Research On The Opportunistic Behavior Of Managers Under The Equity Incentive

With the development and improvement of modern enterprise system,the principal-agent problem is becoming more and more serious.To alleviate the principal-agent problem,improve the company's performance level,and achieve the maximization of shareholder wealth,listed companies have implemented equity incentive plans.However,with the deepening of the implementation of the incentive plan,its disadvantages are gradually highlighted.One of the important problems is that the management may take various opportunistic actions to achieve the performance appraisal goal,so as to successfully exercise the right,but this completely goes against the original intention of the implementation of the equity incentive plan.Taking the first stock option of Dinghan technology as an example,this paper analyzes the paths for the management to implement opportunism under the equity incentive.Through the case study,it was found that the management got the incentive target at a lower price,which made the management obtained part of the income due to the low stock price before the implementation of the equity incentive plan.When the management made the equity incentive plan,they set the performance assessment index which was easy to be completed to reduce the difficulty of exercising the right;And two months after the formal implementation of the incentive plan,they implemented the material assets reorganization.After eliminating the acquisition of assets on the company's performance,it fully demonstrated the free riding behavior of the management;In addition,the management impacted cash dividend policy and implemented earnings management during the implementation of equity incentive to improve the performance level during the appraisal period,and successfully meets the exercise requirements.Then,this paper analyzes the motivation of the opportunistic behaviors of Dinhan's management,and finds that the management may be affected by the insufficient monetary compensation,controlling the board of directors and high concentration of equity.Finally,this paper proposes suggestions on the design of equity incentive scheme,the level of management salary and the internal governance structure of the company,in the hope of providing some help to curb such behaviors.