plan is limited,and the performance evaluation indicators and values are not set properly.According to the problems of Tianqi lithium in the process of implementing the equity incentive plan,this paper puts forward the targeted solutions.First,the company can improve the performance evaluation indicators of the incentive plans and improve the transparency of indicators.Second,optimize the setting of performance evaluation indicators.Third,Tianqi lithium should fully combine the company's development strategy to develop incentive plans.Finally,the company can consider setting longer effective incentive plans,or publish multi-stage incentive plans in parallel.This paper hopes to summarize the experience and shortcomings of Tianqi lithium's equity incentive implementation,it can help the company better develop its strengths and avoid weaknesses in the design of equity incentive plans in the future,at the same time,it could provide reference and inspiration for designing equity incentive plans for other industries or different industries.